When you have found the home that is right for you the next step is to make an offer. Most offers will include “subjects” which give home buyers have a chance to do their due diligence investigating the home before finalizing the purchase agreement.

In the Lower Mainland our real estate term is “subjects”, meaning the concessions in place for either buyer or seller to be fulfilled before the agreement for sale is finalized. Subjects are also called subject to’s, conditions, or contingencies.

The buyer or the seller can add subjects to the offer, making it a “conditional offer” – meaning the contract to sell/purchase hinges on fulfilling all the conditions.

Common subjects for residential home, town home, condo, and strata purchases for buyers would include:
1)Financing: subject to the buyer obtaining a new first mortgage or obtaining suitable financing for the property
2)Inspection: subject to the home passing a professional inspection conducted by the buyer’s inspector of choice and paid for by the buyers
3)Title search: subject to the buyer reviewing a current title search
4)Seller disclosure: subject to the buyer reviewing a copy of the property disclosure statement
5)Strata documents: Subject to the buyer reviewing a current strata information package. This would only be applicable if the property is a condo, town home, or strata home.

The above list includes some of the most common subjects, but any number of subjects may be added into the conditional contract. There can also be many variations on the wording used. It’s important to keep in mind although the exact wording may change, the intent of the subject could remain the same.

All subjects must include an end date for the condition to be fulfilled or it expires. In a busy market we normally see subjects span a week or two, but they could be extended for as long as the buyers and sellers agree to.
If a buyer does not include any subjects we would say the offer is unconditional. If a buyer chooses to make an unconditional offer, once the sellers have accepted the offer the buyer would not be able to change their mind on the purchase agreement.

However, if the buyer makes an offer with subjects the transaction could collapse by not fulfilling their conditions and not removing the subjects. For example, if the buyer’s inspector found a huge issue the buyer could decide to not remove the inspection condition and, in essence, withdraw their offer.

The subjects are part of the offer and may become a point of negotiation, so think carefully when planning to add subjects to your offer. Adding too many non-tangible subjects – such as subject to friends visiting the property or subject to changing/adding names – could give the sellers the impression you are looking for an exit strategy.
Subjects are there to protect home buyers by giving you an opportunity to do your homework!

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