When a home buyer’s offer has a lot of “subject to” clauses, it should be for their due diligence. It’s common to see five subject clauses, but more than this may mean the purchaser is being overly cautious.
When selling your home, it’s reasonable to see conditions and subjects that give buyers an out. This is the whole point of the due diligence period for a buyer. The buyer needs to have a chance to research the property before committing to their purchase. Although subjects are for the buyer’s protection, it’s not just in the best interest of the buyers. It ultimately facilitates a smooth closing and minimizes the chance that a buyer will back out of the contract.
The most common buyer subjects are financing, home inspection, disclosure statement, title search and strata documents(if applicable). Other common but lesser-used subjects are property insurance, bank appraisal, verifying taxes and subject to sale. In Metro Vancouver, we typically see buyer subjects for one or two weeks.
However, some subjects can be completed before making an offer, such as reading the disclosure statement or reviewing the publicly available title documents. These items are generally available upfront at little or no cost. In contrast, hiring a home inspector buyer prefers to do this after their offer because of the associated cost. On the other hand, obtaining approval for a mortgage may only be possible after an offer, as most lenders won’t offer approval without an offer.
Subjects are in place for due diligence. Buyer’s subjects allow purchasers to research the property they intend to buy. If it’s a simple case of buyer’s remorse, all home purchasers in BC are entitled to their three-day rescission.
If a buyer’s offer has a lot of subject-to clauses, the other possibility is the buyer is nervous. A nervous buyer may still be a sincere purchaser; perhaps this is their first purchase, or they’ve had a bad experience. Buyer subjects are in place for due diligence, and it’s always up to the buyer and seller to decide what is reasonable through the negotiating process.
