Insights · Blog
What are subjects, and which ones should I include?
By Ramon Gutierrez, PREC
By Ramon Gutierrez, PREC
A subject is a condition written into your Contract of Purchase and Sale. Until you remove it, the deal depends on it. Subjects are how a buyer in BC gets time to check the financing, the condition of the home and the documents before being fully committed. Choosing them well is one of the most important decisions in an offer, and dropping them is one of the most expensive mistakes a buyer can make.
When an offer with subjects is accepted, you have a firm contract that still depends on those conditions. Each subject has a date. Before that date, you do your checks. If everything is fine, you remove the subjects in writing, and the deal becomes firm. If something is not fine, the subject gives you a way to not go ahead, depending on how it was written.
Most subjects are written for the buyer's sole benefit. That wording matters, because it means the decision belongs to you. How subjects are worded and what happens if one is not satisfied are legal questions, and your agent and your lawyer or notary should be clear with you on both before you sign.
The subject period is not a free option. A seller accepts it because they expect you to act in good faith and do the checks you said you would do.
Financing. The purchase is subject to you getting the mortgage you need. Pre-approval is not the same as approval for this specific home. The lender still has to approve the property, often with an appraisal, and confirm your documents.
Inspection. You hire a home inspector to look at the condition of the home. On an older house in Walnut Grove or Murrayville, this is where you learn about the roof, the drainage, the furnace and the electrical. On a newer townhouse in Willoughby, it still finds things.
Strata documents. For a condo or townhouse, the purchase is subject to you reviewing the Form B, the bylaws, the depreciation report, the financial statements and the minutes. This is where you find special levies, rental and pet bylaws, insurance issues and repair plans.
Title search. Your agent or lawyer reviews the title for charges, easements and covenants. On an acreage in the Township of Langley, this can matter a great deal.
Property Disclosure Statement. You review what the seller has disclosed and ask questions about it.
Some subjects only apply to certain buyers or homes. Sale of your current home, if you need that money to buy. Insurance, if the home has features that may be hard to insure. For a rural property, checks on the well, the septic system or what can be built under the zoning and any Agricultural Land Reserve status. For a home with a suite, confirmation from the municipality that the suite was permitted.
The right list depends on what could go wrong with this home for this buyer. A generic list copied from the last deal is not enough.
In a competitive situation, buyers sometimes offer without subjects to look stronger. It can win a home. It also means that if your financing falls through or the inspection would have found a serious problem, you are already committed.
If you are thinking about it, do the work before you offer. Get the lender to review the specific property. Book an inspection before the offer date if the seller allows it. Read the strata documents ahead of time. Then you are choosing a risk you understand, not hoping for the best.
I go through every subject with my clients before we write. For each one I explain what it protects, what it would cost them if they left it out, and how many days we need to do it properly. Then I check those days with the lender and the inspector before the offer goes in, so we are not asking for time we cannot use.
I do not tell buyers to drop subjects to win. If a buyer chooses to, I make sure they understand exactly what they are giving up and that the checks are done first.
Thinking about buying or selling in the Fraser Valley? Message me and we will go through your options.
Every property and every household is different. Ask Ramon directly.