A Buyer’s Guide to Subject Clauses in Real Estate Contracts
When buying real estate in North and West Vancouver, one of the most important protections available to buyers is the subject clause, also known as a condition precedent. These clauses allow a buyer to back out of a contract if mutually agreed conditions are not met, after making a good faith effort to satisfy them.
While subject clauses are designed to protect the buyer’s interests, in a competitive market, some buyers may choose to forgo subjects to make their offer more appealing to the seller. Doing so carries risk — especially if financing, insurance, or property condition hasn’t been fully confirmed — so it’s a decision that should be made carefully.
Disclaimer: The information in this guide is for general informational purposes only and does not constitute legal, financial, or other professional advice. Buyers should consult with qualified professionals for advice tailored to their specific situation.
Most subject clauses benefit the buyer exclusively and do not give the seller the ability to cancel the deal.
Common Buyer subject clauses include:
- Arrange financing
- Complete a home inspection
- Review strata or property-related documents
- Confirm insurance coverage
If any subject is not satisfied within the agreed timeframe, the buyer has the right to withdraw from the contract — either by giving written notice or by allowing the subject to expire without being waived or declared fulfilled.
Important Note: Subject clauses are different from the Home Buyer Rescission Period (HBRP) — also known as the “cooling-off period” — which gives buyers of most residential resale properties in B.C. a short, mandatory window (3 business days) to cancel a signed contract for any reason. Subject clauses, by contrast, are specific conditions added to a contract and tied to due diligence. Depending on the situation, a buyer may rely on subject conditions or the HBRP (or both, if applicable) — but if a buyer cancels under the HBRP, a 0.25% rescission fee is payable to the seller.
Common Subject Clauses
1. Subject to Home Inspection
This clause allows the buyer to hire a licensed home inspector to assess the condition of the property. The inspection typically includes:
- Roof, foundation, and structural integrity
- Plumbing, electrical, and HVAC systems
- Moisture or water damage
- Pests or infestations
If the inspector finds significant issues that could impact the property’s value or livability, the buyer can choose not to proceed.
2. Subject to Financing
Even if a buyer is pre-approved, final mortgage approval is usually subject to review of the specific property. This clause gives the buyer time to secure financing on acceptable terms.
Why it matters:
If the lender declines to finance the property due to appraisal issues, condition, or strata concerns, this subject allows the buyer to exit the deal.
3. Subject to Insurance Review
For a strata, this clause allows the buyer to:
- Review the strata corporation’s master insurance policy to ensure it provides adequate coverage and has manageable deductibles
- Confirm that personal strata unit insurance (including deductible coverage) is available on terms satisfactory to the buyer
Why it matters:
With rising deductibles and premiums in many B.C. strata buildings, buyers need to ensure they’re not exposed to unexpected liabilities — especially for water or fire damage, which can carry owner-payable deductibles in the tens of thousands of dollars.
For a single-family home, this clause allows the buyer to:
Confirm they can obtain property insurance coverage on acceptable terms, including protection against fire, flood, earthquake (if desired), and liability
Why it matters:
Some homes — particularly older ones or those with past insurance claims — may be difficult or expensive to insure. Since mortgage lenders require home insurance as a condition of funding, this clause protects buyers from committing to a purchase they can’t insure.
4. Subject to Document Review
This clause is especially important when purchasing strata properties like condos or townhomes. It allows the buyer to review a wide range of documents and withdraw if they find anything unsatisfactory. Documents typically include:
- Strata bylaws and financials – Provide insight into rules (e.g. pet or rental restrictions) and financial stability.
- Meeting minutes – Offer details on building maintenance, disputes, and upcoming expenses.
- Strata plan and amendments – Show layout and any changes to the property or common areas.
- Form B (Information Certificate) – Summarizes key strata info, including fees and insurance.
- Engineering or Depreciation Reports – Highlight current conditions and long-term repair costs.
- Strata Insurance Documents – Show coverage, deductible amounts, and any gaps in protection.
Why it matters:
These documents can reveal red flags such as legal disputes, insufficient contingency funds, upcoming levies, or major building issues. Buyers often review these materials with help from a real estate agent, lawyer, or strata consultant.
Title and Disclosure Documents (Strata and Detached Homes)
Whether you're buying a strata unit or a single-family home, these two documents are typically reviewed as part of the contract:
- Title Search – Confirms legal ownership and discloses any charges, easements, rights of way, or covenants that may affect property use.
- Property Disclosure Statement (PDS) – Outlines any known defects or issues, such as past flooding, structural concerns, or unpermitted work.
Why it matters:
These documents help uncover hidden risks that may not be obvious during a showing. For example, a registered easement might limit future use of part of the yard, or a PDS might reveal water damage or past renovations. Reviewing them is essential due diligence—no matter the property type.
Each subject clause includes a specific deadline by which the buyer must:
- Remove subjects in writing, making the contract legally binding, or
- Cancel the contract if any subject condition remains unsatisfied after a good faith effort
The length of the subject period is negotiated between the buyer and seller. The most common timeframe is 7 days, though shorter periods may be used to strengthen a buyer’s offer in competitive situations. Longer periods might be needed for buyers with more complex financing or for properties that require more due diligence.
Once subjects are removed, the deal becomes firm, and the buyer is obligated to proceed to closing—barring any remaining legal protections, such as the Home Buyer Rescission Period (HBRP), where applicable.
Final Thoughts: How Subject Clauses Protect Buyers in B.C.
Subject clauses are one of the most important tools a buyer has in a real estate transaction. They create space to complete due diligence and ensure a property is the right financial and legal fit — before you're fully committed. Whether you're reviewing strata documents, securing financing, or confirming insurability, subjects give you the confidence to move forward — or walk away if something doesn't align.
Every situation is different. An experienced team like ours will help you understand which subject clauses are most important for your goals, how to structure them effectively, and when (if ever) it might make sense to forgo them to strengthen your offer. We’re here to guide you through every step — so you can make smart, informed decisions with peace of mind.