A Guide to Back-Up Offers
Have you been searching for a home in North Vancouver or West Vancouver and found the perfect one, only to discover it’s already under contract? Or maybe you’ve just missed out in a multiple-offer situation but still want another chance at the home.
On the selling side, perhaps you received multiple offers and one of the buyers who missed out is eager to stay in the mix.
In both of these situations, a back-up offer could be the solution. Back-up offers keep buyers in contention and give sellers added security—but they also come with important considerations. Below, we’ll explain what they are, how they work, and what you should think about depending on whether you’re buying or selling.
Disclaimer: This content is for general information only and does not constitute legal, financial, or investment advice. Always consult professionals before making a decision.
What is a back-up offer?
A back-up offer is an offer made on a property that already has an accepted offer. If the first deal doesn’t go through, the back-up offer automatically becomes active—without the home going back on the market.
To protect the seller, back-up offers usually include wording like this:
“Subject to the Seller ceasing to be obligated in any way under the Contract of Purchase and Sale dated (date) (the “Sale Contract”) respecting the Property, including the Seller obtaining a full release from the Buyer, on or before (date). This condition is for the sole benefit of the Seller.”
This clause ensures that the seller won’t be tied to two contracts at once.
For Buyers: Should You Make a Back-Up Offer?
Why it can help you
- Stay in line: You’ll be next up if the first buyer’s deal collapses.
- Avoid another bidding war: If the home comes back to market, new buyers may push the price higher.
- Show you’re serious: A back-up offer signals to sellers that you’re committed and ready.
What to watch out for
- Uncertainty: There’s no guarantee the first deal will collapse.
- Legal clarity matters: Your offer must specify it only activates if the seller is no longer bound by the first deal.
- Cooling-off period applies: The three-day Home Buyer Rescission Period starts the moment your back-up offer is accepted.
- Timing is key: Ask about the first buyer’s subject removal date—it’s when your offer may come into play.
For Sellers: Should You Accept a Back-Up Offer?
Why it can help you
- Added security: If the first buyer backs out, you already have a second deal lined up.
- Saves time: No need to re-list or start negotiations from scratch.
- Leverage: Having a back-up offer can strengthen your position in discussions with the first buyer.
What to watch out for
- Contract complexity: Accepting a back-up offer may limit your ability to make changes to the first deal.
- Risk of two contracts: Without the proper wording, you could unintentionally be bound to two agreements.
- Seek advice: Always consult your REALTOR® and legal advisor before making changes once a back-up offer is in place.
Risks to Sellers: Contract Amendments & Legal Caution
Accepting a back-up offer can create limitations on how you handle the first contract. Here’s why:
- Amendments can be risky: If you and the first buyer want to renegotiate (for example, adjusting price or timelines), certain changes may unintentionally trigger the back-up offer. That could leave you legally bound to two contracts at once.
- Optional clause: Some back-up offers include an additional condition stating: “The Seller agrees not to amend the Sale Contract.” If this is included, you may not be able to adjust the first contract at all without risking a breach.
- Fundamental vs. minor changes: Courts have found that minor amendments (like extending subject removal deadlines) usually do not trigger a back-up offer. But more fundamental changes—such as changing the price or parties—could be seen as collapsing the original deal and activating the back-up.
- Each case is unique: Whether a change is “fundamental” is ultimately a legal question. Sellers should always seek independent legal advice before making changes to the first contract once a back-up offer is in place.
The bottom line: don’t assume small changes are always safe. Each situation is fact-specific, and legal caution is essential.
Key Takeaways
- Back-up offers are can be useful in competitive markets like North Vancouver and West Vancouver, but they also come with important considerations.
- For buyers, they provide a second chance at a property without waiting for it to re-list.
- For sellers, they provide peace of mind—but must be handled carefully to avoid legal risks.
- The right back-up clause protects both sides and helps ensure a smoother transaction.
Thinking about Buying or Selling in North or West Vancouver? Our experienced real estate team can help you navigate the process with confidence. Reach out today to discuss your options and next steps.