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My Offer is Subject to What?

Blog by Claire LeLacheur | February 26th, 2009

With every offer that I write for a Buyer I always make it Subject to.....a whole bunch of different things that allow the Buyer to research the property and get to know it much much better before they buy it. Subjects, or conditions, as some Realtors call them, are inserted in an addendum to a contract for purchase on a home. The Buyer is basically saying to the Seller, I will buy your home, Subject to these very crucial documents and pieces of information. In a "normal" situation in the process of Buying a home you get between 5-7 business days to remove your subjects. Once your subjects are removed your offer becomes firm and binding.

There are numerous subjects, that you, as the Buyer, can insert in your offer, but there are a couple of extremely important subjects that you just can't do without.

Subject to Financing

The first and foremost important subject is Subject to Financing. This is where you as the Buyer, will get your personal financial documents together and send them off to your mortgage broker. Your mortgage broker will then bundle everything up and send it off to the lender. There will invariably be a few more documents that your mortgage broker will need that will be requested by the lender. Included in your financing subject is the possibility of the lender needing to do an appraisal. An appraisal consists of the bank sending in a guy to take pictures and find out the basic information of the home. The appraisal is the banks way of checking in to see if you are spending the right amount of money on the property.

Subject to Building Inspection

The second subject I  always include is the Subject to a Building Inspection. This subject gives the Buyer the opportunity to go back into the property with a qualified building inspector and get him or her to go through the property with a fine tooth comb. The inspector will usually give a report to the nature of the things that they find.

Subject to a Title Search and PCDS

The new Buyer will always want to have a subject that includes the documentation of a title search and a Property Condition Disclosure Statement. These are always made Subjects and are given to the Buyer at the Sellers request. the title Search will let us know what is regeistered on Title, financial or non financial. The Property Disclosure Statement or PCDS is a list of very pointed questions about the property that the Seller is legally bound to answer truthfully, and to the best of their knowledge.

Subject to Strata Documentation

If you are buying Strata, or a condo, there is always a subject included that asks the Seller to provide 2 years worth of strata minutes, Annual General meetings and financial statements and bylaws to the Buyer to read and approve. This is usually a large package of paper that takes a day or two to wade through, but will furnish the new Buyer with a pretty intimate knowledge of the Strata.

Once you have researched the property through the use of these subjects, and you are happy and would like to buy the property then you remove your subjects, hand in your deposit, and your offer becomes firm and binding.

If, in the process of your research, you find out that there is something detrimentally wrong with the the property, or your financing does not pan out, obviously you cannot remove your subjects, and buy the property, and your can back out of the offer. Bear in mind that once you have written the offer and you need to back out, you must have a VERY valid reason. The reason that "my mother doesn't like it" probably won't fly so far. It must be a valid reason, or there will be dire consequences.

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