Subject Removal of Clauses (Conditions)/or Extension of Subject Removal

Subjects are essentially conditions that must be met in order for the deal to become firm, or official. These subjects might include: subject to financing, inspection, property disclosure statement, title search, or strata documents – to name a few. They are completed during the subject removal period, which is the time that you actively work to remove these subjects in good faith. **TIME IS OF THE ESSENCE**  The subject removal process is an extremely important process to understand for both the buyer and the seller in a real estate transaction.

Subject removal period is typically 7 days long (i.e. if you put an offer in Monday, subject removal would be due by the following Monday) and allows you to organize all of your affairs, such as making sure your financing is in place and an inspection on the property or building has been done. You can shorten it depending on how prepared you are with finances etc. However, finding a Home Inspector may change your timeline somewhat. 

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Begin working to remove all subjects. Hire and schedule a home inspector to come by at least 2 days before the date of subject removal. Notify your bank that you have an accepted offer and have them begin the official financing approval process. Obtain all documents including the title search, property disclosure statement, and strata documents (if necessary) to begin reviewing. Follow up on any questions or concerns you may have with the listing agent.

More about “subject” clauses

• The purpose of a subject clause contained in an offer to purchase is to set out a specific condition that must be fulfilled before the sale can go through
• One common subject clause you might encounter is one in which the buyers make the sale conditional upon their finding the exact amount and type of financing which will enable them to purchase your home.
• Another common clause is one in which the buyers make the purchase conditional upon a satisfactory home inspection.
• Remember that, if you accept an offer which contains a subject clause, you are effectively taking your home off the market for the period in which the buyers are attempting to meet the condition they have set. Therefore, you should ensure that an agreed upon time for the condition to be met is specified in the offer to purchase.
• If one of the conditions contained in a subject clause cannot be met after every reasonable effort has been made to do so, the contract ends and there is no legal obligation to complete the purchase or sale.
• As a seller, you may wish to accept an offer containing a subject clause (e.g. subject to the buyers selling their own home) yet still leave yourself free to consider other offers, just in case the buyers are unable to remove the condition.
• You can do this by having the buyer agree to inserting a time clause in the contract. A time clause will permit you to require the buyer to remove all subject conditions within a short, specified time period if you receive another offer that you would like to accept. If the buyer does not remove the conditions within that time, the conditional contract comes to an end and you are free to accept the second offer.
• When selling a strata property, a common clause you might encounter is one in which the buyer makes the counter-offer conditional upon his or her review and approval of all pertinent strata documentation, such as registered bylaws, current rules, strata meeting minutes, financial statements, strata plan, Form B, engineer’s reports, etc.

• WILL YOU LOSE YOUR DEPOSIT IF YOU DONT REMOVE SUBJECTS?

• CAN I GET AN EXTENSION IF I CAN'T GET ALL MY DOCUMENTS IN ORDER BEFORE THE SUBJECT REMOVAL DATE?