A conditional offer is a real estate offer that contains one or more conditions the buyer must satisfy before the deal becomes firm. Conditions are your legal safety valves — they allow you to exit a purchase and recover your deposit if specific events do not occur. Understanding how conditions work is critical for every Canadian buyer.
The financing condition (sometimes called a "subject to financing" condition) gives you a set number of business days — typically 3 to 7 — to obtain a fully approved mortgage commitment from your lender.
A mortgage pre-approval is not a commitment. It means a lender has reviewed your income and credit and agrees in principle to lend a certain amount — but they have not yet approved the specific property. Lenders review the property through appraisal and condition checks after you have an accepted offer. Issues that can kill final approval include:
To waive the financing condition, you need a written mortgage commitment letter from your lender specifying the loan amount, rate, and terms. Do not waive the financing condition based on verbal assurances from your mortgage broker. Get it in writing.
If your financing falls through, you must provide written notice to the seller that you are not waiving the condition. You must provide this notice before the condition deadline. If you miss the deadline without notice, the condition may be deemed waived even if your financing was not approved — putting you in a very difficult legal situation.
The inspection condition gives you 3 to 5 business days to have the property inspected by a qualified home inspector and decide whether to proceed.
The inspection condition is not automatically a negotiating lever. In most standard Canadian contracts, the condition allows you to proceed or exit — it does not automatically require the seller to fix issues or lower the price. However, if the inspection reveals significant problems, most buyers will approach the seller to negotiate a price reduction or repair credits before waiving.
The seller is under no obligation to negotiate. They can hold firm, and you must decide to waive or exit.
In a hot market, some buyers include an inspection condition but arrange a pre-offer inspection so they already have the information. This allows them to waive the condition on acceptance and still have the protection the inspection provides. This is a smart approach for competitive markets.
When buying a condominium, buyers typically include a condition allowing 3 to 10 days (varies by province) to review the status certificate — a package of documents disclosing the condo corporation's financial health, reserve fund status, pending litigation, and rules. Your lawyer should review this, not just your agent.
If you need to sell your current home to fund the purchase, you can include a condition making the deal contingent on your sale. This is less common in competitive markets, as sellers strongly prefer not to accept it. Some sellers will include an "escape clause" allowing them to continue marketing the property while your condition is pending.
In areas prone to flooding, wildfire, or with knob-and-tube wiring, you may include a condition requiring you to obtain satisfactory home insurance. If you cannot insure the home at a reasonable rate, you can exit the deal.
Every condition must have a specific deadline expressed as a date and time. Business days vs. calendar days matters — check the contract carefully. You must provide written notice of waiver or termination before this deadline. Most standard forms specify when notice must be delivered and to whom.
| Offer Type | Advantage | Risk |
|---|---|---|
| Firm (no conditions) | More competitive; sellers prefer it | No exit if problems found or financing fails |
| Conditional | Protected; can exit with deposit returned | Less competitive; may lose to firm offers |
British Columbia introduced a mandatory 3-business-day rescission period for residential property buyers in 2023. This gives buyers the right to rescind a firm accepted offer within 3 business days of acceptance, with a 0.25% rescission fee payable to the seller. This is not the same as a condition — it is a separate statutory right specific to BC. It does not replace the value of including proper conditions in your offer.
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