Key Subjects in a Real Estate Purchase Contract

When purchasing a home in Greater Vancouver, understanding the subject clauses (also known as conditions) in your purchase contract is crucial for protecting yourself.

Subject clauses give you the ability to confirm key details, check for defects, and ensure the property meets your needs before you're fully committed. These conditions act as safety nets, covering important aspects such as financing, inspections, title searches, and strata reviews. By making your offer conditional, you can gain the assurance that all necessary factors align with your expectations before the sale goes through.

Below is a break down of the most common subject clauses used in real estate contracts across British Columbia. Whether you are a first-time buyer or experienced in the market, having a deeper understanding of these conditions will empower you to make informed decisions and negotiate confidently. 

Ill start with the 5 most common, Subjects (conditions) in a contract of purchase and sale when buying a property in Metro Vancouver

Financing:

This subject allows the buyer to ensure they can obtain the necessary mortgage or loan to complete the purchase. It provides a safeguard in case the buyer’s financing falls through, making the contract conditional on securing an appropriate loan. It also sets a timeline for when the financing approval needs to be finalized. If the buyer cannot secure financing by the specified date, they may be able to withdraw from the contract without penalty. This is crucial in protecting the buyer from being financially obligated to purchase a property they cannot afford.

Title Search:

A title search is a detailed review of the property's legal ownership and any claims or encumbrances on it. This process ensures the seller has the legal right to sell the property and that there are no liens, easements, or other legal issues (such as unpaid taxes, lawsuit) that could affect the buyer’s future ownership. The search is conducted through the Land Title and Survey Authority of British Columbia and typically reveals any registered rights, restrictions, or charges (such as covenants or rights of way) that could impact the buyer’s use of the property. Ensuring a "clear title" is essential before closing a real estate transaction. 

Strata Document Review:

For strata properties, such as condos or townhomes, reviewing the strata documents is an extremely critical step in the home buying process. This includes reviewing bylaws, financial statements, meeting minutes, and the strata’s contingency fund (think of this as the savings account) to assess the building’s management, financial health, and any upcoming special assessments. The review also reveals whether there are restrictions on things like age, rentals or pets, which could impact the buyer’s plans. It gives the buyer a comprehensive view of the property’s shared responsibilities and helps them understand if the strata is well-run and whether there are any potential risks, like significant upcoming maintenance costs or legal disputes. This may seem overwhelming but as your trusted realtor, I read these documents (as well as you) and provide input. 

Home Inspection:

A home inspection is an in-depth assessment of the physical condition of the property by a licensed inspector. The inspector checks key components of the home, including the foundation, roof, plumbing, electrical systems, and overall structural integrity. This process helps identify any defects or necessary repairs that may not be visible to the untrained eye. A thorough home inspection ensures the buyer knows the true condition of the home and can renegotiate or request repairs before finalizing the purchase. If major issues are discovered, the buyer may also have the option to withdraw from the purchase or adjust the offer. 

Property Disclosure Statement (PDS):

The Property Disclosure Statement (PDS) is a legally binding document where the seller discloses any known defects or issues with the property. This can include problems such as past water damage (repaired or not), structural issues, un-permitted renovations or repairs, and any non-compliance with building codes. The PDS provides transparency to the buyer, ensuring they are aware of any concerns before proceeding with the transaction. However, it’s important to note that sellers are only required to disclose what they are aware of. A thorough review of the PDS, combined with a home inspection, helps protect the buyer from unpleasant surprises after the purchase.

These subjects play critical roles in ensuring a secure and informed real estate transaction for both buyers and sellers.
Key subject clauses for real estate contracts in Greater Vancouver - financing, title search, inspections, and more for informed buying decisions

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Depending on where you live, or what style of home you are purchasing, Other Clauses and Conditions You Might Want to Include:


Sale of Buyer’s Property: Do you need to sell your home before buying the next?  This clause ensures that the buyer can complete the purchase of the new property only if they successfully sell their current home. It protects the buyer from being financially overextended by making the sale conditional upon freeing up equity from their existing property. This is especially helpful in a balanced or buyer's market where homes may take longer to sell.

Development Potential: Do you want to knock down and rebuild the home? or one of those fancy new multiplex? This clause allows the buyer time to investigate the property’s development or redevelopment opportunities. It involves confirming that the property zoning and local government regulations support the buyer’s intended use or modifications, such as adding an extension, subdividing, or building additional structures. It is crucial for buyers planning significant renovations or new construction.

Woodstove Inspection: Did you purchase a sweet bungalow up Indian river? A specific inspection to confirm that any woodstove or wood-burning appliance is safe, functional, and compliant with current safety standards. This is especially important for properties in rural areas where woodstoves are commonly used for heating. Ensuring it is up to code can also impact insurance coverage.

Heritage Conservation Act: We all love a good character home, from their TV show like living rooms, to the best front porches, Heritages can be a tough to navigate, This condition ensures compliance with heritage preservation regulations that may affect the property, especially if it is a designated heritage building. This clause allows the buyer to investigate restrictions that may limit their ability to renovate or alter the property, which is essential for older homes with historical significance.

Insurability: Is there a stream nearby? or a fire? This clause ensures that the buyer can obtain adequate property insurance at a reasonable rate. Certain properties may have unique risks—such as past claims, flood risk, or structural issues—that make them difficult or expensive to insure. Confirming insurability protects the buyer from discovering these challenges after the purchase has completed.

Zoning Confirmation: If you are looking to redevelop the property, this condition provides time for the buyer to confirm that the property is zoned appropriately for their intended use. It’s especially important if the buyer has specific plans for the property, such as running a home-based business, building additional structures, or ensuring the zoning allows for desired uses like multi-family occupancy or short-term rentals.

Septic Inspection: If the property is not connected to municipal sewer, a septic inspection clause allows the buyer to confirm that the septic system is in good working order. A faulty septic system can lead to significant health risks and costly repairs. This clause ensures the buyer is fully informed about the state of the system before proceeding.

Unauthorized Suite: This clause allows the buyer to investigate whether any secondary suites or rental units on the property are legal and meet local bylaws. Unauthorized or illegal suites may pose significant financial risks, including fines or the need for expensive renovations to bring them into compliance.

Accountant’s Advice: Ensures that the buyer has received professional financial advice regarding the purchase. This is particularly helpful for investors or buyers with complex financial situations, as an accountant can help assess tax implications, potential deductions, and the overall financial viability of the transaction.

Title Notations: This clause provides time for reviewing any notations or encumbrances on the property’s title that could affect ownership rights or intended use. Examples include easements, restrictive covenants, or rights-of-way. Understanding these notations can prevent unexpected limitations on property usage after the purchase.

Legal Advice: This condition gives the buyer an opportunity to consult with a lawyer to review the contract and any potential legal implications. A lawyer’s review helps ensure that the buyer fully understands the terms and conditions, protecting their interests and identifying any legal issues before committing to the purchase.

Mould Inspection: A clause that allows the buyer to conduct an inspection for mould, which can be a serious health hazard. If mould is found, the buyer can either request remediation, negotiate a reduction in price, or decide not to proceed with the purchase. This is particularly important in areas with high humidity or if there is a history of water damage.

GST: This clause ensures that the buyer is aware of whether the property sale is subject to Goods and Services Tax (GST). It typically applies to new construction or substantially renovated properties. Knowing whether GST is applicable helps the buyer calculate the total cost of the purchase accurately.

Site Survey: This condition allows the buyer to verify the property boundaries and ensure that no encroachments exist. A site survey is crucial to prevent future disputes with neighbors regarding property lines, structures, or usage rights. It also confirms that any buildings or fences are correctly positioned within the property limits.

Owner/Builder Declaration: If the property was built by the owner, this clause confirms compliance with building regulations and outlines any warranties or liabilities. Owner-built homes may have different warranty coverage compared to homes constructed by a licensed builder, making this declaration essential to understand the protections available.

City/Municipality File Review: This condition allows the buyer to review municipal records related to the property, including building permits, zoning information, and any outstanding issues. Reviewing these files can reveal whether previous work was properly permitted and identify any ongoing bylaw infractions or compliance issues that could impact future plans.

Septic Filing (Vacant Land): For vacant land purchases, this clause ensures that there is proper approval for installing a septic system. It provides assurance that the land is suitable for such a system, which is a critical requirement if the property will not have access to municipal sewer services.

Oil Tank Inspection: An oil tank inspection clause is used to determine whether there are any underground or above-ground oil tanks on the property. Old or leaking oil tanks can pose significant environmental hazards and financial liabilities, including costly cleanup efforts. This clause ensures any potential risks are addressed before finalizing the sale.

Builder’s Lien Holdback: This condition protects the buyer from future claims by contractors or subcontractors who may not have been paid for work done on the property. By holding back a portion of the purchase funds, this clause ensures that there are no outstanding liens that could impact the property after the sale completes.

Water Quality and Supply: This clause ensures that the water supply for the property is safe and reliable. It is particularly important for rural properties that rely on wells or other private water sources. Testing for potability and ensuring an adequate supply are crucial for the buyer's health and safety.

Asbestos Inspection: An asbestos inspection clause allows the buyer to determine whether the property contains asbestos, a hazardous material commonly used in older homes. If asbestos is found, the buyer can either negotiate for its safe removal or decide not to proceed with the purchase, depending on the extent and associated risks.

Geotechnical Survey: This condition allows for an assessment of the soil and land stability, particularly important for properties located on slopes or near bodies of water. The survey helps determine whether the land is suitable for building or if there are any risks of erosion, shifting, or other geological issues that could affect safety and future development.

New Home Warranty: This clause ensures that if the property is newly built, it comes with a new home warranty to cover potential construction defects. In British Columbia, new homes are typically covered by a warranty program that protects against structural and other defects for specific periods.

Water Potability Test: This clause is essential for properties with private water systems, such as wells. It verifies that the water is safe to drink and free from contaminants, protecting the health of the property's occupants.

Silver Label CSA/Electrical Inspection: Ensures that all electrical systems are safe and up to code, especially in mobile or manufactured homes. The Silver Label is issued by the Canadian Standards Association (CSA) once the electrical systems pass inspection, confirming that the property meets safety standards.

Riparian Area: This condition allows the buyer to determine whether the property falls within a riparian area, which is subject to strict environmental regulations to protect water quality and aquatic habitat. Understanding these restrictions is important for any future development or landscaping plans near water bodies.

Water Licence/Lease Transfer: Ensures that any water rights, licenses, or leases associated with the property are properly transferred to the buyer. This is particularly relevant for properties that rely on water for agricultural or other significant uses.

Mobile Home Registry and Transfer: This clause ensures proper registration and transfer of ownership for mobile homes. It confirms that all relevant documents are in order, avoiding potential complications in ownership and ensuring compliance with local regulations.

Notice to Tenants on Behalf of Buyer: When purchasing a tenanted property, this clause ensures that tenants are properly notified about the sale and understand their rights during the transition. It helps establish a clear line of communication between the new owner and existing tenants.
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