Making an Offer in Canada: Purchase Agreements, Subject Clauses, and Multiple Offers
💡 Quick Answer / Concise Verdict
Making an offer on a home in Canada involves submitting a legally binding contract known as an Agreement of Purchase and Sale. A strong offer contains five core elements: purchase price, deposit amount, fixtures/chattels inclusion, closing/possession dates, and protective subject conditions (such as financing, home inspection, and condo status certificate review). Navigating multiple-offer bidding wars requires balancing competitive pricing with solid contract protections.
Who is this for?
Canadian home buyers ready to submit an offer on a home who want to understand the legal mechanics, protective clauses, and bidding strategies.
When does this apply?
This advice applies when drafting a formal purchase offer with your real estate agent to present to a seller.
📋 Key Takeaways
- An offer is a legally binding contract once signed by both the buyer and seller.
- Always include subject conditions (financing, inspection) unless you are fully prepared for the risks.
- A typical deposit is 5% of the purchase price, paid within 24 hours of offer acceptance.
- Work with an independent real estate lawyer to review the contract details before removing subjects.
⚙️ Step-by-Step Decision Framework
Draft the Purchase Agreement
Work with your realtor to specify the price, deposit, inclusions, possession timeline, and conditions.
Submit and Await Response
Present the offer with a strict irrevocable timeline; the seller can accept, reject, or counter your offer.
Execute Subject Due Diligence
Upon conditional acceptance, immediately secure your lender's appraisal, hire an inspector, and review condo documents.
Sign the Waiver of Conditions
Once satisfied, sign the waiver to make the contract fully unconditional and legally binding.
| Contract Element | Typical Value / Term | Legal Significance | Strategic Action |
|---|---|---|---|
| Purchase Price | Based on recent local comps | The final total sum paid to the seller for the property title | Offer a fair market price based on hard sold comps, not listing price |
| Earnest Money Deposit | Typically 3% to 5% of purchase price | Shows "good faith" and is held in the seller's brokerage trust account | Ensure funds are liquid and ready for bank draft within 24 hours of acceptance |
| Financing Condition | Typically 5 to 7 business days | Protects your deposit if the bank refuses to fund the mortgage or fails the appraisal | Never waive this unless you have alternative guaranteed funding or cash reserves |
| Home Inspection Condition | Typically 3 to 5 business days | Allows a certified inspector to examine structural, electrical, and plumbing systems | Use results to negotiate repair credits or price reductions on the purchase |
Submitting an offer on a home is a major step that transitions your search from shopping to a binding legal commitment. In Canada, the offer is presented using a standard legal document called the **Agreement of Purchase and Sale** (or similar regional variants like the Contract of Purchase and Sale).
Because this is a powerful, legally enforceable contract once signed by both parties, you must understand every line and ensure your financial and legal interests are fully protected before your signature is submitted. Let’s look at how the offer process works.
Five key elements of a Canadian Purchase Agreement
Every valid purchase agreement is built on five core pillars:
- Purchase Price: The exact amount you are offering to pay for the property. This should be based on real market sales, not the seller\'s listing price.
- Earnest Money Deposit: A show of good faith (typically 5% of the purchase price) paid within 24 hours of acceptance. This is held in trust and applied toward your down payment on closing day.
- Fixtures and Chattels: A written list of what is included. Fixtures (permanently attached items like chandeliers) are assumed included; chattels (unattached items like appliances) must be explicitly listed.
- Closing and Possession Dates: The closing date is when funds transfer and title is registered. The possession date (often the same day or the day after) is when you get the physical keys.
- Irrevocable Time: A strict deadline (usually 24 to 48 hours) by which the seller must accept, reject, or counter your offer before it automatically expires.
The protective power of Subject Conditions
A "conditional offer" contains protective clauses (known as "subjects" or "conditions") that give you a set period (usually 5 to 7 business days) to perform due diligence. The two most common and important conditions are:
- Subject to Financing: Gives your lender time to review the purchase contract, pull your credit, and order a property appraisal. If the bank refuses to fund the mortgage or values the home below the purchase price, you can cancel the contract and retrieve your deposit.
- Subject to Home Inspection: Allows you to hire a certified home inspector to inspect the structure and mechanical systems. If they discover expensive defects, you can walk away or negotiate a price reduction.
Navigating intense multiple-offer bidding wars
In hot Canadian markets, sellers often intentionally price homes below market value and set a specific "offer presentation date" to spark a bidding war.
To win without putting yourself in financial danger, always establish your "walk-away price" in advance based on comparable sales, and ensure your lender is aware of the property details. If you choose to submit an unconditional offer to stand out, make sure you have substantial extra cash reserves to cover any potential bank appraisal shortfalls.
⚠️ Common Mistakes to Avoid
- •Submitting a "clean offer" (no conditions) without having a fully committed, property-specific mortgage underwriting approval.
- •Confusing the deposit (held in trust upon offer acceptance) with the down payment (paid on closing day).
- •Failing to specify which appliances, fixtures, or furniture are included in the purchase price inside the contract text.
📌 Critical Reminders
- ✓Subject clauses give the buyer a set period (typically 5 to 7 business days) to conduct due diligence; if a condition is not met, the buyer can walk away with their deposit intact.
- ✓A "bully offer" (pre-emptive offer) is submitted before the seller’s scheduled offer presentation date to bypass multiple-offer competition.
- ✓Your real estate lawyer is your ultimate legal shield; have them review the title search and draft contract before making the offer unconditional.
Hausee Editorial Team
The Hausee Editorial Team is dedicated to creating transparent, objective, and meticulously researched educational guides to help Canadian home buyers navigate the real estate market. Our resources are researched using primary government and regulatory sources and updated systematically to ensure factual accuracy.
Disclaimer: Hausee's Learning Playbook and associated calculators are provided strictly for educational and informational purposes. While we work diligently to verify all statistics, rates, and provincial policies, this content does not constitute formal legal, tax, financial, or mortgage brokerage advice. Real estate transactions carry significant financial risk. We strongly recommend consulting with licensed professionals, such as real estate lawyers, certified mortgage brokers, or Chartered Professional Accountants (CPAs), before concluding any legal agreements or home purchases.
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