Protect Yourself With Subject Clauses

Think of a subject in an offer as insurance.

Once you find a Kamloops home and make an offer, you hope everything will go smoothly; but in case it doesn’t, you have an opportunity to add subject clauses that allows you to back out of the contract without losing money if something untoward happens.

Most agreements already have a few key subject clauses in place to protect against the bigger things—such as a lower-than-anticipated home appraisal—but there are subjects that go beyond the norm. If you’re about to make an offer, consider all of your options.

Standard subjects

Some subject clauses are commonly used when making an offer. Some examples:

• Home inspection: This gives the buyer the right to order a professional home inspection and back out of the sale if major unreported damage is found.
• Appraisal: The buyer won’t be obligated to buy the home if the appraisal value is lower than the asking price.
• Mortgage availability (Finance): This gives the buyer time to find financing for the home. If the buyer can’t find financing, either party can cancel the deal.
• Title: Making sure that the title is correctly assigned to the owners and there are no unusual items on the title that would effect your purchase
• Property Disclosure Statement (PDS): This is the sellers declaration of known issues with the home. Very important to discover if there are problems with the property.

Atypical subjects

A basic offer won’t automatically contain any subject clauses. While many Realtors® include some standard clauses in every offer, you should work with your agent to make sure you’re including subjects for everything you can anticipate before you submit your offer.You don’t have to stick with the standard subject clauses. Depending on your situation, it may make sense to add additional clauses to the agreement. Some examples:

• Strata rules: If you’re considering an area with a homeowners association or one that's part of a strata, it may be prudent to require a copy of the strata rules, budget notes and meeting minutes before you buy. Strata fees vary and if the dues are high, your annual home ownership costs will go up. Many strata properties also have rules on parking, landscaping, paint colors, renters and even holiday decorations. If you aren’t happy with what you find, you’ll want the option to back out of the deal.
• Selling your current home: If you’re trying to sell your home before you buy another one, you may want to put a selling subject in place. If you’re unable to sell your current home within a certain time frame, this subject allows you to cancel your offer.
• Viewing a home: So the market is hot, homes are selling quickly and if your not able to see the house immediately this can cause issues. If the home looks like it is just what you wanted you may want to write and offer and make one of the subjects conditional on you viewing the house. This may not give a seller confidence and you may have to make an offer close to the asking price.
• Neighbourhood rules: Many new developments have rules governing the area's in the neighbourhoods, check with your Realtor for clarity on these.
• Water and Septic: Acreages in Kamloops are abundant and highly sought after. These properties have their own set of unique factors that need to be addressed in an offer. Does the water come from a well? How much water is produced and what is the quality of the water. If the property has a septic system, has it been checked, is it sufficient size for the home (how many people live in the house). Make sure that you use an experienced Realtor with lots of acreage experience when you look at rural properties. Call Danielle today (250)-319-5896
• Moving furniture early: With this contingency, you and the seller agree to allow you to move personal property in (or move in entirely) earlier than the seller anticipated. You may have to agree to pay the seller rent if you move in before closing, but it will spare you from putting your belongings in storage and finding temporary lodging.

Once you’ve submitted the offer, keep in mind that the seller may submit a counteroffer with his or her own subject clauses as well.