What Does Subject Removal Mean in a British Columbia Contract?

After your offer is accepted, the next big step is dealing with the subjects. These are the conditions you must satisfy, such as financing or an inspection, before the deal becomes firm.

Removing them is a serious step. This article explains in plain terms what removal commits you to, how it is generally handled in writing, and what to check first.

This article covers the law of British Columbia.

What subjects are

A subject, also called a condition, is a term that must be met for the contract to go ahead. It protects you while you do your homework. Common examples are arranging a mortgage, getting a home inspection, reviewing the title and, for a strata lot, reviewing the strata documents.

Each subject usually has a deadline. If you are satisfied, you remove it. If you are not, you may be able to ask for changes or end the deal, depending on what the contract says. Read the exact wording of each subject, because it controls your options.

What removing subjects commits you to

What removal commits you to depends on the wording of your contract and the facts. Read each subject carefully before you remove it, and talk with a lawyer first if you have doubts.

A court may relieve against all penalties and forfeitures on terms it thinks fit, and this is the statutory basis on which a buyer can ask a court to relieve against forfeiture of a deposit. That is a remedy you ask a court for after trouble starts, not a safety net to plan around.

If your offer provides for no deposit until after subjects are removed, removal may be the moment the money becomes due. Check the contract so that you are ready to pay.

A buyer usually makes a deposit with the offer or after the offer is accepted, and it is usually held in the licensee's brokerage trust account, with the brokerage holding it as stakeholder. For new developments (presales), developers must hold buyers' deposits in trust under the Real Estate Development Marketing Act.

Doing it in writing

A contract respecting land is generally not enforceable unless there is a signed writing showing the contract was made and giving a reasonable indication of its subject matter. Exactly how a removal, extension or change to subjects should be documented depends on your contract, so it is worth confirming with your realtor or a lawyer.

The law also recognizes two alternatives to a signed writing: acts by the party to be charged indicating a contract was made, and reasonable reliance that would make non-enforcement inequitable. These are not something to count on, so put changes in writing. Ask your realtor or lawyer to explain the document before you sign, and keep a copy once everyone has signed it.

• Do not rely on a phone call, text or verbal promise to change a subject.
• Make sure the removal clearly names which subjects are being removed.
• Confirm the date and time the removal is delivered.
• Keep copies of everything you sign and send.

Check these before you remove subjects

If you are buying a strata lot, the strata corporation must give an Information Certificate within one week of a request by an owner, a purchaser, or a person they authorize. Buyers use it to review the strata's finances and rules. Ask for it early so that you have time to read it before your deadline.

Also confirm your financing in writing from the lender, read the inspection report, and budget for closing costs. Property transfer tax is paid by the buyer and is normally paid through your conveyancer on completion. It is charged at 1% on the portion up to $200,000, 2% on the portion above $200,000 up to $2,000,000, and 3% on the portion above $2,000,000. A further 2% applies to the residential value above $3,000,000, and for mixed-class property only the residential portion is counted.

The tax may be reduced or removed in some cases. For properties registered on or after April 1, 2024, the first-time home buyers' program gives a full exemption if fair market value is $835,000 or less, and a partial exemption if it is above $835,000 and below $860,000, and the lot must be 0.5 hectares (1.24 acres) or smaller. The buyer must be a Canadian citizen or permanent resident, must have lived in BC for at least a year immediately before registration (or filed at least 2 income tax returns as a BC resident in the last 6 taxation years), must never have owned a principal residence anywhere in the world or received a first-time buyers' exemption or refund, and must use the home as their principal residence. If only some co-buyers qualify, only their ownership share is exempt. Whether you qualify depends on your situation, so it is worth confirming with a lawyer before you remove subjects.

What to do next

• List every subject and its deadline.
• Ask for an extension in writing if you need more time, rather than letting a deadline pass.
• Get your lender's approval confirmed before you remove the financing subject.
• Read the inspection report and the strata documents in full.
• Have a lawyer review the contract and the removal if anything is unclear.
• Remove subjects only when you are ready to complete the purchase.

Frequently asked questions