RECO To Shut Down All 17 iPro Brokerage Locations By Tuesday

Conditional Offer

Understand what a conditional offer is in Canadian real estate, how it works, and what it means for buyers and sellers during a property transaction.

Conditional Offer

May 22, 2025


What is a Conditional Offer?

A conditional offer is an agreement to purchase a property that includes one or more conditions that must be met before the sale is finalized.

Why Conditional Offers Matter in Real Estate

Conditional offers are common in Canadian real estate and provide legal protection for both buyers and sellers. For buyers, these conditions create a safety net, allowing them to back out of the deal without penalty if specific requirements—like financing approval or a satisfactory home inspection—are not met.

Typical conditions include financing, home inspection, sale of the buyer’s current home, and review of condominium documents. Each condition includes a deadline by which it must be satisfied or waived. If the conditions are fulfilled, the offer becomes a firm contract; if not, the buyer may choose to walk away.

From the seller’s perspective, accepting a conditional offer may slow the transaction but can still lead to a secure and successful sale. Sellers may prefer firm offers in competitive markets but will often consider conditional ones if other aspects of the offer are favourable.

Understanding conditional offers is vital for structuring offers wisely, protecting against risk, and negotiating favourable terms during a home purchase.

Example of a Conditional Offer in Action

A buyer submits an offer on a home in Calgary for $620,000, conditional on securing mortgage financing and completing a home inspection within 10 days. Both conditions are satisfied, and the sale proceeds to closing.

Key Takeaways

  • Includes buyer-protective clauses that must be met for the sale to proceed.
  • Common conditions include financing and home inspection.
  • Offers flexibility and legal protection during the buying process.
  • Must include timelines for fulfilling or waiving conditions.
  • Becomes a binding contract once conditions are satisfied.

Related Terms

Additional Terms

Recourse Loan

A recourse loan is a type of loan where the lender can pursue the borrower’s personal assets, beyond the collateral, in the event of default.. more

Pari Passu

A pari passu clause is a contractual provision ensuring that multiple creditors share equally in repayment priority from the borrower’s assets.. more

Non-Recourse Loan

A non-recourse loan is a type of loan where the lender’s only remedy in case of default is to seize the collateral property; the borrower is not. more

Net Operating Income

Net operating income (NOI) is the total income generated by a property after operating expenses are deducted but before taxes and financing costs.. more

Mechanic's Lien

A mechanic’s lien is a legal claim by a contractor, subcontractor, or supplier for unpaid work or materials provided for a property.. more

Lis Pendens

Lis pendens is a legal notice filed in the land registry indicating that a property is subject to ongoing litigation that may affect its title.. more

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