Conditional Offer

A conditional offer is an offer to buy a property that becomes binding only when one or more stated conditions are satisfied — most commonly confirming mortgage financing, a satisfactory home inspection, or review of a condominium's status certificate. The conditions are written into the Agreement of Purchase and Sale, each with its own deadline.

How conditions fit into a Canadian purchase

In Canada, a buyer typically submits an offer through a real estate agent or lawyer, and the seller accepts it subject to conditions. During the conditional period the property is effectively held off the market, although the seller may still entertain backup offers. The buyer uses that window to finalize a mortgage commitment, arrange property insurance, and complete inspections. If a condition is not met by its deadline, the buyer can generally decline to waive it and the deal ends, with the deposit returned as set out in the contract.

Common conditions

Financing — the buyer must obtain a lender's approval on acceptable terms. A pre-approval helps, but it is not a guarantee of final approval.
Inspection — a qualified inspector examines the home for defects; the buyer may negotiate repairs or a price reduction.
Status certificate — for condominiums, the buyer reviews the corporation's finances, rules, and reserve fund.
Sale of the buyer's home — the purchase depends on the buyer first selling an existing property.

Why it matters

Conditions protect a buyer from being legally bound to a purchase they cannot finance or that hides major problems. The trade-off is time and competition: in a fast market, sellers may prefer a firm offer with no conditions, and a conditional buyer can lose the property to a competing bid. Removing conditions, often called waiving them, shifts the risk to the buyer — if financing later falls through, the deposit can be at stake.

Lenders assess the deal under the federal mortgage stress test and GDS/TDS ratios, so a conditional offer should reflect a price the buyer can realistically qualify for. Confirming the current rules with a lender, broker, or real estate lawyer before waiving anything is standard practice.

Frequently asked questions

Is a conditional offer legally binding in Canada?

It is a binding contract, but it is conditional. The seller cannot simply sell to someone else while the conditions remain open, and the buyer is not obligated to complete until the conditions are satisfied or waived. If a condition fails by its deadline, the agreement typically collapses and the deposit is returned as the contract specifies.

How long does a conditional offer last?

The length is negotiable and written into the offer. Financing and inspection conditions commonly run from a few business days to a couple of weeks, depending on the property type and lender timelines. The seller usually prefers a shorter period, while the buyer wants enough time to obtain a mortgage commitment and complete inspections.

Can a seller accept another offer while mine is conditional?

In many cases the seller may accept a backup offer that takes effect only if the first conditional deal fails. Some sellers instead include a clause requiring the buyer to waive conditions within a set time. The exact rules depend on the wording of the contract and the province, so review the agreement carefully.