Subject Removal, also known as the removal or waiver of subjects or conditions, is a key phase of the real estate transaction process. It’s essentially the period during which a buyer has the opportunity to conduct various due diligence tasks and ensure that the property aligns with their expectations before committing to the purchase.
Common subjects that homebuyers include in their offers may involve:
Home Inspection: A thorough inspection of the property to identify any structural, safety, or maintenance issues.
The inspection covers both the interior and exterior of the home, including its structural integrity, plumbing, electrical systems, HVAC (heating, ventilation, and air conditioning) systems, roofing, insulation, and other components.
The purpose of a home inspection is to provide the buyer with detailed information about the property’s condition, allowing them to make an informed decision about whether to proceed with the purchase and negotiate any necessary repairs or adjustments to the sale price.
Financing: Ensuring that the buyer can secure a mortgage on the property under terms satisfactory to them.
Financing is one of the most common subjects which allows the buyer a specified amount of time (typically a few days) to secure a mortgage loan to cover the purchase price of the property.
During the subject removal period, the buyer works with their mortgage broker or lender to finalize the details of their financing, including the interest rate, loan amount, and other terms and conditions. The lender will review the buyer’s financial situation, credit history, and the details of the property to determine if they qualify for the loan.
Reviewing Strata Documents (for condos & townhomes): Assessing strata bylaws, financial statements, and other documentation relevant to the condominium or townhome.
When purchasing a condo or townhome, it’s common for buyers to include a subject clause in their offer regarding the review of strata documents. These documents are provided by the Strata and they contain crucial information about the property and its management. Reviewing strata documents is an essential step in the due diligence process for buyers, as it helps them understand the financial health, rules, regulations, and potential issues associated with the property.
Land Title Search: Verifying the property’s title and legal status.
A Land Title Search involves retrieving official records and documents related to the property’s ownership and legal description. It helps buyers verify ownership, identify any potential issues or risks associated with the property’s title, and make informed decisions about proceeding with the transaction.
Reviewing Property Disclosure Statements: Ensuring all required disclosures from the seller are accurate and complete.
These statements are documents provided by the seller that disclose important information about the property’s condition, repairs and renovations, history, and any known issues or defects. If any concerns or discrepancies arise during the review process, buyers may have the opportunity to negotiate repairs, request additional inspections, or even withdraw from the transaction, depending on the specific terms of the purchase agreement.
Review of Zoning and Bylaws: Confirming that the property’s zoning and local bylaws align with the buyer’s intended use.
By reviewing zoning regulations and bylaws, buyers can ensure that they understand how the property can be used and developed within the legal framework established by local authorities.
How Long Does Subject Removal Last?
The duration of subject removal varies and largely depends on the terms specified in the Contract of Purchase and Sale. Typically, it ranges from 7 to 10 days, but this can be negotiated between the buyer and the seller. The key is to ensure that the agreed-upon time frame provides enough time to complete all necessary due diligence while still satisfying the seller’s requirements.
It’s important to keep in mind that subject removal periods can be a stressful time for both buyers and sellers. Buyers must diligently complete their inspections and research during this time, while sellers await the outcome, which can potentially affect their sale. Effective communication and cooperation between both parties are essential to navigate this phase successfully.
Extensions and Amendments
Sometimes, buyers may find that they need more time for subject removal, or they may identify issues that require further negotiation with the seller. In such cases, it is possible to request an extension or amendments to the contract to accommodate the necessary adjustments. This process should be managed carefully to prevent any potential misunderstandings or complications.
If you’re considering buying or selling a property, it’s highly recommended to work with a knowledgeable real estate agent who can guide you through the process and help you navigate subject removal effectively. Understanding the ins and outs of subject removal is crucial to make informed decisions and protect your interests in the dynamic real estate market.
