October 29, 2021 | Buying

When you’re buying a home, there’s a lot at stake. For this reason, you may want to reduce the risk associated with your purchase. One of the best ways to do that is by adding home-buying clauses to your offer.

Also known as conditions, real estate clauses make your purchase contingent on specific criteria. If they aren’t met, you can back out of your deal without consequences. It’s a form of protection against worst-case scenarios. By looking at some examples, you can better understand how clauses work—and whether you should consider using them.

Here are five common real estate clauses every home buyer should know…

1) Financing Clause

It’s a scenario that many buyers fear. You obtain pre-approval for a set amount. But not long after you sign your purchase contract, your mortgage falls through.

Fortunately, adding a financing clause to your offer can protect you if this happens. This stipulation states that if you don’t get the mortgage you’re counting on, you can walk away without facing any penalties (such as having to forfeit your deposit or face legal action). It gives you a set period of time (usually a few days to a week) to confirm that you’re able to obtain approval on terms you find satisfactory.

2) Inspection Clause

Are you worried about unwittingly buying a lemon? Homes aren’t always what they appear, and major defects can be hard to spot. The good news is, a professional home inspector will know what to look out for.

That’s where the inspection clause comes in. It states that your purchase will only be finalized if you’re satisfied with the results in an inspector’s report. You’re expected to hire your own expert to carry out this step—and to act reasonably and in good faith. That means you must have the inspection done (instead of simply using the clause as an excuse to get out of the deal) and you have to use a qualified professional.


We know all about purchasing a home in Etobicoke, and we want to share our knowledge with you. To get more general information about the buying process, read some of our latest posts.


3) Status Certificate Review Clause

Are you preparing to buy a condo? If so, you should understand the value of your status certificate. This critical document provides in-depth information about your prospective unit—and its management. To ensure that you know about any red flags prior to your purchase, obtaining a copy and having your lawyer review it is crucial.

Putting a status certificate review clause in your offer gives you the opportunity to make that happen (usually within a period of 2-5 days). If you learn anything you consider to be a dealbreaker, you can get out of the purchase.

Fyi, you can acquire a status certificate from the condo corporation for a $100 fee, which the seller may be willing to pay. The packet you’ll receive will contain everything from the building’s management structure to its finances to any legal issues it faces.

4) Title Clause

A home’s title is a document listing all of its past legal owners. It also contains information on potential issues like outstanding liens (money owed to a creditor) or easements (the right of another to use the property). You should understand these issues and have the opportunity to work through them—or retreat from the deal.

By putting a title clause in your offer, you can protect yourself against challenges to your ability to own your new home free and clear. Your lawyer will try to resolve any title issues that arise, but having that extra due diligence in place will prove helpful if they can’t.


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5) Home Sale Clause

As you can probably guess, a home sale clause makes your purchase contingent on your ability to sell your current property. Using one can take a lot of stress out of the selling process.

Many buyers feel anxious about the possibility of putting a home on the market, only to find that they don’t receive any offers. It may seem like a home sale clause is the solution, but there’s one potential problem with opting for one. Sellers frequently won’t accept them.

A big part of the reason for that is the demand for homeownership. Homes in Etobicoke and the GTA typically sell quickly, and many receive multiple offers. As a result, these clauses aren’t often used anymore.

Should You Use Home-Buying Clauses?

While it’s tempting to add clauses to your purchase offer—and they can be very helpful under the right circumstances—there’s one reason to consider leaving them out. Namely, doing so can give you a competitive advantage in some situations.

The truth is, sellers prefer not to have to deal with real estate clauses. From their perspective, it can mean extra steps and a sale that’s further from being guaranteed. By making a clean offer (one that’s free of clauses), you can make your bid more attractive. In a multiple offer scenario, it can make all the difference.

Of course, it’s important to weigh the pros and cons of waiving your conditions with a local real estate professional. The goal is to reduce risk while making your offer as appealing as possible.

Your agent can help you assess your situation and decide which clauses (if any) to include. If you opt to waive them, they can also assist you in taking steps to make your purchase as low-risk as possible!

Are you ready to buy your ideal home? We’re here to help—simply get in touch to set up a time to talk with us right here!

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