Can You Be Sued for Walking Away From a Subject-Free Offer in BC?

Can you be sued for walking away from a subject-free offer in BC?

Yes. If a buyer in British Columbia waives every condition and then fails to complete, the seller is entitled to keep the deposit. On top of that, the seller can pursue damages, which usually means the gap between the agreed price and the eventual resale price, plus the cost of carrying the home in the meantime. Losing the deposit is the floor, not the ceiling.

On paper, a clean offer is the cleanest thing that can cross a kitchen table. Most people only talk about the risk to the buyer, since the buyer is the one who gave up all the protection. But in the deals I have seen collapse, the buyer walked away and the seller was left holding the mess. Months gone. A home back on the market with a story attached to it. That is why I think of a subject-free offer as a bet, not a strong offer. And the person holding the risk often does not know they are holding it.

I walk through all of this in the video above, including the BC court case, which you can watch at 7:15. Here is the written version, with a few extra details.

What is a subject-free offer, and why do buyers write them?

If you have never bought in British Columbia, the word “subjects” may mean nothing to you. When you write an offer here, you normally attach conditions to it. Subject to financing. Subject to a home inspection. Subject to reviewing the strata documents if it is a condo or townhome. Subject to getting insurance. Each one is a door you leave open for yourself. You get a set number of days to walk through those doors and decide if you still want the home at that price.

If something turns up, like financing that falls through or an inspector who finds rot behind the siding, you collapse the deal, your deposit comes back, and everybody moves on.

A subject-free offer welds every one of those doors shut before you step inside. It is not a special kind of contract. It is a normal contract with your buyer protections stripped out. If you want the basics, I wrote about what a subject-free offer is and whether to accept one in White Rock.

To be fair, a subject-free offer wins, and it ends the two-week limbo sellers hate. For a buyer with real cash, reviewed strata documents, and an inspection done before writing, it can be a calculated move. Those buyers exist, and I have represented them.

Reality Check: A subject-free offer does not remove risk. It moves the risk to whoever is least able to see it.

Where do subject-free offers fall apart, and what happens when they do?

There are three weak spots, and the first one catches almost everyone.

Financing. The language around financing is misleading. You go to your bank and get a pre-approval, and you feel like you are holding a cheque. You are not. A pre-approval is the lender’s opinion of you: your income, your credit, and your down payment. It does not include the home, because the home did not exist yet when you got it.

Think of it like being approved for a car loan before you pick the car. The bank likes you. That does not mean they will finance the 1987 hatchback you fell in love with. Lenders say no to properties all the time. An unpermitted suite, a strata with a lawsuit running, or an oil tank buried in the yard can all do it. That can kill the file after the lender already said yes to you. If you want to understand the lender side better, read my post on mortgage pre-approval in White Rock and South Surrey.

The appraisal. Your lender does not lend on what you paid. They lend on what their appraiser says the home is worth. If you write $2 million on a home and the appraisal lands at $1.8 million, the bank funds $1.8 million. The $200,000 difference is yours to bring in cash before completion. In a rising market, that gap tends to close on its own. When values are drifting down, appraisals come in soft more often, and with no condition in your contract, nothing protects you. I explain what to do about a low appraisal in a separate post, but without an appraisal condition your options get thin fast.

Everything you did not look at. Maybe it is the strata documents you skipped that contain a special levy the owners voted in last November. Maybe it is the inspection you skipped on a home where the roof has four years left. None of that gets less true because you waived the right to check. I covered that in more detail when I asked whether you can waive your home inspection.

Most people assume the worst case is losing the deposit. It is not. When a buyer does not complete, the seller is entitled to keep the deposit, and that is well settled in British Columbia. Then the seller can go after damages. Damages are usually the difference between what you agreed to pay and what the home resells for, plus the carrying costs: mortgage interest, property taxes, insurance, strata fees, and the cost of putting the home back on the market. In a falling market, your exposure grows while you stand still.

Here is the case I mention in the video. A buyer in British Columbia waived their due diligence and then did not complete. They forfeited a $500,000 deposit. The property was later resold for less than the original deal, and the court held the buyer liable for the difference. That was an investment purchase, so the numbers are big, but the principle is the same at any price. If you want a related example from the new-home side, read about walking away from a presale.

Now the one I saw up close, which you can also watch at 7:45. In February 2022, a buyer wrote a condition-free offer on a home I had listed. It was a clean offer, and three other offers that day were also condition-free. What nobody on our side knew was that the buyer needed to sell their own home to fund the purchase. That was never disclosed. It was not a condition, because there were no conditions in the contract.

Later that spring, mortgage rates spiked, and a long tail of deals across the region did not complete. The chain this buyer was standing on came apart somewhere behind them, and they could not perform. The deal collapsed and eventually went to court. Over $100,000 in legal costs later, the parties settled, and the sellers recovered most of their losses. The home went back on the market and sold for well over $300,000 less than the original contract price.

Quick Stat: In that 2022 case, legal costs passed $100,000 and the home eventually sold for well over $300,000 less than the contract price.

I know what some of you are typing. “There is a cooling-off period in BC now, so this does not matter.” The homebuyer rescission period gives you three business days to back out of most residential purchases, and it costs a quarter of 1% of the price you agreed to. A buyer who wants a home badly in a competitive spot is unlikely to use it. And if you know a bank that will give an unconditional loan on a home you met three business days ago, appraisal included, please introduce me.

“But I am paying cash.” Cash closes one door. It does not tell you the strata has a $9,000 levy coming, or that the perimeter drains are original to the house.

“But it is a buyer’s market.” In the video I mention over 10,000 active listings across the Fraser Valley in July, with roughly 11% of them selling that month. You can check current numbers in the Fraser Valley Real Estate Board monthly report. The point is that buyers have the upper hand right now. Nobody is forcing you to strip your offer bare, and if it goes sideways, the damages math in a soft market is worse, not better. Some well-priced homes still draw condition-free offers, but I would call this a poor moment to volunteer for it.

How can you compete without writing a naked offer?

You do not have to choose between a naked offer and losing every home you like. Here are four moves that help:

• Get your financing underwritten on the actual property before you write. Send the listing to your broker, hand over the strata documents, and take it to your lender in advance. It is the difference between the bank approving you and the bank approving the car in the driveway. Almost nobody does this, and it is the highest-impact move you have.
• Shorten the window instead of removing it. Two business days of subjects reads almost as strong as none, and it keeps a door open just a crack.
• Do your looking before you write. Book the inspection ahead of the offer where the seller allows it, and order the strata documents early.
• Make the offer easy to say yes to. A larger deposit and a completion date built around what the seller actually wants can cost you nothing. Sometimes the right date is worth more to a seller than an extra $10,000.

I also wrote a guide on winning in multiple offers without overpaying that goes deeper on these ideas, and if you are still early in the process, my page on buying a home is a good place to start.

If you are the seller, look past the front page of the offer. I get it, a subject-free offer is exciting because it feels like everything is done. But a subject-free offer with no lender confirmation behind it is a promise from someone you have never met. Ask your agent to find out what is actually underneath it. And if you want to plan for the worst case, read about what happens if your buyer can’t close.

The short version is this. Subject-free offers are not as strong as people think, and they can be genuinely risky. A lot of people write them because they feel they have to, not because anyone walked them through what they were giving up. If you want the full story, including the court case and the 2022 collapse, watch the video at the top of this page. I am a REALTOR®, not a lawyer, so check your own situation with your lawyer, lender, and REALTOR® before you write.