Question Box: What is a Subject to Sale Clause?

A Subject to Sale clause or Special Clause Sale is simply when the Buyer puts an Offer in on a property, but the Offer to Purchase has the condition that the Buyer first needs to sell their home.

If the Seller accepts an Offer with that condition, the listing remains active on MLS, and will continue to be marketed by the Listing Agent.  The status does not change to Pending or Conditionally Sold.  However, the remarks field of the listing must note that there is a “Special Clause in effect” or “Subject to Sale Offer”, as well as identifying the length of the notice (i.e. 24, 48, or 72 hours)

If the Seller receives another Offer on their property, the Buyer is notified that they have 24, 48, 72 hours (or whatever time frame was agreed upon in the Contract) to waive their Subject to Sale clause and proceed with the purchase.  If the Buyer does not, or is unable to waive the condition, the Seller can then accept the new Offer after the specified time has elapsed.

No other terms or conditions of the Subject to Sale Clause may be disclosed to any other subsequent potential Buyers making a Purchase Contract.

Sellers need to think about several things before deciding whether to accept an Offer with a Subject to Sale Clause:

  • What is the likelihood of the Buyer’s home selling?  Is it priced properly?   How long has it been listed for?  etc.
  • Some buyers might be turned off by seeing a home with a Conditional Offer on it.  They might not want to compete with another buyer when there are ample properties on the market.
  • In a slow market, it might be good to “lock-in” a potential buyer at today’s market value, and hope that their home sells soon as well.

There are advantages and disadvantages to this type of Conditional Offer that varies dependent on your situation and the current marketplace.

5 responses to “Question Box: What is a Subject to Sale Clause?

  1. hi mike; your readers might be interested in a piece on how to buy a forclosure. Back in the 80’s the courts used to post them in the saturday paper but i believe that practice has changed. I’m seeing a few more on the market and expect to see a lot more.
    tks
    Curt


    Mike says: Thanks for the suggestion, Curt. I will start putting an article together.

  2. I have been looking at a house on MLS that has come on and off the listing over the last few months. What are the reasons it may be off the listings besides being sold or having the listing expire?

  3. Leah, if you email me the MLS number I can pull the history for you.

    Besides being sold or expiring, the listing can also have gone C/S which also removes it from MLS. It could have been Terminated by the Listing Agent or Withdrawn by CREB after an audit if it didn’t conform to some rule.

  4. We are the back up offer on a home. All of our subjects have been removed so the 48 hour clause has gone into effect. The other buyer has sold his hime but the subjects have yet to be removed. Is there any way of us getting this property before the 48 hrs are up or do we just have to wait it out?

  5. Hello Erin, the first buyer has whatever time was specified in the Subject to Sale Clause in order to satisfy their conditions and waive them.

    These are the steps in the “Sale of Buyer’s Home Schedule”


    7. If the Seller signs the Second Contract, then: the Seller will give notice (the Seller’s Notice) to the Buyer; and within __ hours of receiving the Seller’s Notice, the Buyer must give a Buyer’s Notice waiving, as per the Contract, all of the Buyer’s Conditions contained in this Purchase Contract.

    8. If the Buyer gives the Buyer’s Notice properly, according to the Purchase Contract, then this Contract will be enforceable and will be completed according to its terms.

    9. If the Buyer fails to give the Buyer’s Notice properly, then this Contract is ended, the Deposits must be returned to the Buyer as soon as reasonably possible and the Buyer and the Seller will have no further obligations or liabilities under this Contract.

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