Stratas and No-Subject Offers: A High-Risk Combination
Your buyer clients are so eager to see their offer on a property accepted, they’ve asked you to write an offer with no subject clauses before they’ve had an opportunity to perform the normal due diligence.
In a hot market, buyers may be tempted to do ‘whatever it takes‘ to get the property – including submitting a no-subject offer. As a licensee, you have a duty to act in your clients’ best interests – and that means making sure in advance that they understand the risks of no-subject offers.
By not including subject clauses, your clients may not have an opportunity to review strata documents, arrange for an inspection, or confirm financing or insurance approvals. Without this due diligence, your clients may not be able to make an informed decision about their purchase. If they get the information after the offer, your clients may not be able to use it to collapse the deal, should they wish to.
- Advise your clients about the risks. Before submitting an offer, advise your clients that if they make an offer with no subject clauses, without having performed their due diligence, they will be taking many risks. Make sure your clients understand that by moving forward without performing the normal due diligence, they are accepting those risks.
- Document your advice. If your clients insist on going ahead with a no-subject offer, you should promptly follow-up with a written summary of your advice. Keep a copy of that summary in your file.