Every time I think, “That’s it, I’ve run out of things to write about on TRB,” a reader comes to my rescue!

This entered my mailbox last week:

Hi David,

I was hoping you could dedicate a future blog post to so called “escape clauses” in real estate agreements. Namely, if you’ve seen the practice increase in the current market, would you recommend same to your seller clients and if you think this practice is only being tolerated given the current market conditions.

There was a recent article in the Toronto Star about so called escape clauses but The Star’s lackluster reporting on this one leaves me wanting a more in depth view. Thank you again  for your time and for all you do!! Have a great day!

I explained to my reader that I actually had written about escape clauses on TRB before.

Here are two such articles from the TRB archives:

2017: What The Heck Is An Escape Clause?

2023: Sold Conditional On The Sale Of Buyers’ Property

I suppose I’ve written a blog on just about every real estate topic out there, at one time or another.  And in many cases, I’ve covered it twice.

I read the Toronto Star article that my reader mentioned.

Here it is for your reference:

“Why ‘Escape Clauses’ Are Popping Up In Toronto Area Real Estate Deals”
The Toronto Star
July 3rd, 2025

It’s a little bit fluffy and veers off into discussions about multiple offer scenarios in 2022, how prices in the Durham region have come down, and a host of other things that have nothing to do with escape clauses in today’s market.

So with that in mind, let me tell you a story about a recent sale we had on our team that included an escape clause.

Call this one, “How To Beat Out Another Buyer When They’ve Already Bought The Damn House!”

Or something like that, since that’s exactly what happened.

I’ve written about Matthew, Tara, and Chris on TRB before, with each of them experiencing situations that simply must be told!

Today’s story involves Tara, as she was helping a young couple to purchase their first home in Hamilton.

We’ll call this young couple “Trudy” and “Kyle,” and detail that they were each living alone, single, and owned their own properties before they met.

But along comes love, and voila!

Time to buy a house!

One of the hidden gems of this particular story is that the house, which will be the subject of discussion today, was first listed for sale last November!  In fact, Trudy and Kyle saw the house in person in December, before putting their search on hold as they realized that they should probably sell one or both of their properties first.

There’s a novel idea.  And there’s a future blog topic, but I digress.

Kyle put his Burlington condo on the market in January and had it sold firm by April.

Trudy held her condo for the time being, but selling one of the properties would give Trudy and Kyle tremendous flexibility as they began their housing search again.

Tara began to show Trudy and Kyle houses again in May, and they visited about six or eight houses before they circled back to that first house that they had previously seen in December.

Yes, it was still on the market.

Whether the house was overpriced, whether the market was slow, or whether it was a combination of factors remains to be seen, but by the time they circled back to this house, which we’ll call “McMaster Avenue,” they were missing one small yet crucial piece of information.

The property was sold conditionally.

When you’re browsing on Realtor.ca, House Sigma, and the like, you often don’t notice that “SC” designation on the listing that specifies the property is conditionally sold.

Trudy and Kyle had been out for viewings twice with Tara before asking about McMaster Avenue, and suggesting that a return trip to the property was in order, but when Tara looked up the listing on MLS, she had to be the bearer of bad news.

“Guys, this property is sold conditionally,” she told them, except this particular condition wasn’t like most others.

Let’s take a step back for a moment and consider which are the most common conditions that we see in offers.

For condominiums, we usually see a condition on “review of the status certificate.”  In red-hot markets, buyers will review the status in advance of making an offer so they can submit an unconditional offer.  In today’s condo market, almost every offer is conditional on a review of the status certificate.

For houses, the corresponding condition would be “satisfactory home inspection,” and as noted above, we usually see unconditional offers in busy markets whereby the buyer will rely on a home inspection provided by the listing agent.  In slower markets, or anywhere outside the 416, most offers are conditional on home inspection since it’s rare to see a seller-provided pre-inspection like we see here in Toronto.

A condition on “satisfactory financing” is also a common one, depending on the market.

Beyond those three, every other condition out there is far less common.

McMaster Avenue wasn’t sold conditionally on financing or inspection, however, but rather it was sold conditionally on the sale of the buyer’s property.

We call this “SOP” in real estate circles for “sale of property.”  It’s very rare in the 416 and never-heard-of during hot markets, but it’s not uncommon in the 905, especially when the market is cool.

In the case of McMaster Avenue, the property had been listed for sale for seven months, so when the sellers of the home received an offer that was conditional on the buyer selling their own home, it seems that the sellers decided, “What have we got to lose?”

But what do the sellers have to lose?

I mean, what if somebody else is interested in the house while the property is tied up conditionally?

Here’s how the “conditional on sale of property” condition would read:

This Offer is conditional upon the sale of the Buyer’s property known as 123 Fake Street, Niagara Falls, Ontario, L2E0A2.  Unless the Buyer gives notice in writing delivered to the Seller personally or in accordance with any other provisions for the delivery of notice in this Agreement of Purchase and Sale or any Schedule thereto not later than August 30th, 2025 at 6:00pm, that this condition is fulfilled, this Offer shall be null and void and the deposit shall be returned to the Buyer in full without deduction.  This condition is included for the benefit of the Buyer and may be waived at the Buyer’s sole option by notice in writing to the Seller as aforesaid within the time period stated herein.

So the seller does have something to lose, right?

By signing an offer with this condition, the seller has tied his or her property up until August 30th.  That’s a long time!

The key here, however, is that most properties sold conditionally on the subsequent sale of the buyer’s property will contain an escape clause.

Here’s how that escape clause would look:

Provided further that the Seller may continue to offer the property for sale and, in the event the Seller receives another Offer satisfactory to the Seller, the Seller may so notify the Buyer in writing by delivery to the Buyer personally or in accordance with any other provisions for the delivery of notice in this Agreement of Purchase and Sale or any Schedule thereto. The Buyer shall have 48 hours from the giving of such notice to waive this condition by notice in writing delivered to the Seller personally or in accordance with any other provisions for the delivery of notice in this Agreement of Purchase and Sale or any Schedule thereto, failing which this Offer shall be null and void, and the Buyer’s deposit shall be returned in full without deduction.

The section that reads “48 hours” is negotiable.

This could be 24 hours or 72 hours, both of which are common, but ultimately, it can be anything that’s agreed upon by the buyer and seller.

Let’s circle back to the property on McMaster Avenue now, which Trudy and Kyle wanted to see.

Tara told them that the property was sold conditionally, but the seller was still allowing showings.

Trudy asked, “If it’s sold conditionally, why would they allow showings?  Don’t most conditional sales firm up?”

Tara explained that most do. 

However, in this case, McMaster Avenue was sold conditionally on the sale of the buyer’s own property, and that condition contained an escape clause for the seller.

It seems fair, right?

The seller is willing to sell the property conditionally for two or three months, but the seller wants the option of being able to “escape” from that condition if another buyer has interest.

Tara took Trudy and Kyle to see the house, which had been reduced in price twice since they first toured it back in December, and as luck would have it, they determined that it was “the one.”

Now what?

Well, for starters, Trudy and Kyle wanted their offer to be conditional on a satisfactory home inspection.  That might have added an additional layer of complexity to an offer, but handled appropriately, it’s just another box to check.

Tara submitted an offer on behalf of Trudy & Kyle that contained the following condition:

This Agreement is conditional until 6:00 PM on June 23, 2025 upon (i) the Seller being released from a previous Agreement of Purchase & Sale for the Property and (ii) the Seller providing the Buyer with written evidence in the form of a Mutual Release signed by the Seller and the withdrawing buyer or buyers, failing which this Agreement shall be null and void and Buyer’s deposit returned without interest or deduction. This condition is for the sole benefit of the Seller and may be waived by the Seller only by notice in writing to the Buyer or Buyer’s representative within the time period specified above.

This condition is necessary because the property has already sold to a previous buyer.

Tara also included a condition on a satisfactory home inspection, which we don’t need to detail here, but this is where things got interesting.

Originally, the condition was for three business days, which would have taken the condition past June 23rd, when the original buyer had to firm up, or step aside.

Tara specifically included the conditions this way so that if the original buyer firmed up, then Trudy and Kyle wouldn’t waste their time and money with a home inspection.

This was something that was discussed over and over through the course of negotiations, and what it came down to was this: the seller was willing to accept less money via Trudy and Kyle’s offer than the previous buyer had contracted to pay, however, the seller wanted the inspection to happen first, and then enact their escape clause.

Trudy and Kyle agreed.  They were very pleased with the price they had offered (they actually were willing to go higher, but the seller clearly valued their offer more), and weren’t fussed about “wasting” $600 on a home inspection if they were getting the house for $30,000 less than the previous buyer had paid.

The clause was revised so that instead of the agreement being conditional until June 23rd, 2025, upon the seller being released from the previous agreement, it would specify “48 hours from the time the Buyer waives their condition on home inspection.”

This made more sense for the seller.

In this case, the Buyer was required to complete a home inspection and sign a Waiver or Notice of Fulfillment of their condition before the seller would trigger their 48-hour escape clause.

This added another layer of complexity, since the forty-eight hours would only start when the buyer had completed the inspection, thus they wanted to get this inspection done as soon as possible!

While all this was going on, the original buyer had sold their Niagara Falls home conditionally as well.

Just picture a whole lot of dominoes, all lined up, and you’re the one ready to push the first one over.

Tara, Trudy, and Kyle didn’t know the status of the buyer’s conditional sale in Niagara Falls, but they knew that every day – or in this case, every hour, counted.

Instead of waiting until the following day to book their home inspection, they jumped into action.

We have an inspector that we hold in high regard, and Tara called him and asked, “Can you do an inspection tonight?”

The company he works for said their first available slot was in two days, but by calling him directly and pleading, Tara was able to get him to meet at the property at 5:00pm that evening.

Tara, Trudy, Kyle, and our inspector met at the house and spent four hours on site.

They satisfied themselves accordingly, and Trudy and Kyle signed a “waiver” of their condition, sending it to the listing agent for McMaster Avenue at 10:00pm.

That triggered the 48-hours on the escape clause for the original buyer of McMaster Avenue.

This was a Wednesday evening.  This means that Tara, Trudy, and Kyle had to wait until Friday evening at 10:00pm to know if the original buyer would firm up their deal, or walk away, allowing Trudy and Kyle to purchase the home.

Had they waited to conduct their inspection on Friday, then the original buyer would have had until Monday instead.

This ended up making all the difference in the world.

The listing agent for McMaster Avenue said that the original buyer’s home was sold conditionally until Monday, and thus, if they were to firm up the purchase for McMaster Avenue, they’d be taking a huge leap of faith that the sale of their own home would go firm.

Is this a risk that you would take?

There’s no right or wrong answer here, but it depends on a combination of probability and risk tolerance.

Who knows what the Niagara Falls home looked like, how it was priced, or how much the buyer of that home wanted it.  The bottom line was: the original buyer for McMaster Avenue, who had sold their home in Niagara Falls conditionally, likely wasn’t going to take on the risk that the deal would fall through.

That’s where Trudy and Kyle would ultimately prevail.

It was a very long forty-eight hours, but on Friday evening, Tara received a phone call from the listing agent for McMaster Avenue.

“They’re out,” the listing agent said.

Tara thought this could mean two very different things!

Are Trudy and Kyle “out?”

Or are the original buyers of McMaster Avenue out?

“Congrats,” the listing agent said, removing any ambiguity at a time when ambiguity had serious consequences.  “The buyers are out.  They tried everything they could to get the buyers of their house to firm up; they even offered a $15,000 abatement on the price, but those buyers wanted to wait until Monday.”

Victory is sweet.

“Great work,” the listing agent told Tara.  “You literally stole this house from them.”

You don’t know Tara, but she’s incredibly modest.  To a fault, as I always tell her.  She thanked the listing agent, downplayed the compliments, and went right into a conversation about logistics, documentation, and next steps.

Then she called Trudy and Kyle, of course, to tell them the great news.

The young love-birds were shocked.

“I had zero expectation here,” Trudy said.  “I came into this fully expecting to lose.”

Kyle added, “Thank God we sold the condo first eh?”

As I said, that’s a whole other story, but good on Kyle and Trudy for putting themselves in a position to be successful in this market.  Kyle’s condo was not an easy sale, and without the certainty that this sale provided, there was no way they could have submitted an offer to purchase McMaster Avenue – without their own condition on “sale of property.”

Despite what was written in the Toronto Star article, escape clauses are still exceptionally rare.  When they’re used, they’re talked about a lot.

If you’re a buyer in the central core, you’re extremely unlikely to come across this.

But if you’re outside the GTA, you can almost bank on the fact that you’ll see “SCE” out there with regularity; sold conditionally w/escape.”

Buying a home is an awesome experience.

But buying a home that somebody else thought they had bought before you, well, it adds a whole other layer of competitive spirit…