When used strategically, a back-up offer can be a powerful tool. But whether you're representing a buyer or a seller, it’s important to navigate back-up offers with care. Understanding the common pitfalls is key to ensuring a smooth and stress-free transaction for both you and your clients.   

Starting Off With the Right Clause 

First things first: A back-up offer must clearly state that it’s in a back-up position and that it is contingent on the seller no longer being bound by an earlier accepted offer. To avoid legal headaches, it’s crucial to ensure that a back-up offer includes an appropriate subject condition. The BC Financial Services Authority (BCFSA) clause catalogue suggests the following: 

“Subject to the Seller ceasing to be obligated in any way under the Contract of Purchase and Sale dated (date) (the “Sale Contract”) respecting the Property, including the Seller obtaining a full release from the Buyer, on or before (date). This condition is for the sole benefit of the Seller.”

Without an appropriate subject condition, a seller may unintentionally become bound by two separate contracts – a situation that is both stressful and legally precarious.  

The activation date in a back-up clause should follow the original accepted offer’s subject removal date and allow sufficient time for the seller to secure a full release from the first buyer, if required.  

Contract Amendments: Proceed With Caution  

The parties to the originally accepted offer may sometimes wish to renegotiate its terms or conditions, even when a back-up offer is in place.  

However, when a seller accepts a back-up offer, their ability to amend the first contract is often limited, and changes to the terms and conditions of the originally accepted offer can inadvertently trigger a back-up offer, potentially binding the seller to two contracts. 

Contractual Limitations to Amendments  

The BCFSA clause catalogue also includes an “optional” back-up offer clause: “[t]he Seller agrees not to amend the Sale Contract.”  

If this optional clause forms a part of a back-up offer, the seller likely can’t amend the originally accepted offer without risking a breach of contract. However, this clause is subject to negotiation, and REALTORS® should consider specifying what amendments, if any, are permitted without triggering a back-up offer. 

If you’re unsure whether an accepted back-up offer contractually precludes the seller from renegotiating the terms of the originally accepted offer, you should advise your clients to seek legal advice before proceeding with any proposed amendments.  

Fundamental Amendments May Trigger Back-Up Offer 

The key trigger in the BCFSA back-up offer clause is  “…the Seller ceasing to be obligated in any way” under a previously accepted offer.  

REALTORS® should be aware that certain amendments may collapse the original contract and open the door to claims that a seller is now obligated under a new agreement and not the original one. 

This issue was central in a 1988 BC Court of Appeal decision,¹ where a back-up buyer claimed that an Interim Amending Agreement to the originally accepted offer triggered its back-up offer. The back-up buyer argued that increasing the deposit and extending the completion date effectively collapsed the original deal. The BC Court of Appeal disagreed, finding that the amendments were “…all of a character which affirm and do not reject the original contract.” Consequently, the first contract remained in place, and the back-up offer was not triggered. 

Similarly, in a 2009 BC Provincial Court ruling,² the Court considered whether an amendment to extend the time to remove a subject condition for financing caused the collapse or non-completion of the first offer. Relying on the BC Court of Appeal decision mentioned above, the Court held that the back-up offer was not activated because the amendment did not reject the original agreement but instead affirmed its continued existence. In particular, the Court stated the following:  

“As in the B.D. Management case, supra, the amendment at issue in this case is not of a character which rejects the original Pollard deal, but is of a character which affirms it. It is an amendment to a still subsisting agreement. As such, the amendment which operated to extend the time for Mr. Pollard to remove his “subject to financing” clause did not constitute a collapse or non-completion of the Pollard deal…”.

Teachable Takeaways  

While the cases above involved a different back-up clause where the trigger was the “non-completion” or “collapse” of the originally accepted offer, the same legal principles likely apply to the BCFSA back-up clause. That is, some amendments to the originally accepted offer could result in “…the Seller ceasing to be obligated in any way” under a previously accepted offer.  

The case law suggests that fundamental changes that reject the original contract may trigger a back-up offer, whereas amendments that merely affirm the continuing existence of the original agreement likely will not. 

Whether an amendment is “fundamental” or “rejects” an originally accepted offer is a legal question and generally beyond the expertise of a REALTOR®. Where the parties to the originally accepted contract seek to amend its terms and / or conditions, REALTORS® should recommend that their respective clients seek independent legal advice before proceeding, particularly when the proposed changes are significant in nature, such as changes to price and parties.  

Importantly, REALTORS® should not assume that it is always safe to increase the deposit or extend subject removal and completion dates. Each situation is fact-specific, and caution should be exercised with any proposed change.   

Home Buyer Rescission Period for Back-Up Offers  

If the Home Buyer Rescission Period (HBRP) applies, the three-day rescission period for a back-up offer begins upon its acceptance in the back-up position. Even if the back-up offer is subject to the seller being released from a previously accepted offer, the rescission period begins upon acceptance of the back-up offer.  

For more details about the HBRP, refer to BCREA’s HBRP Calculators and BCFSA’s Home Buyer Rescission Period Frequently Asked Questions.  

Final Reflections 

Back-up offers can be powerful tools, but they require careful navigation to avoid costly pitfalls.³ By staying informed and vigilant, you can help protect your clients and ensure smoother, less stressful transactions. 

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	1.	B.D. Mgmt. Ltd. v. Tajico Hldg. Ltd., 1988 CanLII 2932 (BCCA).
	2.	Wright v. Hamster, 2009 BCPC 0109.
	3.	The consequences of being bound by two contracts can be costly for a seller. See, for example, Singh v. Sidhu, 2019 BCSC 1551, where the Court ordered that the sellers pay damages to one of the buyers for failing to deliver the subject property.

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