BUYING IN BC
What happens if financing falls through
Whether this is an inconvenience or a serious problem depends on one thing: whether you have removed subjects yet.
Before subject removal, a properly written subject-to-financing clause lets you end the contract and your deposit comes back. After subject removal, the contract is firm. If you cannot complete, the seller can keep your deposit and can sue you for the difference if the home resells for less.
That is the whole answer. Everything below is how to stay on the right side of it.
What “subject to financing” actually does
A subject-to-financing clause makes the contract conditional on you satisfying yourself that financing is available. It is not a pause button and it is not a free look. You are expected to act in good faith, which means genuinely trying to arrange the mortgage rather than using the clause as a way out because you saw something you liked better on the weekend.
The clause runs to a date. That date is negotiated in the offer, and in this market a week to two weeks is normal.
Removing subjects
Subjects come off in writing, on or before the deadline. Your agent prepares the form, you sign it, and it goes to the other side. Until that document is delivered, the deal is still conditional.
If the deadline passes and nothing is delivered, the contract generally ends on its own terms. That is not a loophole to rely on, and it is not a strategy. A missed deadline can also cost you a house you wanted, because the seller is free the moment it lapses.
The moment everything changes
Removing subjects makes the contract firm. From that point:
- You are committed to completing on the completion date
- If you cannot complete, you are in default
- The seller can retain the deposit as liquidated damages, which is the standard remedy under the BC Contract of Purchase and Sale
- The seller can also pursue you for further damages, most commonly the difference between your price and what the home eventually sells for
That last one is the part people do not see coming. If you agreed to $700,000, you default, and the home resells months later for $660,000, the gap is not automatically absorbed by the seller.
Where your deposit physically sits, and why nobody can simply hand it back, is covered in deposit vs down payment.
Why financing falls apart after you were “approved”
Most of the trouble here comes from treating a pre-approval as a final approval. They are not the same thing.
A pre-approval is the lender’s view of you, based on what you told them, before they have seen the property. Final approval takes account of the specific home. Between those two moments, deals come apart for reasons that are boringly consistent:
- The appraisal comes in below the purchase price. The lender lends against their number, not yours, and you have to cover the gap in cash
- Your income or employment changes. A new job, even a better one, can reset a lender’s view. Probation is a problem
- You take on new debt. Financing a car or a furniture package between acceptance and completion changes the ratios the approval was built on
- Your credit changes. Lenders often re-check before funding
- The property itself. Some lenders will not finance certain buildings, remediated properties, or homes with unusual features
Nothing on that list is exotic. All of it is avoidable with a week of discipline.
What to actually do
- Do not remove subjects on a phone call. Get your lender’s confirmation in writing, specific to this property, before anything is signed.
- Ask your broker directly about appraisal risk on this particular home and this particular price. That is a real conversation, not a formality.
- Change nothing financially between acceptance and completion. No new loans, no new cards, no job moves you can delay, no large unexplained transfers.
- Keep the subject period honest. A short subject period looks strong to a seller and it is worth nothing if your lender cannot actually turn around a final approval inside it.
- If it starts going wrong, say so immediately. There are options while the contract is still conditional. There are far fewer afterwards.
The part I take seriously
Subject removal is the single moment in a purchase where the risk changes shape completely, and it gets treated as paperwork because it arrives at the point where everyone is tired and excited and wants the thing to be done.
I would rather tell you to extend the subject period and annoy the other side than watch you remove subjects on an approval nobody has confirmed. If the numbers do not hold, or your lender goes quiet, or the appraisal looks like a risk, that is a conversation we have before the deadline, not after. That approach is part of how I represent buyers, and if you are earlier in the process the first-time buyer’s guide lays out the whole sequence.
General information about buyer conditions in British Columbia, current as of September 2026, and not legal advice. What your contract says governs your transaction, remedies on a collapsed deal depend on the facts, and a lawyer is the right person to advise you if a deal is going wrong. Braden Koop Personal Real Estate Corporation operates under RE/MAX Kelowna. Each RE/MAX office is independently owned and operated.
