Counteroffers and Backup Offers: How Negotiation Works in BC

When a buyer and seller don't agree on the first offer, they negotiate with counteroffers, and a second buyer can wait in line with a backup offer. Here is how offers, counteroffers and acceptance work in BC, how a backup offer moves up, and the habits that keep a negotiation fair and on track.

The short version

How an offer becomes a contract

In BC, an offer is usually written on the standard Contract of Purchase and Sale, and it sets a deadline for the other side to respond. BCFSA, the real estate regulator, describes four ways a seller can respond:

• Accept. Signing the offer without any changes, and letting the buyer know, creates a legally binding contract, subject to its conditions and the buyer's rescission right.
• Reject. The seller has no obligation to accept or to make a counteroffer.
• Ignore. An offer whose deadline passes is treated as rejected. Restarting talks takes a new offer.
• Counter. The seller changes one or more terms and sends it back, which starts a new round.

Signing is only part of it: a contract is formed when the acceptance is communicated to the person who made the offer. Make sure a signed acceptance reaches the other side before the deadline, with a time-stamped record. And in BC, a contract about land generally can't be enforced against someone who hasn't signed a written record of it, apart from limited exceptions under the Law and Equity Act, so every buyer, and every owner who is selling, should sign.

Once there is a contract, the buyer of most homes in BC can still rescind within three business days by written notice, paying the seller 0.25% of the price. The three business days are counted from the day after the acceptance is signed, so after a round of counteroffers they run from the final acceptance; I explain it in Subject Clauses in BC.

What a counteroffer does

BCFSA is clear that changing any term, however small, rejects the original offer and makes a new one:

• The earlier offer is gone. Once you counter, you can't go back and accept the original, even if the other side rejects your counteroffer or changes their mind.
• The other side decides next. They can accept, reject, ignore or counter again, and the exchange can go on until you agree or someone walks away.
• Every counter needs its own deadline. BCFSA's guidance is that counteroffers should be in writing, with a specific time for acceptance.
• Sellers see their costs each time. With every offer and counteroffer, the seller's agent must give the seller a Disclosure to Sellers of Expected Remuneration, showing what each brokerage would be paid.
• The rescission fee follows the price. Because it is 0.25% of the purchase price, a counteroffer that changes the price changes the fee too.

When several buyers offer at once, BCFSA recommends countering only one offer at a time, because countering several is a potential source of lawsuits. I cover the seller's choices in Offer Dates and the buyer's side in Multiple Offers in Metro Vancouver.

Deadlines and withdrawing an offer

• Set a realistic deadline. Long enough for the other side to review it with their agent, short enough to keep things moving. Once it passes without an acceptance, the offer is treated as rejected.
• You can generally withdraw before acceptance. As BCREA's Legally Speaking column puts it, each offer and counteroffer is capable of revocation, but you can only revoke an offer, not an accepted contract.
• Withdraw clearly, in writing. BCFSA calls written evidence of a revocation critically important. Send it as soon as you decide, follow up any phone call in writing, ask the other side to confirm they received it, and don't do anything afterwards that suggests the offer is still open.

Changing terms after acceptance

Once an offer is accepted, neither side can change the deal alone. If you both agree to change something, such as the price, a subject removal date or the completion date, put it in a written amendment that the buyer and seller both sign. Until it is signed, the original terms stand. If the seller has also accepted a backup offer, the seller should get legal advice before renegotiating, for the reason below.

How backup offers work

A backup offer is one a seller accepts while already bound by an earlier contract. It is a contract in its own right, but it goes ahead only if the first one ends by a set date. BCREA's Legally Speaking column suggests a clause making the backup subject to the seller ceasing to be obligated under the earlier contract by that date, for the seller's sole benefit.

• It is binding once accepted. Like any accepted offer, a backup is a legally binding contract even though it is conditional, so a backup buyer generally can't walk away later unless its terms allow it.
• The rescission clock starts at acceptance. BCFSA says the rescission period for a backup begins when the backup is accepted, not when the first contract collapses, so it may be over by the time you move up.
• Plan your own subject dates. Fixed dates could pass while you are still waiting, so consider setting them as a number of days after the seller tells you that you have moved up.
• Settle the deposit timing. Spell out whether your deposit is due on acceptance or only once the backup moves up.

Even after a sale is agreed, BCFSA's guidance is that the seller's agent must present new offers received before completion and advise the seller to get legal advice before considering one.

How a backup moves up

A backup moves into first place when the seller is released from the first contract: for example, the first buyer rescinds, a subject isn't met despite reasonable efforts, or a time clause runs out. The seller then tells the backup buyer in writing that its condition is met, and the backup becomes the deal, with any subjects of its own still to remove. If the first contract hasn't ended by the backup's date, the backup generally ends instead.

A time clause is one way this happens. If the first buyer's offer has one, another acceptable offer, such as a backup, lets the seller give the first buyer notice to remove their subjects within the set time. If they can't, the first contract ends. I explain time clauses in Buying and Selling at the Same Time.

What a seller can't do is walk away from a firm deal for another buyer. In Singh v. Sidhu (2019), sellers who had accepted offers from two buyers said their agent's buyer was only a backup, but neither the listing nor that buyer's contract said so: the BC Supreme Court awarded that buyer the home and ordered the sellers to pay the other buyer damages. BCREA's column on the case recommends a backup clause whenever you know an offer is a backup, and warns that renegotiating the first contract can activate the backup and risk selling the home twice.

Fair negotiating habits

• Keep it in writing. Offers, counteroffers, withdrawals and amendments should all be written, so the terms, dates and obligations are clear.
• Counter one offer at a time. And give each counteroffer a clear deadline.
• Be truthful about other offers. A seller doesn't have to say whether there are other offers or give a buyer the chance to improve, but can't lie about them.
• Use a clear, fixed price. Offers priced by reference to other offers, such as a set amount over the highest bid, can lead to disputes.
• Negotiate the whole deal. Dates, the deposit, subjects and what stays with the home can matter as much as price, and trading on them can bridge a gap.
• Know your limit first. Decide your walk-away number before the counteroffers start, so pressure doesn't make the decision for you.
• Get advice when it gets complicated. Licensees aren't lawyers, and BCFSA's guidance is to seek legal advice on the legal status of an offer or contract, especially before accepting a backup or renegotiating a firm deal.

Questions buyers and sellers often ask me

Can a seller accept my original offer after making a counteroffer?

No. A counteroffer rejects your original offer, so the seller can't go back to it. You can accept the counteroffer, counter again, or write a new offer.

Can I withdraw my offer before the seller responds?

Generally yes, until the seller's acceptance has been communicated to you. Withdraw it in writing as soon as you decide, and ask for confirmation that it was received.

Is a backup offer binding?

Yes. Once accepted, it is a contract that goes ahead only if the first contract ends by a set date. Its rescission period runs from the day after the backup is accepted, not from when it moves up.

What happens if the other side doesn't respond by my deadline?

The offer is treated as rejected and can no longer be accepted. To keep negotiating, one of you makes a new offer.

Can we change the price after the offer is accepted?

Only if both of you agree, in a written amendment that the buyer and seller both sign. Until then, the accepted terms stand. If there is a backup offer, the seller should get legal advice first.

Getting ready to buy or sell? Read what happens when a sale falls through, the BC selling process from listing to completion and From Offer to Keys.

This article is general information, not legal advice. It draws on BCFSA guidance, BCREA's Legally Speaking columns, BC's Law and Equity Act and the Home Buyer Rescission Period rules, current at the time of writing; ask a lawyer or notary about your own contract. For BCFSA's guide, see offers from buyers.