Backup Offers in Quebec: How a Second-Position Offer Works

The house you wanted went to someone else: their offer was accepted, yours was not. Our article on what to do after a rejected offer in Quebec walks through the options. One of them deserves its own article: getting in line behind the winner. An accepted promise to purchase is not yet a sale; until its conditions are lifted, it can fall through. A backup offer positions you as the next buyer if that happens, without the seller committing twice.

An offer waiting its turn

In form, a backup offer is an ordinary promise to purchase: a price, conditions, deadlines, a closing date. What sets it apart is one extra condition: it only takes effect if the promise the seller has already accepted comes to an end. While the first one holds, the backup sits in second position and creates no obligation to sell or to buy.

For the seller, it is insurance against the first deal collapsing: if the primary buyer's financing falls through or they walk after the inspection, another buyer is already there with a known price and terms. For the backup buyer, it is a place in line, with no guarantee of reaching the front.

The condition that brings it to life: the first offer ending

Everything hinges on one sentence: the backup offer becomes effective if the first promise ends. So "ends" has to be defined precisely. The usual cases are a condition in the first promise not being met and that buyer withdrawing, the parties terminating it by mutual agreement, or the promise lapsing because it was not completed within its deadlines.

The wording should also say how the backup buyer learns their turn has come: a written notice from the seller, sent through the brokers, ideally with proof that the first promise has in fact ended. Receipt of that notice is what moves the backup into first position, and everything else is counted from it.

Why a seller cannot accept two firm offers

An accepted promise to purchase commits the seller to sell. If they accepted a second unconditional promise on the same property, they would be committed to two buyers for one house, and one of them would inevitably have a claim against them. The condition tied to the first promise ending is exactly what prevents that double sale.

That is also why a backup offer needs careful drafting by the brokers on both sides. A loosely worded condition, or a notice sent before the first promise has really ended, can recreate the very risk the backup was meant to avoid.

The backup buyer's deadlines: when the clock starts

Like any promise, a backup offer carries deadlines for inspection, financing and other conditions. The trap is having them run from signature. A backup buyer may wait weeks for the first deal to resolve; if their deadlines ran during that time, they could expire before the buyer ever set foot in the house.

Consistent drafting starts those deadlines when the backup becomes the primary promise, that is, on receipt of the seller's notice. The closing date is set relative to that moment too, not to a calendar date picked at the outset.

Several backup offers: ranking, and what it guarantees

A seller may receive more than one backup offer. They must then rank them, second, third, and each one's condition depends on every offer ahead of it ending. That order is fixed at acceptance; it is not reshuffled later as new proposals come in.

Being in second position guarantees neither the price nor the outcome. Your price is the one in your promise, which may differ from the first buyer's; if the first deal holds, you do not buy. Your rank only says who gets called, and in what order, if the offers ahead of you fall through.

For the backup buyer: what you commit to, and how you get out

While the backup is waiting, the buyer is not yet bound by an effective promise, but they have committed to buy if their turn comes. Two things protect their freedom to keep looking:

• an end date: if the first promise has not ended by then, the backup lapses and the buyer is released;
• clear withdrawal terms: the wording can set out how, and on what terms, the backup buyer may withdraw before their turn comes.

If a deposit is planned, the promise should say when it is paid and where it is held; there is usually no reason to hand it over before the offer becomes effective. How a deposit held in trust works is covered in our article on the deposit on a Quebec purchase offer. The related case of a seller who stays on the market during a conditional offer, and the notice they then send the first buyer, is covered in our article on offers conditional on the sale of the buyer's home.