Back Up Offers

What Is a Back-Up Offer? A back-up offer is a written offer to purchase a property that is submitted and negotiated while the property is already conditionally sold (i.e., under contract but not yet firm). If the first offer collapses (e.g., due to financing, inspection, or other unsatisfied conditions), the back-up offer can take effect without putting the property back on the market.

Can a Back-Up Offer Be Accepted? Yes. In Alberta, a seller can accept a back-up offer only with clear terms that it is subject to the collapse of the first contract. This must be reflected in the offer’s conditions, usually stated in Section 9.2 (Other Terms) of the Residential Purchase Contract:

"This offer is accepted as a back-up offer and shall become binding only upon the Seller providing written notice to the Buyer that the first accepted offer has been terminated in accordance with its terms."

Key Considerations for Listing Agents

Full Disclosure: Make sure all parties understand that the property is conditionally sold.
Written Clarity: Ensure the back-up offer clearly states that it only becomes binding upon collapse of the first offer.
No Double Selling: The seller cannot be bound by two active contracts simultaneously.
Manage Timelines Carefully: Do not allow overlapping condition dates or possession conflicts.
Amend the MLS Status: Do not change the listing to "Pending" if you are actively entertaining back-up offers. Use "Active Under Contract" or update remarks appropriately.

Best Practices

Encourage the use of clear, lawyer-reviewed clauses.
Inform your seller of the pros and cons of back-up offers (e.g., added security vs. complexity).
Inform the first buyer (ethically) that other offers are being considered, without disclosing terms.
Document all communications and maintain transparency.

When to Use a Back-Up Offer

When the first offer has weak conditions or a hesitant buyer.
In competitive markets where buyer interest remains high.
When your seller wants security without returning to market.

Where to Place Disclosure

In offer terms (Section 9.2)
In private remarks on MLS ("Back-up offers being considered")

Key Takeaway Back-up offers are legal and useful, but they require careful wording, proper timing, and clear communication. As a listing agent, your role is to protect the seller while ensuring compliance with Alberta's real estate rules and ethical standards.

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