Selling Before Buying in Quebec: The Clauses That Decide

You own your home and you want to move. The real question is not whether you will sell and buy, but in which order. That order plays out in three clauses of mandatory forms, and that is where the financial risk switches sides.

Here is what each clause allows, what the lender verifies, and what the notary imposes.

The three paths, and the risk each one moves

Sell first, buy after. You know the exact amount you have. In exchange, you can find yourself with no new property on the date you have to vacate the old one.

Buy first, sell after. You know where you are going. In exchange, you carry two properties for a period whose length you do not control.

Both at once. The scenario everyone aims for. It assumes that two chains of transactions, each with its own conditions, lenders and notaries, arrive at the same point on the same date.

Article 1396 of the Code civil du Québec says why that third path is fragile: a promise, on its own, is not equivalent to the contemplated contract. Until the notarial deed is signed, the money does not exist.

None of these paths eliminates the risk. Each only decides who carries it.

Selling before buying: what clause R2.1 allows

When you buy without having sold, the mandatory form Annexe R, Immeuble résidentiel (AR 00001) provides condition R2.1.

What the clause says. The promise becomes conditional on the sale of the immovable belonging to the buyer, at an address named in the form. The buyer must notify the seller in writing, before a date and time entered on the form, either that the condition is fulfilled or that they waive it. If they waive it, they must demonstrate at the same time that they have the funds required to cover the purchase price. Without notice within the deadline, the promise becomes null and void.

How it interlocks with financing. If the promise is also conditional on obtaining a mortgage loan, the Annexe R specifies that a lender’s commitment which is itself conditional on the sale of your property satisfies the financing condition. But as soon as condition R2.1 is fulfilled, you must provide a commitment carrying no condition at all. Your bank therefore follows you in two stages, and the second one depends on your own buyer.

This is a conditional obligation within the meaning of article 1497 of the Code civil: an obligation made dependent on a future and uncertain event. The word to hold on to is uncertain.

The 72 hour clause, seen from the seller who accepts it

An R2.1 condition almost never travels alone. It comes with clause R2.2, which the OACIQ itself calls the “72 hour clause.”

What the seller keeps. The seller may continue to offer the immovable for sale despite having accepted the promise. If the seller accepts a new promise, then as soon as all of that new promise’s conditions are fulfilled, other than the signing of the deed of sale, the payment of the price and the cancellation of the first promise, the seller must send the first buyer a written notice.

What the first buyer gets. Seventy-two hours from receipt of that notice, to deliver a written notice stating either that they waive condition R2.1 and all other conditions not yet fulfilled, except the signing at the notary’s office, or that they render their promise null and void. They may waive only by demonstrating at the same time that they have the funds. Without an answer, the promise falls.

The current version of the form frames the proof: the seller checks off the means that will establish the moment the buyer received the notice, email, registered mail or other, and the buyer checks off the one that will establish the moment their answer was sent. That detail settles most disputes over the countdown.

What the seller gives in exchange. The seller is not selling, but granting a right of first refusal. The second buyer signs a promise conditional on the cancellation of the first one, clause R2.3, by which the seller undertakes to take reasonable steps in good faith and at their own expense to obtain that cancellation. The OACIQ recommends that the deadline entered at R2.3 exceed by at least five days the longest deadline for fulfilling the conditions of the new promise.

In a tight market, this mechanism seriously weakens condition R2.1. In a slow market, it is often the only way to get the offer accepted.

Buying before selling: the bridge loan and what the lender verifies

What I cannot tell you. No public body publishes a schedule for bridge loans. Amounts, term, fees and rates vary from one lender to the next, and the only reliable version is the one your lender or your mortgage broker puts in writing for you.

What comes up everywhere. A bridge loan advances the equity already locked in by the sale of your current property. As long as your sale remains conditional, nothing is locked in: the lender is looking at a promise that can still become null and void. The application is therefore presented with an accepted promise whose conditions are fulfilled, and the interest is paid for the real length of the overlap, not the one you had planned.

The solutions you set up ahead of time. The Agence de la consommation en matière financière du Canada (the Financial Consumer Agency of Canada) describes two ways of borrowing against home equity: the home equity line of credit, up to 65% of the value, and the second mortgage, as a general rule up to 80%. These products are put in place before you need them.

What qualification imposes. The same agency gives the lenders’ benchmarks: monthly housing costs should not exceed 39% of the household’s gross income, total debts 44%, and the stress test requires you to qualify at the greater of 5.25% or the negotiated rate plus 2%. If the lender counts the costs of both properties in those ratios, the scenario breaks right there, before any question of budget. A pass through the affordability calculator with both properties entered gives the answer in five minutes, and remember that a mortgage preapproval does not guarantee everything.

Carrying two properties, line by line

The cost of carrying two properties is not a number, it is a list. Fill it in by month.

On top of that come two notarial files instead of one, each with its fees, its publication costs and its adjustments: see the real cost of selling a house in Quebec.

One point that often gets forgotten: call your insurer before you leave a property empty. Only the insurer can tell you what your policy provides once the dwelling is no longer occupied.

Signing dates, occupancy, and what the notary imposes

Two separate dates. Clause 11.1 of the promesse d’achat (the promise to purchase) sets the signing of the deed of sale before the notary and specifies that the buyer becomes owner as of that signing. Clause 11.2 separately sets the date and time from which the premises are available for occupancy. The two may differ.

The mechanism that settles the gap. If occupancy comes after the signing of the deed of sale, clause 11.3 provides for an adjustment at the time of signing: the seller pays a monthly amount entered on the form, calculated from the signing date to the occupancy date, and during that period the seller covers heating, electricity and general maintenance. It is the tool provided for staying in your home a few days or a few weeks after selling. It gets negotiated at the time of the offer, not afterward.

What the notary cannot compress. Éducaloi (Quebec’s legal information organization) points out that the notary must have received your down payment and the lender’s funds before the deed of sale is signed, and that a clearing period of up to ten business days then applies. After the signing of the hypothec deed and then of the deed of sale, count roughly two to three days for publication in the land register. CMHC’s buying guide places the closing date generally 30 to 60 days after the offer is signed for an existing home. See the notary’s role.

Sell before buying or the other way around: what settles it for your household

There is no good general answer. There are four variables, and they get verified on paper.

1. The equity actually free. Not the value of the house: what is left after the mortgage balance, the possible penalty, the remuneration and the fees.
2. The ratios with both properties. If 39% and 44% do not pass when counting both, the question is settled: you sell first.
3. The type of property you are selling. A product that many buyers finance quickly does not behave like an atypical property, a plex or a condo with an incomplete file. The realistic selling timeline in Montreal belongs in the calculation, not in the hoping.
4. Your tolerance for the temporary. Storage, temporary housing, a second move: costs and fatigue, to be compared with the cost of carrying two properties.

Those four lines get filled in before any talk of strategy. The table often decides on its own.

Frequently asked questions

Can a seller refuse an offer conditional on the sale of my house? Yes. The seller has no obligation to accept an R2.1 condition or the R2.2 clause that goes with it. It is a negotiation, and it often plays out against the price, the occupancy date or the deposit. See the real negotiation levers.

If I receive the 72 hour notice, can I ask for more time? The form does not provide for it. The delay runs from receipt of the notice, and the absence of an answer renders the promise null and void. An extension requires a written agreement from both parties, which the seller has no interest in giving if they already hold a second firm promise.

Can I waive the condition without having sold? Yes, but only by demonstrating at the same time that you have the funds to cover the purchase price: a lender’s commitment with no condition, or proof that the funds are available. An intention to borrow is not enough.

How long does a bridge loan last? No public source sets a standard term. Ask in writing for the maximum term, the rate, the fees and what happens if your sale is postponed.

To go further, read the real cost of selling a house in Quebec and how long it really takes to sell in Montreal.

You have a house to sell and a date to meet? Write to me. We fill in the four-variable table before choosing the order, and we plan the dates backwards from the signing at the notary’s office.

Georges Matar

Residential Real Estate Broker · RE/MAX DU CARTIER INC.

Contact Georges