Dependent purchase risk: what Canadian home sellers face when their buyer is selling too

Your buyer's money is coming from their own sale. Here's what happens to you, and your next home, when that sale runs late or falls apart.

Your next home already has a closing date. There is a deposit sitting in trust, a mortgage commitment with an expiry date, and a balance that has to land in the seller's lawyer's account on one specific day. Most of that balance is coming from the sale of the home you are in now. That is where dependent purchase risk starts: your plan rests on money you have not received yet.

Here is the part most sellers never check. Your buyer is very often in exactly the same position. Their money for your house is coming from the sale of their house, which is coming from their buyer, who may be selling too.

Your next home is already firm. Is your buyer's?

Once you sign a firm agreement on your next home, the closing date does not move because your own sale is running late. As Toronto real estate lawyer Jayson Schwarz puts it, a seller who misses their own purchase because the sale funds arrived late can "have breached your purchase contract, even though you did nothing wrong."

So the question that matters is not only "is my buyer firm?" It is "where is my buyer's money coming from, and what does it depend on?" A buyer who is paying from savings and a mortgage approval is one link. A buyer who is paying from the proceeds of their own sale is two or more links, and every link has its own lender, lawyer and closing day.

What is dependent purchase risk?

Dependent purchase risk is the exposure a seller carries when the buyer needs the proceeds of another sale to close. In most of Canada it shows up in the offer as a condition on the sale of the buyer's property. Woitzik Polsinelli LLP describes it as a common condition precedent: "the sale of the buyer's existing property prior to closing on the new purchase." In British Columbia the same idea is usually called a "subject-to-sale" offer.

Sellers who accept one usually protect themselves during the conditional period with an escape clause. If a better offer comes in, the first buyer gets a short window to waive or step aside. In Ontario that window is commonly 24 to 48 hours; in British Columbia a "72-hour clause" plays the same role.

That clause protects you while the deal is conditional. It does nothing once the buyer waives and the deal is firm.

How do you spot a dependent buyer in an offer?

Some dependent buyers are obvious and some are not. The obvious ones have a sale condition written into the offer. The less obvious ones have already sold their home firm, with a closing date that lands on or just before yours, or they have waived a sale condition under pressure from an escape clause notice.

Questions to put to your real estate agent before you accept, and again before you let a condition go:

• Does this buyer own a home they are selling? Is it listed, sold conditionally, or sold firm?
• If it is sold, what is that closing date, and how close is it to ours?
• Is their buyer also selling? How many closings sit above ours on the same day?
• Is the buyer's mortgage approval dependent on the sale proceeds, or on bridge financing?
• If the buyer waives their sale condition, what changed? Did their home sell, or did they just run out of time?

None of these answers decides the offer for you. They tell you how long the chain is above you, and how many things have to go right before your money arrives.

Why waiving the sale condition doesn't remove the dependency

Waiving a condition ends the buyer's ability to rely on it; as the Court of Appeal for Ontario put it in VanderMolen Homes Inc. v. Mani (2025), as summarized by Woitzik Polsinelli LLP, "parties are bound by the timelines they agree to." But a waiver does not create the money. If the buyer still needs their own sale proceeds to close, the dependency is still there; it has just disappeared from the paperwork. For a refresher, see our explainer on what waiving conditions actually means.

The Ontario Superior Court of Justice decision in Liddell v. Mousavi, 2024 ONSC 6431, shows how this plays out. The agreement was firm at $1.35 million with no financing or other conditions. Weeks before closing the buyer asked for a three-month extension, and on closing day her lawyer asked for 45 days. The sellers declined both, and the funds never arrived.

The buyer argued she could not close because the sale of her own property in Hamilton had fallen through. The court found that her property not selling was not an unforeseeable supervening event, and held her liable. On paper the offer was clean. In practice it depended on a second sale the sellers could not see.

That is the core point: a firm offer from a dependent buyer is a signed commitment, not a funded one.

What a same-day closing chain looks like

Picture three households closing on the same day. Household A sells to Household B. B sells to you. You are buying your next home from Household D. Each sale funds the next purchase.

On closing day the money moves in sequence. The buyer's lender sends funds to the buyer's lawyer, and the buyer's lawyer sends them to the seller's lawyer. Schwarz notes that some wires "can take several hours," and that "bank wires are touchy after 4 p.m." A seller relying on their own sale is "at the mercy of the purchaser, their lender, lawyer and the timing of multiple wire transfers."

Now add the chain. If A's lender funds late, B's lawyer cannot release funds to your lawyer until A's money lands. Your lawyer cannot send money to D's lawyer until yours arrives. A two-hour delay at the top can become a missed closing at the bottom.

We cover the timing of your own side of this in our guide to selling and buying at the same time. This post is about the links above you, the ones you do not control.

The delay case: when the chain runs late

Delay is the more common event, and financing sits near the top of the list. In an Ownright survey of 1,015 real estate professionals across Canada (excluding Quebec), conducted March to April 2026, financing and mortgage approvals were the second-leading cause of transaction delays, cited by 28%.

A delay upstream lands on you in three places at once. Your buyer asks for an extension. Your own seller, Household D, is waiting for your funds. And you are carrying both positions: the home you are selling and the one you are buying.

You can grant your buyer's extension, but the court in Liddell v. Mousavi held that a seller may refuse an extension when a buyer wants more time because they cannot get the funds. Even if you agree, your own seller may not. Short-term solutions like bridge financing can carry you across a gap, but they cost money for every day the chain is stalled.

Not sure how exposed your sale is? The Closing Risk Tool walks you through the questions that matter, including what your buyer's purchase depends on. Check your closing risk.

The default case: when a link breaks

Sometimes the delay never resolves. The upstream sale collapses, your buyer cannot fund, and your sale fails on closing day. Your own purchase does not wait for you to sort it out.

The Ontario Superior Court of Justice decision in Singh and Kaur v. Feneich, 2024 ONSC 5776, puts numbers on that downstream cost. The buyer failed to close a $1.25 million sale after several extensions, and the sellers eventually sold for $965,000. The court awarded $366,513, including $31,906 in carrying costs and $47,107 in interest on financing the sellers' own next home. That last line is the chain risk in one figure: the sellers' next purchase kept costing them money while their sale sat broken.

In Liddell v. Mousavi the sellers re-sold in April 2023, about nine months after the failed July 2022 closing, for $1.1 million. The court awarded $280,739: $250,000 for the price difference plus $30,739.28 in resale expenses.

Both sellers won. But a judgment is not a deposit in your account, and a buyer who could not fund a closing may not be easy to collect from. The deposit itself is typically held in trust until both sides agree or a court orders its release. Market conditions matter too: CREA reported September 2026 national sales down 8.3% year over year, with 4.8 months of inventory. A seller who has to start over is doing it in a slower market. Our guide to re-listing after a failed sale covers that second listing in detail.

What protects a seller financially when a buyer can't close?

Escape clauses protect you while the deal is conditional. A lawyer and the courts give you remedies after a default. Neither puts money in your hands on the day your next purchase needs it.

Home closing insurance from SecureMyOffer is built for the window between a firm offer and closing day. The seller is the insured party. Subject to policy terms, the policy responds when the buyer delays or defaults, including when the cause sits further up the chain.

If your buyer is delayed. The policy advances your carrying costs through the delay, so you are not stranded while a late buyer waits on their own sale. Listing commission is advanced too, and that advance is repaid once the property closes. Any unused portion of an advance is returned to the insurer when the transaction closes.

If your buyer defaults. The policy covers the shortfall between your original firm price and the resale price, your carrying costs, legal costs, re-listing costs, and the listing commission on the resale, up to the policy limit and subject to policy terms. If the home resells for more, you keep the difference. An Emergency Advance Payment of up to 50% of the policy limit can go to your real estate lawyer's trust account as early as the same day, to meet the seller's immediate cash needs.

Coverage is up to 20% of the sale price, to a maximum of $250,000, depending on the coverage selected. Policies start at $349, all-in, and increase depending on the level of coverage selected. Nothing is paid until the deal goes firm. Home closing insurance is available across Canada except Quebec, for resale homes. It is not title insurance, a home warranty or mortgage default insurance, and it cannot make a buyer close; it protects the seller's finances if they don't.

Frequently asked questions

How do I protect myself as a seller if my buyer can't close?

Know what your buyer's purchase depends on, then protect the financial gap that remains once the deal is firm. Ask your real estate agent whether the buyer is selling, when their sale closes, and whether their financing relies on those proceeds. Before firm, use the escape clause and condition deadlines. After firm, home closing insurance protects the seller, as the insured party, if the buyer delays or defaults.

What protects a seller financially when a buyer walks away?

Home closing insurance is built for this gap; the deposit and a damages claim are the traditional answers, but neither is fast. The deposit is usually held in trust until both parties agree or a court orders its release, and a court award must still be collected. Home closing insurance, where the seller is the insured party, covers the shortfall, carrying costs, legal costs, re-listing costs and the resale commission, up to the policy limit and subject to policy terms.

What happens if my buyer's own home sale falls through?

A firm buyer whose own sale collapses can still be held liable for failing to close. In Liddell v. Mousavi, 2024 ONSC 6431, the Ontario Superior Court of Justice held that the buyer's own property not selling was not an unforeseeable supervening event, and awarded the sellers $280,739. Practically, though, a buyer without funds may ask for an extension or fail to close, and the cost lands on you first.

Does waiving the sale condition make my buyer safe?

No. Waiving the condition ends the buyer's ability to rely on it, but it does not supply the money. If the buyer still needs their sale proceeds to close, the dependency remains in place even though it no longer appears in the agreement.

Should I accept an offer conditional on the sale of the buyer's home?

It can be a reasonable offer to accept, especially with an escape clause in place. The decision is yours and your real estate agent's to make on the specifics. Go in knowing the chain above you, and plan for what happens after the condition is waived, not only before.

Why dependent purchase risk is part of your deal

Dependent purchase risk is the risk you cannot see in the agreement. Your buyer's offer can be firm, unconditional and signed, and still rest on a sale two or three links up that you have never heard of. When one of those links runs late, the delay rolls down to you, and from you into your next home.

Run the numbers on your own position before closing day. The Closing Calculator shows what a delay or a failed closing could cost you, so you can decide how much of that gap you want to carry yourself.

A firm offer tells you the buyer is committed; it does not tell you where their money is coming from.