Escape Clauses Rise in Toronto Resi Market

In one of the surest signs yet that Toronto’s formerly frenzied housing market has cooled, buyers are getting escape hatches.

“Escape clauses,” once almost unheard of during bidding wars at the peak of the pandemic market, allow buyers to walk away if they’re unable to sell their current home within a set period, often 30 to 60 days. In exchange, sellers can continue showing the property and can ask the buyer to firm up or walk if another offer comes in.

While still rare, the clauses are appearing more frequently in Greater Toronto Area home sales contracts, the Toronto Star reported. Their return reflects buyers’ growing leverage and sellers’ willingness — or need — to accommodate.

The term, which offers peace-of-mind for move-up buyers, introduces uncertainty for sellers and often signals softening demand.

“I just think there’s more of a willingness to negotiate from sellers, and maybe not even so much of a willingness as a necessity,” Valery Real Estate’s Robert Marsiglio said.

Marsiglio, who is based in Toronto, tracked a steady uptick in escape clauses since the start of 2024, particularly in Durham Region, where they now account for 1.19 percent of active listings, the highest level since last spring. Citywide, they still make up a sliver of activity at 0.31 percent of listings but have grown to 8.35 percent of all conditionally sold deals this year, up from 7.28 percent in 2024.

The renewed use of escape clauses is part of a broader trend in which conditions are getting added to residential contracts. Inspection and financing contingencies, once liabilities for would-be buyers trying to win bidding wars, are also on the rise.

Brokers say the trend is being driven by higher inventory, a slower pace of sales and more negotiation-friendly sellers. Some agents still hesitate to call it a true buyers’ market, describing the current moment as “frozen.”

One deal in Scarborough’s Rouge Hills neighborhood involved both buyer and seller including escape clauses: The buyer had 60 days to sell their own home, while the seller reserved the right to back out if they received another offer. After weeks of uncertainty — perhaps a new normal in Toronto — the original deal ultimately closed.

— Judah Duke