Commitment Letter

A mortgage commitment letter is a lender's written approval of a mortgage loan, specifying the approved amount, interest rate, term, and conditions that must be satisfied before funding (e.g., employment confirmation, satisfactory appraisal, fire insurance binder). It is typically required before a buyer removes the financing subject clause in a Contract of Purchase and Sale. Every condition in the letter must be carefully reviewed and satisfied, as an unfulfilled condition voids the commitment. Verify all terms and conditions with your lender and legal counsel before relying on the commitment.

BC law does not mandate that a buyer obtain or present a commitment letter to complete a purchase. However, under the Real Estate Services Act (RESA), SBC 2004, c. 42, and the RESA Rules administered by the British Columbia Financial Services Authority (BCFSA), a licensed real estate professional must confirm that a buyer has removed or waived financing subject clauses in accordance with the contract terms. Most prudent buyers and their representatives require a signed commitment letter before removing a financing subject to evidence that mortgage funds will be available. Verify your contractual obligations and risk with a BC lawyer or notary before waiving any subject clause.

Commitment letter validity periods are set by individual lenders and are not prescribed by BC statute. Typical validity ranges from 30 to 120 days (as of 2026-07-27 — verify current), but the exact expiry date and any extension provisions will be stated in the letter itself. If the commitment expires before the property purchase closes, the buyer may need to reapply or renegotiate terms, which could affect the approved rate or amount. Always confirm the expiry date, conditions precedent, and renewal process directly with your lender and legal counsel.

Common conditions include satisfactory property appraisal at or above the purchase price, proof of employment and income, confirmation of down payment source, clear title search, acceptable fire and property insurance binder naming the lender as mortgagee, and sometimes a satisfactory credit re-check before funding. Each lender sets its own conditions; there is no standard list under BC law. Any condition not satisfied by the deadline stated in the commitment letter will void the lender's obligation to fund. Review every condition with your mortgage broker, lawyer, or notary to ensure you can meet them before removing your financing subject.

A commitment letter is generally a conditional, binding offer by the lender, but most letters include clauses permitting revocation if any condition is not met, if the borrower's financial or employment situation materially changes, or if information provided was inaccurate. BC contract law principles govern enforceability, and courts will interpret the specific language of the commitment. If a lender wrongfully revokes a valid, unconditional commitment, the borrower may have remedies for breach of contract, but that depends on the facts and the letter's terms. Verify your specific situation and any revocation clauses with a BC lawyer before relying on a commitment to waive financing subjects.

Neither the Real Estate Services Act (RESA), SBC 2004, c. 42, nor the RESA Rules require a buyer to disclose the commitment letter itself to the seller or listing agent. However, the Contract of Purchase and Sale typically requires the buyer to provide written confirmation (often a simple notice) that financing has been arranged when removing the financing subject clause. Some buyers' representatives voluntarily provide a redacted copy or confirmation from the lender as evidence of good faith, but this is not a legal obligation. Discuss disclosure strategy and contract requirements with your real estate licensee, lawyer, or notary before waiving any subject.

If you cannot satisfy a condition in the commitment letter by the date you must remove your financing subject under the Contract of Purchase and Sale, the lender's obligation to fund is void, and you typically cannot obtain that mortgage. In that situation, you may not be able to remove the financing subject clause, and depending on the contract terms, the seller may be entitled to walk away or you may lose your deposit if you fail to complete. Notify your real estate licensee, lawyer, or notary immediately if any commitment condition cannot be met, and explore whether the contract permits an extension or whether alternative financing is available.

A commitment letter typically guarantees (or "locks in") the stated interest rate for a specified period, often 30 to 120 days (as of 2026-07-27 — verify current), but the exact rate-hold period and any conditions are set by the lender and stated in the letter. If your completion date falls outside the rate-hold period, the lender may adjust the rate to current market rates or require a new commitment. Some lenders charge a fee for extended rate holds. Always confirm the rate-hold expiry and extension options in writing with your lender, and coordinate your completion date with your lawyer, notary, and mortgage broker.

The BCFSA regulates mortgage brokers and submortgage brokers under the Mortgage Brokers Act, RSBC 1996, c. 313 (repealed and replaced by the Financial Institutions Act, RSBC 1996, c. 141, Part 10, as of 2026-07-27 — verify current statute references), but commitment letters themselves are issued by lenders (banks, credit unions, trust companies) and are primarily governed by federal banking law and contract law, not BCFSA rules. The BCFSA does require licensed mortgage brokers to act honestly, in good faith, and with reasonable care and skill when assisting clients in obtaining commitments. For questions about lender practices or commitments, consult the Financial Consumer Agency of Canada (FCAC) or a BC lawyer.

While BC law does not mandate that a lawyer or notary review your commitment letter, it is prudent to have legal counsel review the letter, the conditions, and your Contract of Purchase and Sale together to ensure you understand all obligations, deadlines, and risks before removing the financing subject. A lawyer or notary can identify ambiguous or onerous conditions, confirm whether title and insurance requirements are achievable, and advise on remedies if the lender fails to fund. The Real Estate Services Act (RESA), SBC 2004, c. 42, requires real estate licensees to recommend that clients obtain independent legal advice. Always consult a BC lawyer or notary before waiving any subject clause in a real estate transaction.