On January 1, 2023 amendments to British Columbia’s Property Law Act will come into effect, establishing the Home Buyer Recission Period (HBRP), also referred to as the “cooling-offperiod”. The HRBP enables a purchaser of residential real estate property to cancel a contract within three business days after the offer is accepted.
Buyers who exercise their right to rescind will have to pay 0.25% of the purchase price. For a $1 million home, this would result in a $2,500 fee paid to the seller. If a deposit is held in trust, brokerages must release the recission fee to the seller upon recission. Any remaining balance is returned to the buyer, regardless of what is provided in the contract.
Without a recission period, if a buyer wanted to terminate an unconditional contract, they would have needed to negotiate with the seller and would typically face significant financial penalties or legal ramifications.
The HBRP applies to all residential real estate sales, including private sales and FSBO properties. It cannot be waived; however, some exceptions include assignment sales, and pre-construction sales which are already subject to a seven-day recission period.
The recission period begins the next full business day after an offer is accepted. For example, if an offer is accepted on Monday afternoon, the recission period would end at 11:59 am on Thursday. Any subject conditions with the offer (e.g. financing, home inspection etc.) will run concurrently with the recission period. The recission period does not begin after subject removal.
Real estate licensees are required to make disclosures in the Disclosure of Representation in Trading Services form at the outset of a client relationship and a second disclosure at the time that an offer is made. In the case that an individual is not represented by a real estate licensee, the licensee representing the other party is responsible for providing the disclosure form with information about the HBRP and for explaining a buyer’s rights. The other party would not be responsible for providing the second disclosure in this circumstance.
In May, the regulator published an independent report offering some recommendations to the Ministry of Finance to improve consumer protection. The Ministry of Finance has not indicated whether they will implement additional measures. We will keep you informed of any developments.
Content credit to MPC - Mortgage Professionals Canada