A “Cooling-Off” Period Has Been Introduced for Home Sales by BC Government

Sources: BCREA, REBGV

According to a new regulation released by the provincial government on July 21, home buyers have up to three business days to back out of a residential purchase.
Beginning January 1, 2023, this regulation will be enforced by the government.
According to the province, this three-day cooling-off period will allow buyers to conduct their due diligence, such as securing financing or arranging home inspections.

As a real estate consumer, if you’re purchasing or selling residential real property it’s important to understand buyer’s rights during the Home Buyer Rescission Period, and how they might apply to your real estate transaction.

During the Home Buyer Rescission Period, certain buyers have the right to rescind or cancel their offer to purchase residential real property within a specified period of time (three business days) after an offer has been accepted.

If a buyer decides to rescind their offer during the Home Buyer Rescission Period, they must pay the seller 0.25% of the purchase price. 

The fee must be paid regardless of any clauses in the contract that might say otherwise. 

The rescission period applies to transactions  of residential real property involving:

• a detached house;
• a semi-detached house; 
• a townhouse;
• an apartment in a duplex or other multi-unit dwelling;
• a residential strata lot, as defined in Section 1 of the Strata Property Act;
• a manufactured home that is affixed to the land; and
• a cooperative interest, as defined in Section 1 of the Real Estate Development Marketing Act, which includes a right of use, or occupation of a dwelling.

At the beginning of your relationship with your REALTORS®, they will provide you with general information about the right of rescission by giving you a Disclosure of Representation in Trading  Services form, provided by the regulator. 

If the Home Buyer Rescission Period applies, buyers and sellers’ clients will receive a second disclosure from their REALTOR® at the time of preparing or presenting an offer.

In most cases, this disclosure will be included within BCREA’s Contract of Purchase and Sale Residential form.

The information in this disclosure will include the following:

• the fact that the rescission period can’t be waived;
• the period for the buyer to rescind  the offer is three clear business days;
• the recession period begins on the day after the offer is accepted by the seller and the buyer. 

Business days are Monday to Friday and do not include weekends or holidays as defined under the Interpretation Act. The rescission period ends immediately before midnight on the third business day.

It’s important to be aware that the rescission period begins when both parties accept an offer, whether it’s subject-free or not. This means that any subject removal period, such as inspection or finance, would start concurrently with the three-business day rescission period.

The calculation of the dollar amount that the buyer must pay to the seller for exercising the right of rescission and when and how the amount will be paid.

If the real estate brokerage is holding a  deposit, and the buyer rescinds the offer, the brokerage holding the deposit must pay the rescission amount to the seller, and pay the balance, if any, back to the buyer.

If no deposit was paid, or the deposit isn’t enough to cover the rescission fee, the buyer must promptly pay the rescission amount (or unpaid paid portion) to the seller. 

If the buyer refuses to pay the rescission fee, the seller will need to seek legal advice on how to recover the rescission amount from the buyer.

There are some types of properties and transactions that are exempt from the buyer’s right to rescind during the Home Buyer Rescission Period.

These include: 

• residential real property that  is located on leased land; 
• a leasehold interest in residential real property;
• residential real property that is sold at auction; 
• residential real property that is sold under a  court order, or the supervision of a court; and 
• contracts to which Section 21 of the Real  Estate Development Marketing Act applies.

If the buyer wishes to perform due diligence during the Home Buyer Rescission Period, they must ensure they have included the right to do so including terms in the contract that allow them access to the property. The buyer may rescind the contract at any point during the Home Buyer Rescission Period, for any reason, and isn’t required to inform the seller of the reason.

To exercise this right, the buyer must serve written notice to the seller before the end of the three-business day period.

There is no mandatory form for buyers  to exercise their right of rescission, but they must provide the following information on the notice to the seller:

• the address, parcel identifier (or PID), or a description of the property; 
• the name, and the signature or electronic signature of the buyer who is exercising the right of rescission; 
• the name of each seller who is a party to the contract; and
• the date the right of rescission is being exercised.

Written notice can be served by providing the seller or a person authorized to receive notice on behalf of the seller as set out in the contract by:

• registered mail to the address; 
• by fax; 
• or by email, with a requested read receipt.  

If you have any questions, please call Geoff Jarman at 604-313-7280 or fill out the contact form.

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