The first resale policy of its kind in Canada, homes bought and sold in British Columbia will now be automatically enrolled in a mandatory multi-day rescission period, according to new legislation.
The Homebuyer Protection Period took effect in British Columbia on January 3rd, 2023. Also known as the Homebuyer Recission Period (HBRP) or cooling-off period, the new policy requires a three-business-day interval after a purchase offer is accepted on a home, allowing purchasers to rescind their contract if they choose to.
Although similar laws exist abroad in countries such as France and New Zealand, B.C. is the first province in the country to implement a protection period for resale and new construction homes, according to the provincial government.
Here’s a roundup of everything you need to know about the B.C. Homebuyer Protection Period:
What is the purpose of the cooling-off period?
By allowing up to three business days for a buyer to retract their offer, the protection period gives purchasers more time to consider whether buying a property is right for them, especially in a high-pressure sales environment. The three-day wait also gives buyers time to complete due diligence as part of the transaction, such as securing financing or arranging a home inspection.
According to the BC Financial Service Authority (BCFSA), the protection period applies to all residential real property transactions, regardless of whether a real estate professional is involved in the purchase or not. The protection period cannot be waived by the buyer or the seller.
How does the policy work?
The protection period takes effect the next full business day after an offer is accepted. For example, if an agreement is accepted on Monday afternoon, the rescission period would expire on Thursday at 11:59 p.m. If the purchase agreement contains conditions such as a home inspection, these clauses will run concurrently with the rescission period.
Only a few exemptions apply under the protection period, such as properties that are located on leased land, under a court order or sold at auction.
Real estate professionals are required to provide disclosures on HBRP regulations, which include information about rescission rights, exemptions and a calculation of the amount that the buyer must pay to the seller in the event of rescission.
What happens if a buyer rescinds their offer?
Should the buyer choose to cancel their contract during the cooling-off period, they are required to pay 0.25% of the purchase price, or $250 for every $100,000, to the seller. On a $1 million home, this would equal $2,500.
The fee to the seller is paid out of the deposit the buyer provides upon acceptance of the offer, and the remainder is refunded to the purchaser. In cases where a deposit is not provided with the agreement, payment can be provided directly to the seller or through the buyer’s representative to give to the seller or their agent. The buyer must notify the seller in writing that they are retracting the offer.
For more information on British Columbia’s Homebuyer Protection Period, visit the provincial government’s website or review BCFSA’s HBRP consumer guide.
Re Posted from Royallepage.ca
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Mike Alford
