BC’s provincial government recently introduced a home buyer protection period, the details of which are outlined in a new regulation that allows home buyers to back out of a residential purchase up to three business days after signing a contract.
The government will begin to enforce this regulation starting January 1, 2023.
The province claims this three-day cooling off period will help ensure all homebuyers have an opportunity to conduct their due diligence, such as securing financing or arranging home inspections.
The homebuyer protection period basics
- The period will be effective January 1, 2023.
- Buyers will have three business days to back out of a residential purchase after signing the contract.
- This applies to all contracts, regardless of subjects. We’re asking the government for clarity on what constitutes a “rescission” (cancellation).
- The period is mandatory and can’t be waived.
- Buyers who back out of a contract within this three-day period will have to pay a rescission fee of 0.25%. For example, if the purchaser exercises the right of rescission on a $1-million home, they’d be required to pay the seller $2,500.
- The rescission fee is paid to the seller.
- The enforcement mechanism for the rescission fee, and for any deposits that may need to be returned, is unclear at this time.
- Realtors must provide general information on the period to all clients through the Disclosure of Representation in Trading Services.
- If a deposit is held in trust, brokerages may release it upon rescission.
- If there’s a balance, it’s returned to the buyer, regardless of what’s provided in the contract.
Exemptions and waivers
While the period can’t be waived, there are narrow exemptions, including sales:
- Subject to section 21 of the Real Estate Development Marketing Act.
- Of residential real estate located on leased land.
- Of leasehold interest in residential real estate.
- At auction.
- Under a court order or supervision of a court.
Residential real estate defined
The homebuyer protection period will apply to:
- detached homes;
- semi-detached homes;
- apartments in a duplex, triplex or other multi-unit dwelling;
- residential strata lots;
- manufactured homes that are affixed to land; and
- cooperative interests that include a right of use or occupation of a dwelling.
The new period doesn’t apply to presale properties, which already subject to a rescission period under the Real Estate Development Marketing Act.
The notice of rescission
- Homebuyers must serve rescission notice to the seller through registered mail, fax, email with read receipt, or personal service.
- The notice must contain the address, PID or description of the property, the names and signature of the buyer(s), name of the seller(s), and the date of notice.
- Realtors must also provide an additional mandatory disclosure when presenting an offer to a client, outlining:
- that the protection period can’t be waived,
- the rescission period,
- the dollar amount of the rescission fee,
- deposit handling, and
- the homebuyer protection period exemptions.
- Brokerages must retain a copy of any rescission notices it prepares or receives for auditing and reporting purposes.