Cooling-Off Period on Residential Real Estate Comes into Effect January 2023
The Home Buyer Rescission Period (“HBRP”), also known as a “cooling-off period,” will become mandatory for residential real estate transactions when the B.C. government amends the Property Law Act in January 2023.
Even if the contract does not contain any conditions, homebuyers will be able to cancel it within the allotted time frame thanks to the HBRP. It will start the day after an offer is finally accepted on a business day. The right to cancel the agreement will exist for three business days and cannot be waived by the buyer, seller, or any of their agents. Homebuyers still have a legal right to revoke the contract during this time, but they will be charged a fee equal to 0.25 percent of the purchase price.
If the contract of sale contains any subject conditions, both the HBRP and such subject conditions shall commence counting down at the same time and shall continue concurrently.
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.
Deposits
- 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;
- townhouses;
- 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.
We recommends that homebuyers speak with their real estate licensees to understand the requirements of the HBRP, so ensure you keep up to date with information as we provide it.
