News/Press
British Columbia Introduces Cooling-Off Period for Residential Property Contracts
On January 3rd, 2023, the B.C. government became the first province to implement changes to its Property Law Act with the new Home Buyer Rescission Period (HBRP)—also known as the “cooling-off period”. A purchaser protection measure aimed at protecting buyers in high-pressure sales situations or overheated markets.
The HBRP gives buyers the right to rescind their offer up to three business days after the offer is accepted. If a buyer changes their mind, they must pay a 0.25% rescission fee to the seller to help ensure that all parties are taking the transaction seriously—which must be paid within 14 days of exercising the right to rescind.
What Transactions Does the HBRP Apply To?
The HBRP applies to all residential real estate sales, including private sales, which include:
- detached houses;
- semi-detached houses;
- townhouses;
- apartments in a duplex or other multi-unit dwelling;
- residential strata lots, as defined in section 1(1) of the Strata Property Act;
- manufactured homes affixed to land; and
- a cooperative interests, as defined in section 1 of the Real Estate Development Marketing Act (“REDMA”), that includes a right of use or occupation of a dwelling.
Are there Exceptions?
The limited exceptions, of which the HBRP does not apply to, 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.
Additional Implications
Only buyers—not sellers—may rescind a contract under the HBRP, and this right can be exercised at any point during the rescission period, for any reason. Additionally, any buyer(s) listed on the contract of purchase and sale has a right to rescind the contract within the rescission period on behalf of the other buyer(s). If the other buyer(s) listed on the contract wish to proceed with the transaction, a new offer will need to be drafted and presented to the seller.[1]
Takeaways
In 2021, the B.C. real estate market experienced significant volatility due to low interest rates[2]. The implementation of the HBRP is one of the key actions undertaken by the B.C. government following the recommendations of the B.C. Financial Services Authority (the “BCFSA”)—the province’s financial service sector regulator—and a wide range of real estate industry stakeholders, home inspectors, appraisers, realtors, and academics.
“Too many people have been faced with giving up an inspection in order to buy a home,” said Selina Robinson, Minister of Finance. “This is a major step toward providing homebuyers with the peace of mind they deserve while protecting the interests of people selling their homes—for today’s market and in the future.”[3]
For more information on the new HBRP legislation and its potential impacts, please contact our Real Estate Group.
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[1] https://www.bcfsa.ca/industry-resources/real-estate-professional-resources/knowledge-base/frequently-asked-questions/home-buyer-rescission-period-frequently-asked-questions
[2] https://www.bcfsa.ca/media/2861/download
[3] https://archive.news.gov.bc.ca/releases/news_releases_2020-2024/2022FIN0026-001134.htm
