BC’s Home Buyer Rescission Period: Your Questions Answered
TAGS: A Better Way Home BCFSA Consumer Protection Cooling Off Period Homebuyer Protection Period Homebuyer Rescission Period Real Estate Practice
The Home Buyer Rescission Period (HBPP), previously known as “Homebuyer Protection Period” and “cooling-off period,” is expected to be implemented province-wide in January 2023. With many details yet to be determined by the BC Government, we have been hearing from REALTORS® with questions. In this post we answer some of those questions.
Bookmark this page since we’ll be updating this post as we learn more details from the BC Government. In addition, if you are interested in subscribing to BCREA’s regular advocacy newsletter, please email [email protected].
What is the Home Buyer Rescission Period (HBRP)?
The HBRP, commonly known as a "rescission period," gives buyers the right to withdraw from a purchase agreement within a specified period of time after an offer is accepted. Without a rescission period, if a buyer wishes to terminate a contract, they would need to negotiate with the seller and would typically face significant financial penalties or legal ramifications.
What properties will be subject to the HBRP?
The policy will apply to the following types of structures:
- detached homes,
- semi-detached homes,
- apartments in a duplex 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.
What are REALTORS®’ requirements to inform their clients?
All real estate licensees must provide general information on the HBRP to all consumers through a form approved by the Superintendent. Licensees must also provide an additional mandatory disclosure at the time of preparing an offer on behalf of a buyer and presenting an offer to a client, containing all of the following notices:
- the HBRP cannot be waived,
- the rescission period time length,
- the dollar amount of the rescission fee,
- the deposit handling, and
- HBRP exemptions.
Are brokerages required to retain a copy of a rescission notice?
Yes, brokerages must retain a copy of rescission notices that it prepares and is served to the seller or that the brokerage receives.
How are sellers supposed to receive rescission notice?
Buyers must serve rescission notice on the seller through one of the following methods: registered mail, fax, email with read receipt, and personal service. Rescission notices must contain:
- address, PID or description of the property,
- names and signature of the buyers,
- name of the seller(s), and
- date of notice.
What is meant by “three business days?”
For the HBRP, “business day” means a day other than a Saturday, Sunday or a statutory holiday. The rescission period is three business days, beginning the day after a contract is signed.
How much is the rescission fee?
Buyers who use their right to rescind will have to pay a fee of 0.25% of the purchase price. For a $1,000,000 home, this would result in a $2,500 fee paid to the seller.
How does a HBRP impact other subjects in my contract?
Other subjects are unaffected by the HBRP.
What about For Sale by Owner (FSBO) properties?
The HBRP applies to all residential real estate sales, which includes FSBO.
Can the HBRP be waived?
The HBRP cannot be waived.
Are there any exemptions?
. There are narrow exemptions, including:
- sales of residential real property located on leased land,
- sales of leasehold interest in residential real estate,
- sales at auction,
- sales by way of an Assignment of Contract,
- pre-construction sales of multi-unit development properties, which are already subject to a seven-day rescission period, and
- sales under a court order or supervision of a court.
Will the termination fee be taken from the deposit?
If a deposit is held in trust, brokerages must release the rescission fee to the seller upon rescission. The balance, if any, is returned to the buyer, despite what may be provided in the contract.
Who will receive the termination fee?
The rescission fee amount is provided to the seller.
How can I learn more about the HBRP’s details when they are available?
This blog post will be updated as we learn more about the HBRP from BCFSA and the Ministry of Finance. In addition, you can follow BCREA’s advocacy news, which will include updates on the HPRP, by subscribing to our Advocacy Update. To do so, please email [email protected].
What are the next steps for BCREA?
BCREA staff are updating and creating new Standard Forms and updating professional development courses to ensure REALTORS® are equipped with the tools needed to serve effectively clients. Staff are also meeting regularly with BCFSA to try and answer outstanding questions.
Will the Ministry of Finance implement additional consumer protection measures?
In May, BC’s real estate regulator, the BC Financial Services Authority, published an independent report, “Enhancing Consumer Protection in BC’s Real Estate Market,” which offered advice and recommendations to the Ministry of Finance to improve consumer protection. There was significant overlap between BCFSA’s advice and BCREA’s “A Better Way Home” paper.
The Ministry of Finance has not indicated whether they will implement additional consumer protection measures within the coming months.
What policies do BCREA recommend to improve consumer protection?
Earlier this year, BCREA has published a white paper, “A Better Way Home,” which included more than thirty recommendations to improve consumer protection. BCREA does not support a HBRP, because it is not likely to have a meaningful impact on consumer protection and may have unintended consequences on affordability.
If you have any additional questions, we encourage you reach out and share them at [email protected].
Below are a list of other resources on the HBRP:
- BC Government news release
- Home Buyer Rescission Period Regulation (Order in Council)
- Disclosure of certain clients of the right of rescission (Order in Council)
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