Home Buyer Rescission Period began January 3, 2023
The new Home Buyer Rescission Period (“HBRP”) is now in force for residential real estate transactions in the province.
The B.C. government introduced the HBRP, also known as the “cooling-off period,” as a consumer protection measure to give home buyers time to consider whether a purchase is right for them. 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.
Often contracts of purchase and sale contain subject clauses that provide buyers and sellers with an opportunity to perform their due diligence. The right of rescission is separate from any subject clauses that may be in the contract.
It is important to understand that the HBRP begins where an offer is accepted whether it is subject free or not. This means that the timing of any subject removal in the contract (example: inspection, finance) would run concurrently with the three-business day HBRP.
For example, a contract may provide for five days to remove a subject to financing condition. If as a ;buyer, you want want to rely on that condition to get out of the contract, you would have to be able to show that, in good faith, you tried to obtain financing but were unsuccessful.
However, if, on day two after offer acceptance, you decide that you wanted to walk away from the contract, whether or not you were successful in getting financing, you could exercise you right of rescission and pay the associated rescission fee.
It is important to ensure that any subjects and terms you include in the contract accurately reflect your needs. The HBRP is not a replacement for subjects and terms included in a contract that provide the buyer and seller opportunity to perform their due diligence.
For example, if you want an inspection on the property, make sure that the contract provides for this. Solely relying on the HBRP would not provide you a guarantee that the seller would provide access to perform the inspection. It is important that the terms that are important to you clearly indicated in the contract so that both you as buyer and the sellers can be clear on what is required of each of you.
The new form that is provided to you at the start of writing the offer, the Disclosure of Buyer's Right to Rescission, calculates the rescission fee. The fee is based on the agreed upon price between the buyer and seller. The fee is 0.25% of the accepted purchase price. For example, if the purchase price is $400,000 the rescission fee would equal $1000 (400,000 x 0.0025 = 1000).
The rescission period expires three business days after acceptance of the offer, excluding Saturdays, Sundays, and holidays, at 11.59 pm. If there are counteroffers back and forth between yourself and seller that change the price, then the rescission fee will date and the rescission expiry date may also expire as the final acceptance date may change.
More information to consumers available from the BCFSA is HERE
There are two new real estate forms required to be presented to you by your real estate Licensee. The first is
1: Disclosure of Representation of Trading Services at the time you first start talking to your Realtor® HERE
2: Disclosure of the Buyer’s Right of Rescission which is required when you write an offer with your Realtor® on a propertyHERE
Posted by Denise Brown on
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