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As of January 1, 2023, British Columbia became the first jurisdiction in Canada to implement a rescission period for real estate transactions, also known as a "cooling-off period.”
The amendments to the province’s Property Law Act were first announced over a year ago by the provincial government, but have now officially came into law.
The Home Buyer Rescission Period (HBRP), as it’s officially known, allows homebuyers to back out of their home purchase within a period of three business days after their offer is accepted.
Those who exercise their right to rescind their purchase offer must pay a 0.25% cancellation fee, or $250 per $100,000 of the purchase price. This fee would be payable to the sellers within 14 days.
The new legislation, which applies to residential real estate, was introduced by the B.C. government in an effort to introduce some "cooling-off” time in what was, at the time, a very hot real estate market.
"Lack of time for buyers to complete due diligence can exacerbate risk or be used to hide property defects that otherwise may have been discovered,” housing analyst Leo Spalteholz commented in a B.C. government release.
"Though the market has cooled dramatically in recent months, it’s good to proactively put buyer protections in place,” he added. "The rescission period strikes a sensible balance between protecting buyers while the fee should protect sellers from frivolous invocation of it.”
Questions about the recession period
For some more specific details of B.C.’s new rescission period, we’ve included the following questions and answers based on information provided by the B.C. Financial Services Authority.
When does the rescission period begin?
The three-day rescission period begins the full business day after a purchase offer is accepted. For example, if an offer is accepted on a Monday afternoon, the rescission period ends at 11:59 am on Thursday. Any subject conditions included in the offer, such as financing, a home inspection etc., will run concurrently with the rescission period. The rescission period does not begin after subject removal.
Which properties are subject to the HBRP?
The new HBRP applies to all residential properties, including private sales and those for sale directly by the owner. This includes:
- Detached homes
- Semi-detached homes
- Townhouses
- Apartments in a duplex or other multi-unit dwellings
- Residential strata lots
- Manufactured homes that are affixed to land
- Cooperative interests that include a right of use or occupation of a dwelling
What are some of the exemptions?
The following types of properties are excluded from the rescission provisions:
- 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
The rescission right also does not apply to any purchase and sale of property under the Real Estate Development and Marketing Act, which applies to new developments/pre-sales, where Section 21 of that Act applies. In those cases, they are still allowing a 7 day recission period, as that has been in place for some time now.
For those interested in the full details of the new law, please visit the BCFSA consumer guide here.
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