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As of January 3rd, 2023, The New Home Buyer Rescission Period, or “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.
What types of properties does the HBRP apply to?
The types of residential real estate property that are subject to the legislation are as follows:
A detached house;
A semi-detached house;
A townhouse;
An apartment in a duplex or other multi-unit dwelling;
A residential strata lot, as defined in Section 1(1) of the Strata Property Act;
A manufactured home that is affixed to land; and
A cooperative interest, as defined in Section 1 of the Real Estate Development Marketing Act, that includes a right of use or occupation of a dwelling.
Are there any exemptions to the HBRP?
The following types of properties are excluded from the legislation and the rescission period does not apply:
Residential real property that is located on leased land;
A leasehold interest in residential real property;
Residential real property that is sold at auction; and
Residential real property that is sold under a court order or the supervision of a court.
The HBRP also does not apply to any purchase and sale of property under the Real Estate Development and Marketing Act (“REDMA”) where Section 21 applies.
When does my rescission period start and end?
The rescission period begins the next full business day after an offer is accepted. For example, if your offer is accepted by a seller on Monday afternoon, your rescission period would end at 11:59 p.m. on Thursday. Should your offer contain subject conditions (e.g., financing, home inspection etc.), these will run concurrently with the rescission period. The rescission period DOES NOT begin after subject removal.
How does the seller collect the rescission fee?
If you, as a buyer, happen to provide your real estate licensee with a deposit upon acceptance of your offer, and you exercise your right of rescission within the allowable period the real estate brokerage will pay the 0.25% rescission fee to the seller out of those funds and return the remaining deposit to you, the buyer.
If you have not provided a deposit with your accepted offer, you will need to pay the seller the required rescission fee directly or to your real estate licensee who may deliver the funds directly to the seller or the seller’s representative. Alternatively, you are able to provide the fee directly to the seller as well. If you fail to pay the rescission fee, the seller can file to recover the funds through the courts.
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). Please see the HBRP Calculator here.
Now that we understand what the HBRP is, let's take a look at a few frequently asked questions provided by BCFSA:
Do sellers also have a rescission right?
No. Only buyers may rescind a contract under the Home Buyer Rescission Period.
Does the buyer have a right to access the property during the three-day rescission period?
Access to the property may be addressed in the contract of purchase and sale. If the contract is subject to inspection or has a term permitting the buyer to access the property, then the seller must abide by the terms of the agreement. The buyer does not have an automatic right to access the property during the recission period, although a seller may wish to grant access to a buyer during this period if they choose.
Does the buyer need a reason to exercise their right of rescission?
No. The buyer may rescind the contract at any point during the rescission period for any reason. This reason is not required to be relayed to the seller.
Can my client, either buyer or seller, waive the rescission rights under the Property Law Act?
No. The right of rescission is guaranteed under the legislation and cannot be waived by any party. Even if the parties to the contract notionally agreed to waive the Home Buyer Rescission Period (“HBRP”), such an agreement would be contrary to the legislation.
What does three business days mean?
The three business days begin the day after acceptance of an offer is signed. For example, if an offer is accepted on a Monday, then the recission period will end at 11:59:59 p.m. on Thursday, where there is no holiday falling into that period. Remember, business days are Monday through Friday and do not include Saturdays, Sundays or holidays. You should be mindful that for the purpose of calculating the rescission period, “holidays” are those days defined in the Interpretation Act. This list is different than the list of “statutory holidays” commonly used for employment purposes.
Please connect with me, should you have any further questions regarding the HBRP.