Real Estate Adopts High Level of Consumer Protection With Rescission Period

In a red hot seller's market, when there are often 10 plus offers on one home, people were buying wrecklessly just to secure a home.  This rescission period is designed to allow people to still do their full due diligence on a property they are buying.  Now that the market has shifted to a buyers market, it's rare for people to make subject free offers but I guess better late than never.  
The Home Buyer Rescission Period (HBRP), previously known as “Homebuyer Protection Period” and “cooling-off period,” is in full effect as at January 3, 2023.  Here are some answers to your questions (from BC Real Estate Associate website.  

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 an unconditional 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,
• townhouses,
• apartments in a duplex or other multi-unit dwellings,
• residential strata lots,
• manufactured homes that are affixed to land, and
• cooperative interests that include a right of use or occupation of a dwelling.

How much is the rescission fee?

Buyers who exercise 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. 

What is meant by “three business days?”

The HBRP provides that the buyer must exercise their rescission right within three clear business days. Business days do not include Saturdays, Sundays or holidays. Holidays are defined within the Interpretation Act to include:

• Christmas Day
• December 26
• Family Day
• Good Friday
• Easter Monday
• Victoria Day
• Canada Day
• British Columbia Day
• Labour Day
• National Truth and Reconciliation Day
• Thanksgiving
• Remembrance Day, and
• New Year’s Day

In addition, a day set by the federal or provincial government, such as a day of mourning or celebration, is considered a public holiday.

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, or presenting an offer to a client, containing all of the following notices: 

• that the HBRP cannot be waived,
• the rescission period time length,
• the dollar amount of the rescission fee,
• the deposit handling, and
• exemptions

Are brokerages required to retain a copy of a rescission notice?

Yes, brokerages are required to retain copies of notices of rescission that are prepared by or on behalf of a brokerage and served on a seller. Brokerages are also required to retain copies of rescission notices that are received by the brokerage.

How are sellers supposed to receive rescission notice?

Buyers must serve rescission notice to the seller through registered mail, fax, an email with a read receipt or personal service. Rescission notices must contain:

• the address, PID or description of the property,
• the names and signatures of the buyer(s),
• the names of the seller(s), and
• a date of notice.

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 private sales and FSBO properties.

Can the HBRP be waived?

No, 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 of supervision of a court.

Will the rescission 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 rescission fee?

The rescission fee amount is provided to the seller

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 published a white paper, “A Better Way Home,” which included more than thirty recommendations to improve consumer protection. BCREA does not support a Home Buyer Rescission Period (HBRP), because it is not likely to have a meaningful impact on consumer protection and may have unintended consequences on affordability. 

See FAQ from BCFSA website here.