On July 21, the provincial government introduced a home buyer protection period, the details of which are outlined in a new regulation that allows home buyers to back out of a residential purchase up to three business days after signing a contract.

The government will begin to enforce this regulation starting on January 1, 2023.

The province claims that this three-day cooling off period will help ensure that all homebuyers have an opportunity to conduct due diligence, such as securing financing or arranging home inspections.

Read the province’s announcement.

Read the regulations around the cooling off period.

The homebuyer protection period basics

• The period will be effective January 1, 2023.
• Buyers will have three business days to back out of a residential purchase after signing the contract.
• This applies to all contracts, regardless of subjects. We’re asking the government for clarity on what constitutes a “rescission”.
• The period is mandatory and can’t be waived.
• Buyers who back out of a contract within this three-day period will have to pay a rescission (cancellation) fee of 0.25%. For example, if the purchaser exercises the right of rescission on a $1-million home, they’d be required to pay the seller $2,500.
• The rescission fee is paid to the seller.
• The enforcement mechanism for the rescission fee, and for any deposits that may need to be returned, is unclear at this time.
• Licensees must provide general information on the period to all clients through the Disclosure of Representation in Trading Services.

Deposits

• If a deposit is held in trust, brokerages may release it upon rescission.
• If there’s a balance, it’s returned to the buyer, regardless of what’s provided in the contract.

Exemptions and waivers

While the period can’t be waived, there are narrow exemptions, including sales:

• Subject to section 21 of the Real Estate Development Marketing Act.
• Of residential real estate located on leased land.
• Of leasehold interest in residential real estate.
• At auction.
• Under a court order or supervision of a court.

Residential real estate definitions

The homebuyer protection period will apply to:

• detached homes;
• semi-detached homes;
• townhouses;
• apartments in a duplex, triplex 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.

The new period doesn’t apply to presale properties, which already subject to a rescission period under the Real Estate Development Marketing Act.

The notice of rescission

• Homebuyers must serve rescission notice to the seller through registered mail, fax, email with read receipt, or personal service.
• The notice must contain the address, PID or description of the property, the names and signature of the buyer(s), name of the seller(s), and the date of notice.

• a copy of any rescission notices it prepares or receives for auditing and reporting purposes.

Our Government Relations team is working with BCREA to study this new regulation and get more information from government on how it will be implemented. They’re also looking at the other recommendations BCFSA made in a recent report on real estate regulation that the provincial government is considering.

We’ll provide more information on this cooling off period in the weeks ahead.