Change in the Real Estate Rules and what it means to you
“Cooling off Period” for Buyers known as Home Buyers Rescission Period
Coming off an unprecedented real estate market, a change in the real estate market rules was made by the government of BC in an effort to protect homebuyers. In this article, we provide clarification on how this change will affect you as a consumer.
Effective January 3, 2023 the Home Buyers Rescission Period (HBRP) allows the buyer of a residential property the opportunity to rescind their offer within 3 days of acceptance of the offer. This comes with a financial penalty and cannot be waived by the buyer or seller.
Once the contract of purchase and sale is accepted by both the buyer and seller the rescission period begins the next business day. This allows the buyer 3 business days to rescind the offer. If the buyer chooses to rescind their offer during this time, a Notice to Rescind shall be delivered to the seller along with the rescission fee.
If the offer contains subjects (financing, home inspection ect.), this runs concurrently with the rescission period. This new change in real estate does not begin after subjects are removed.
If a rescission notice is served to the seller, the buyer must pay the seller 0.25% of the purchase price of the property.
Purchase price: $ 1,100,000.00
Rescission fee: $ 2,750.00
The Home Buyer Rescission Period applies to the follow types of real estate transactions:
- Single family detached property
- Semi-detached house
- Townhouse or duplex
- Condo or other multi-unit dwelling
- Residential strata lot
- Manufactured home
The team at Vrecko Real Estate group share some of their top questions:
Why make this change in the real estate rule?
This rule was implemented as a result of the unprecedented estate market of 2020 and 2021. Where home buyers were being forced to make a quick decision, sometimes sight unseen with no conditions to protect them. If a homebuyer wanted to secure a property during this time, in many cases the only option when competing with multiple offers, was to make their offers as appealing as possible. Often resulting in unconditional offers, thousands (sometimes hundreds of thousands) of dollars over the asking price. This rescission period will now allow buyers to secure a property but have an option to back out within the 3 days if they get “cold feet”. This comes with a fee, however, will give the buyer a peace of mind.
How does this affect someone Selling?
As a home seller, this change in the real estate rule won’t dramatically affect their ability to sell to a qualified buyer. After an accepted offer, while waiting for the rescission period to expire, the homeowner is still able to show the property to potential buyers and also consider any back up offers. The difference will be when an unconditional offer is accepted, the property is not sold until that period expires. If the rescission is exercised and the Notice of Rescission is delivered, the seller is entitled to 0.25% of the purchase price and is free to move onto the next offer.
Why now? Hasn’t the market cooled off already?
Some argue this change in the real estate rule comes a little too late. Yes, the real estate market has seen a dramatic decrease in sales over the last 6 months. In most markets, this decrease has put an end to the frenzy which led to multiple offer situations.
Regardless, this change in the real estate rule is here to stay and will be there to protect future home buyers.
For more information on the Home Buyer Rescission Period visit the BCFSA wesbite.