Buying a Home, Real Estate News

The BC Home Buyer Rescission Period Explained

The Home Buyer Rescission Period (HBRP), previously known as “Homebuyer Protection Period” and “cooling-off period,” came into effect province-wide on January 3, 2023. This period allows homebuyers to rescind a contract within three business days after the final acceptance of a firm and binding offer. The rescission period applies to all contracts, regardless of subjects. It cannot be waived by either the seller, buyer, or their representatives.

In this blog, I’ll go through more details of the cooling off period, as well as addressing frequently asked questions. I’ll answer questions such as: what types of properties does the cooling off period apply to? What type of properties are exempt? How is the rescission fee calculated and paid? And more.

WHAT IS THE HOME BUYER RESCISSION PERIOD IN BC?

The HBRP, gives buyers the right to withdraw from a purchase agreement within a specified period of time after an offer is accepted. In British Columbia this is a 3-day period that provides the buyer an opportunity to rescind (cancel) their Contract of Purchase and Sale with a small financial penalty.

If the buyer backs out during those three business days (NOT related to subject removal) then they owe the seller .25% of the agreed upon sale price of the home as a rescission fee. For example, $2,500 on $1,000,000.

WHAT TYPE OF PROPERTIES DOES THE HBRP APPLY TO?

The Home Buyer Rescission Period applies to residential real property. This includes private sales and FSBO properties defined as the following:

Detached homes
Semi detached homes
Townhouses
Apartments in a duplex or multi-unit/family dwelling
Residential strata lots (condos)
Manufactured homes that are affixed to land
Cooperative interests that include a right of use or occupation of a dwelling

WHAT PROPERTIES ARE EXEMPT?

The following properties are EXEMPT from the three day cooling off period:

Leasehold land (e.g., SFU)
Property sold at auction
Foreclosures or under court order/supervision of a court
Presales or properties under Section 21 of the Real Estate Development Marketing Act (REDMA)

FREQUENTLY ASKED QUESTIONS

Q: How are three business days calculated?

A: The three business days (Monday to Fridays excluding Saturdays and holidays) must be three full days. For example. If an offer is accepted on Monday, the buyer would have until 11:59pm on Thursday to exercise their rescission rights.

Q: Do subject removal periods run concurrently with the three business day rescission period?

A: Yes. If you have a subject to finance in the offer with seven days to remove it, the rescission period runs at the same time as the first three days of the financing subject removal period.

Q: If a buyer notifies a seller that they are unable to remove subject conditions during the rescission period, do they owe the seller a recission fee?

A: No. The buyer would only owe a recission fee if they invoked their rescission right and provided the required notice to the seller. If the buyer is unable to remove subjects, they would follow the same process they always have, even if it is during the rescission period.

Q: Will the rescission fee be taken from the deposit?

A: 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.

HOW DOES THE HOME BUYER RESCISSION PERIOD IMPACT ME AS A BUYER?

In the event you have written a subject free offer or have a subject removal period that is less than three days, then you will have an automatic right to a full 3 business days to consider the purchase after acceptance.

This period is not waivable; it is an automatic right of rescission. This will allow you time to do your due diligence if not already done (e.g., to arrange financing). But, it DOES NOT grant you automatic right to access the property within that 3 day window. If you’d like to view the property during your ‘cooling off’ period then there must be a term included in the contract that the seller agrees to.

If you have a contract with a subject removal period that is longer than three days then the rescission period will likely not affect you. This is because the subject removal period allows you an alternative opportunity to back out of the contract with relation to subjects listed (financing, inspection, etc.). If you back out with relation to a subject during the three day cooling off period, you will not owe the rescission fee.

HOW DOES THE HOME BUYER RESCISSION PERIOD IMPACT ME AS A SELLER?

As a seller, the cooling off period will impact your ability to accept subject free offers. This is because all buyers will have an automatic right to a 3 day rescission period.

In a cooler or more balanced market where contracts have subjects, most subject removal periods will extend past the 3 day rescission period (a standard subject removal period is 7 days). Therefore, the rescission period will not greatly impact properties that have accepted offers with subjects of less than 3 days.