Cooling-Off Period on Residential Real Estate Comes into Effect January 2023

BFSA (NEWS RELEASE) - In January 2023 the B.C. government will implement changes to the Property Law Act to make the Home Buyer Rescission Period (“HBRP”) or ‘cooling-off period’ mandatory for residential real estate transactions. 

In the months leading up to the HBRP, BCFSA’s role as the provincial regulator for the sector is to provide real estate licensees with the details they need to understand HBRP and navigate this new process with clients. Updated regulatory information, practice guidelines, and FAQs will accompany newsletter articles, e-mails, and targeted webinars for trading services licensees so they can help consumers to be informed during a sale. 

We’re also developing materials to inform buyers, sellers, and the public about how the HBRP will work and what they can expect. Resources including updated buyer and seller guides will help consumers understand how the HBRP will impact home sales and will be made available on BCFSA’s website to improve consumer awareness. 

The HBRP will allow homebuyers to rescind a contract to purchase residential real estate within the set period, even if the contract does not include conditions. It will begin the next business day after the final acceptance of an offer. The rescission period will be in effect for three business days and cannot be waived by either the seller, buyer, or their representatives. During this period, homebuyers can still legally withdraw from the purchase without justification at the cost of a rescission fee equal to 0.25 per cent of the purchase price. 

The HBRP and any subject conditions in the contract of sale both start counting down at the same time and run concurrently if subject conditions have been included in the contract of sale. 
​
BCFSA recommends that homebuyers speak with their real estate licensees to understand the requirements of the HBRP, so ensure you keep up to date with information as we provide it.

(REBGV - Aug 9 ,2022)
Key facts
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” (cancellation).
• 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 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.
• Realtors 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 defined
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.

Additional Disclosure
Realtors must also provide an additional mandatory disclosure when presenting an offer to a client, outlining:

• that the protection period can’t be waived,
• the rescission period,
• the dollar amount of the rescission fee,
• deposit handling, and
• the homebuyer protection period exemptions.