On July 21, 2022, the Government of British Columbia announced the creation of regulations that will enable a mandatory three-day Homebuyer Protection Period ("HPP"), also known as a "cooling off period" or "right of rescission" starting on January 1, 2023. The new regulations can be implemented directly by the government due to previously passed amendments to the Property Law Act in April 2022.
The HPP is unique to British Columbia, as no other Canadian province has yet implemented a similar right for homebuyers. The primary intent of the amendments is to afford homebuyers, who might otherwise feel pressured to make a "no subjects" offer, the opportunity to perform due diligence and make more informed decisions about buying property. Previously, due to difficulty in finding properties for sale, many potential homebuyers were skipping home inspections to entice sellers into choosing their offers.
The changes were made as a result of the 2022 B.C. Financial Services Authority's report on B.C. homebuyers.
Summary of Changes
The legislative changes add a right of rescission to the Property Law Act in which a purchaser of residential real property may rescind the contract of purchase and sale for a property by serving written notice of the rescission on the seller within three days (beginning on the first business day following the acceptance of an initial offer). Nevertheless, buyers should note that if they decide to exercise their right of rescission and back out after completing their due diligence, they are charged a fee of 0.25% of the purchase price, or $250 for every $100,000.
The HPP applies to a variety of different properties, including:
- detached homes;
- semi-detached homes;
- apartments in a duplex 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 HPP cannot be waived. However, the HPP does not apply in the following situations:
- sales of residential real property located on leased land;
- sales of leasehold interest in residential real estate;
- sales at auction; and
- sales under a court order or supervision of a court.
The HPP also does not apply to pre-construction sales of multi-unit development properties, as they are already subject to a 7-day rescission period under Section 21 of the Real Estate Development Marketing Act ("REDMA").
While buyers can still make offers conditional on home inspections or financing for any length of time, this minimum protection period ensures an even playing field regardless of the offer received. However, it does add an element of uncertainty to sellers, and therefore sellers should not treat their sale as "complete" unless this right-of-rescission period has passed. Realtors will also be required to provide general information on the HPP to all consumers at the time of signing their contract of purchase and sale.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.