The Home Buyer Rescission Period, what does it mean?
Starting January 3, 2023 there will be something new that buyers and sellers in British Columbia will have to deal with. Buyers will no longer be able to bring in a ‘subject-free’ offer and have it unconditionally accepted the same day.
Since early in the COVID-19 pandemic and even before Canada and BC’s housing market specifically has experienced low rental inventory and conditions where prices quickly escalated and working for home was more common. Low interest rates meant buyers and investor could borrow money at low cost with higher returns from rentals. It seemed to be a battle of the buyers…who can pay more to win the home.
What does this mean for buyers and sellers?
Once an offer is provided and accepted, the 3 day recession period comes into play. Every-time there is a counter offer or change, the rescission period is automatically started. The Buyer can still add longer subjects to their offer, and will be able to carry out any due diligence within that period.
Should a buyer not be able to remove subjects they will have to provide a ‘Notice Of Rescission’. The purpose of this is to provide a standardized form to notify the Seller the Buyer is unable to carry forward with the contract. The Buyer will have to provide details regarding the transaction that will be documented on the form. The notice also sets out details regarding payment of the prescribed fee equal to 0.25% of the purchase price for the property will be deducted from a deposit if a deposit was received with the Contract of Purchase and Sale. If a deposit was not received, the buyer is required to promptly pay the seller an amount equivalent to the fee.
Will The Home Buyer Rescission apply to all residential property?
The rescission right applies to residential real property defined as the following:
– Detached homes
– Semi-detached homes
– Apartments in a duplex or other multi-unit dwelling
– Residential strata lots
– Manufactured homes that are affixed to land
– Cooperative interests that include a right of use or occupation of a dwelling
Will there be any exemptions?
The following properties are exempt from recession rights:
– Residential real property that is located on leased lands
– A leasehold interest in residential real property
– Residential real property that is sold at auction
– Residential real property that is sold under a court order or the supervision of a court; and
– A contract or offer to purchase to which Section 21 of the Real Estate Development Marketing Act applies
An Example of a Offer where the Recession period is triggered
The home price is $900,000, and an accepted offer happens on January 20th, 2022.
Expiration of Rescission Period ends at 11:59:59 pm on 2023-01-25.
Should the Buyer back out of the contract, they would potentially be liable to pay $2,250.00
Where the Home Buyer Rescission Period applies, the rescission period is three business days not including Saturdays, Sundays and holidays. The three business days begin the date after final acceptance by a seller and buyer.
*Section 29 of the Interpretation Act defines holidays to include:
(a) Sunday, Christmas Day, Good Friday and Easter Monday,
(b) Canada Day, Victoria Day, British Columbia Day, Labour Day, Remembrance Day, Family Day and New Year’s Day,
(c) December 26, and
(d) a day set by the Parliament of Canada or by the Legislature, or appointed by proclamation of the Governor General or the Lieutenant Governor, to be observed as a day of general prayer or mourning, a day of public rejoicing or thanksgiving, a day for celebrating the birthday of the reigning Sovereign, or as a public holiday.
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