Comparing BC Rescission Periods for New & Existing Homes
Updated by Mike Stewart Realtor July 10th, 2023
The real estate market in British Columbia highly regulated by the provincial government with various regulations and programs designed to protect home buyers.
Two such initiatives are the BC Home Buyers Rescission Period and the 7-day rescission period for presales.
This article will delve into the intricacies of these two programs, comparing and contrasting their features, benefits, and implications for home buyers in BC.
BC Home Buyers Rescission Program – The Cooling Offer Period
This program is often referred to as a the “cooling off period” in BC for existing properties.
The BC Home Buyers Rescission Period (HBRP) is designed to protect home buyers from hasty or ill-informed decisions on the purchase of existing and not new properties in this province.
It allows buyers with a three business day (weekdays excluding holidays and weekends) cooling-off period after getting an accepted contract of purchase and sale on the purchase a new or pre-owned home, during which a buyer can kill the deal.
The HBPR is distinct from the subject removal if there are subjects on the offer and can be invoked if there are or are no subjects on an offer.
You can Rescind, But It will Cost You
During this period, the buyer has the right to rescind or cancel the contract of purchase and sale on a property for any reason for 3 business days. But in contrast with the 7 day rescission period, the buyer is required to pay the seller .025% of the purchase price to exercise this right of rescission.
The program is particularly beneficial for buyers who may feel pressured into making a purchase decision. It provides them with an opportunity to reconsider their decision, consult with legal or financial advisors, or simply take a step back to ensure they are making the right choice.
HBPR – Somewhat Redundant with Subject Conditions
That said, in standard practice Realtors who know what they are doing, advise their clients to put subjects on their offers except in exceptional circumstances that are beyond the scope of this article.
The use of subject conditions allows a buyer to kill a deal on a property at no cost. Subject conditions are used constantly and were prior to the introduction of the HBRP.
There is widespread discussion on the true utility of this program for buyers in BC among the real estate community. There is speculation that this policy may have been more of a political move to ensure the current provincial government has talking points on “doing something” about real estate in BC going into the next election cycle.
In practice, this legislation has made transactions slower, added more uncertainty to sales, increased costs, while doing very little to increase buyer protections.
7-Day Rescission Period for Presales in BC
On the other hand, the 7-day rescission period for presales in BC is a regulation that specifically applies to the purchase of presale condos and new homes across the province. Presales are condos, townhouses, and other properties that are offered for sale before they are fully constructed.
The 7-day rescission period for presales begins on the later of one of these two things happening:
- the buyer receiving a copy of the disclosure statement from the developer and signing a document confirming receipt or
- getting an accepted offer on the presale signed by both buyer and the developer.
You Can Rescind for Free with Presales
During seven day rescission period, the buyer has the right to cancel the contract for any reason with no penalty the buyer. This provides an added layer of protection for buyers, given the inherent risks associated with purchasing a property that is not yet built.
This policy is widely accepted as useful by the real estate community and was enacted with actual buyer safety in mind as opposed to political considerations of the provincial government.
Comparing the 7 Day Rescission Period and HBRP
While both programs aim to protect home buyers, there are several key differences between the BC Home Buyers Rescission Period and the 7-day rescission period for presales.
- Scope: The BC Home Buyers Rescission Period only applies to pre-owned residential properties. In contrast, the 7-day rescission period applies on to to presales and new construction residential properties.
- Different Legislation – The 7 day rescission period is part of the Real Estate Marketing Development Act (REDMA) legislation governing presales and new construction homes, whereas the Home Buyer Rescission Period is an amendment of the Real Estate Services Act (RESA) governing real estate sales, but not presales in BC.
- Duration: The BC Home Buyers Rescission Program provides a 3 business day cooling-off period which excludes weekends and holidays, whereas, the 7-day rescission period for presales offers a longer window of seven days (Including weekends and holidays) for buyers to reconsider their decision.
- Cost – Exercising the 7 day right of rescission for new homes in BC is free. Exercising the Home Buyer Rescission Period right involves a payment equal to .025% of the accepted offer price.
- Trigger: The BC Home Buyers Rescission Program’s cooling-off period begins immediately after the contract is signed. However, the 7-day rescission period for presales starts on the later of when the buyer receives the disclosure statement from the developer or an accepted offer.
Conclusion
While they differ in scope, duration, and trigger, both programs provide a cooling-off period that allows buyers to reconsider their purchase decisions. As a home buyer, understanding these programs and their implications can help you safely navigate the complex landscape of BC’s real estate market with confidence and peace of mind.
The BC Home Buyers Rescission Program and the 7-day rescission period for presales are both designed to protect the interests of home buyers, but they cater to different scenarios and offer different durations for reconsideration. The former is a more general program that applies to pre-owned residential properties, while the latter is specifically designed for the presale market, reflecting the unique risks and uncertainties associated with buying a property that is not yet built.
While the BC Home Buyers Rescission Program offers a shorter cooling-off period, it is applicable immediately after the contract is signed, providing a quick safety net for buyers that may or may not be useful as almost all real estate offers in BC include subject conditions.
The 7-day rescission period for presales, on the other hand, offers a longer window for buyers to reconsider their decision, but it only begins the later of the disclosure statement or an accepted offer being received, which could be some time after the initial agreement.
Ultimately, both programs underscore the importance of making informed decisions when purchasing a home. They provide opportunities for buyers to take a step back, review their decisions, and consult with professionals if needed. This helps ensure that buyers are comfortable with their purchase.
In the fast-paced and high-stakes world of real estate, these can be protections are invaluable. They provide a buffer against hasty decisions and allow for careful consideration of one of the most significant financial decisions most people will make in their lifetime. Whether you are consideri