Last January, the government of British Columbia, Canada rolled out a new real estate policy known as the Home Buyer Rescission Period (HBRP). According to the British Columbia Financial Services Authority (BCFSA), the HBRP gives homebuyers up to three business days to back out of an offer on a home after accepting it. 

The HBRP is supposed to serve as an extra layer of consumer protection in the heated real estate market. However, three months after taking effect, multiple reports suggest its impact could have been more impressive. One realty reported that only two of their 300 transactions took advantage of the policy, all while the market has cooled down in recent months. 

Regardless, there are no plans to rescind the policy (no pun intended) as of this writing. Despite the poor timing, the HBRP may still help active and prospective homebuyers. To give you some ideas, here are a few crucial things to know about this policy:

1. Not All Homes Are Eligible 

The BCFSA states that all detached and semi-detached homes, townhouses, and other multi-unit dwellings are eligible for the HBRP. Other qualified properties include residential strata lots (as defined by the Strata Property Act), deployed prefabricated homes, and cooperative interests (as defined by the Real Estate Development Marketing Act) that guarantee the right of occupation. 

That said, such homes aren’t eligible for the HBRP if they’re: 

• Located on leased land 

• Sold at an auction 

• Sold under a court order 

Generally, the buyer must inform the seller of their intent to withdraw within the period. Sellers can’t waive a buyer’s right to withdraw from a deal nor require a buyer to give their reason for doing so. However, such intent should be in writing, either in a separate form or integrated into the sale contract.

2. Rescission Isn’t Free 

Advocates believe that the HBRP will make the playing field between buyers and sellers more level, especially regarding penalties. Under Section 6 of the HBRP Regulation, rescinding homebuyers must pay sellers equivalent to 0.25% of the property’s purchase price as stated in the sale contract. For example, if a property’s stated price is CAD$500,000, the rescission fee is CAD$1,250. You can use a home buyer rescission period calculator to calculate the fee. 

If the buyer made a deposit before the rescission, Subsection 2 indicates that the seller must get the payment from there, whether or not it’s enough. Any remainder after deducting the fee must be returned to the buyer. The same applies to deposits made in a brokerage trust account. 

Neither party can negotiate a lower or higher rescission fee as the rate is fixed. However, legal experts agree that it can change if they agree on a counteroffer with a purchase price different from the previous one.

3. Only For Deals Closed On Or After January 3rd 

The HBRP has been in discussion since 2022, only taking effect on January 3, 2023. Given this, only property deals made on or after the effective date can benefit from the rescission period. That also includes deals in negotiations before January 3 and only closed on or after the effective date. 

Speaking of the latter, the contract for such deals may not have the HBRP disclosure statement that’s now required in current and future contracts. Section 42 of the Property Law Act, one of two new additions following the HBRP taking effect, states that the rescission period still applies whether or not it’s stated in the contract, provided the property is eligible. 

Nevertheless, Section 57.1 of the Real Estate Services Rules requires sellers to disclose buyers’ right to rescission. The most common approach is filling out the BCFSA’s HBRP disclosure form and affixing it to the contract.

4. Weekend Holidays Aren’t Counted Twice 

The policy is clear about the period’s duration, three business or working days. Most offices, including real estate offices and banks, don’t usually work on weekends or holidays, so such days are excluded from the count. In this case, the following day falls on a non-weekend or non-holiday. The term ‘holiday’ in this context includes nationwide and B.C.-specific holidays.  

But what if a holiday falls on a weekend, such as this year’s Truth and Reconciliation Day on a Saturday? The BCFSA states that weekend holidays don’t influence the duration of the period. For example, a buyer that confirms the deal on September 29 still has until October 4 to rescind. Also, note that the count begins on the business day after the confirmation.  

Knowing this bit, even if it sounds straightforward, is essential. But for better guidance, communicate with a real estate professional should you decide to exercise your right to rescind a recently confirmed deal. 

Conclusion 

As far as industry analysts and leaders claim, the HBRP might not have come at an ideal time. Then again, the future is rife with uncertainties, and the HBRP may shine when Canada enters another real estate slump. The good news is that the government continues fine-tuning the policy to serve its purpose more effectively.