B.C. New 3-Day Cooling Off Period for Homebuyers
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by Richard Morrison
- March 20, 2023
- Trends
- 0
Home buying in British Columbia just got a little less stressful. As of January 1st, 2023, BC has implemented a new 3-day “cooling off” period for homebuyers after an offer is accepted by the seller. This gives buyers some breathing room to conduct due diligence before being locked into a purchase.
Key Takeaways
- BC is the first province in Canada to require a cooling off period for home purchases
- The cooling off period is 3 business days after an offer is accepted
- It applies to most residential property purchases in BC
- Buyers can back out during the cooling off period but must pay a fee of 0.25% of the purchase price
- The cooling off period runs concurrently with any subjects like financing or inspection
- Its purpose is to protect homebuyers from high pressure sales tactics
As a realtor in the Greater Vancouver area for over 10 years, I’ve seen my fair share of eager homebuyers swept up in bidding wars and forgoing key protections like home inspections and subjects in their rush to secure a property. This cooling off period is a common sense policy that will benefit both buyers and sellers in the long run.
What is the Home buyer Rescission Period
Known officially as the “Home Buyer Rescission Period”, the cooling off period gives homebuyers a chance to back out of a purchase agreement within 3 business days following acceptance of their offer by the seller.
The 3 days are calculated as follows:
- Day 1 is the first business day after the offer is accepted
- It does not include weekends or statutory holidays
- Business day means Monday to Friday unless it is a statutory holiday
For example, if the seller accepts an offer on Monday, the cooling off period would end on Thursday at 11:59pm.
During this time, the buyer can rescind the offer for any reason – whether they changed their mind, weren’t able to arrange financing, or wanted to get a home inspection done.
Cost of Backing Out During the Cooling Off Period
If the buyer does choose to back out, they will owe the seller a cancellation fee of 0.25% of the purchase price.
So on a $800,000 home, the fee would be $2,000 payable to the seller.
This fee comes out of any deposit paid, or must be paid by the buyer directly within 14 days if no deposit was collected yet.
What Types of Properties Are Included?
The cooling off period applies to most residential real estate purchases in BC, including:
- Single family homes
- Townhomes
- Condos
- Duplexes
- Manufactured homes on land
Exemptions from the Cooling Off Period
Certain types of property are exempt from the cooling off period legislation:
- Homes sold via auction or tax sale
- Leasehold properties
- Court ordered sales
- Presale condo assignments
So if you’re purchasing a presale condo or a home on leased land, you won’t have the 3-day rescission period.
How Homebuyer Protection Period Impacts Subjects
One common question is how the cooling off period interacts with subjects like financing and inspection.
The cooling off period runs concurrently with any subjects in the contract.
For example, if you have a 5 day financing subject, those 5 days will include the 3 cooling off days. You can remove subjects per the contract terms without owing the cancellation fee.
However, if you simply rescind the offer during the 3 day cooling off period without invoking one of the contract subjects, then you’ll pay the 0.25% fee.
Why Was This Cooling Off Period Implemented?
The BC provincial government brought in the homebuyer protection period to curb high pressure sales tactics and give buyers more confidence in their purchase.
In 2021, over 70% of property offers in competitive markets like Vancouver were made without subjects according to government research. Forgoing key protections like financing and inspection can leave buyers exposed to costly surprises down the road.
The 3 day cooling off period acts as a bit of a safety net, giving buyers the chance to line up financing, rethink their offer price, or conduct a home inspection after the emotions of bidding wars have passed.
How Can Buyers Make the Most of the Cooling Off Period?
As a buyer, here are some tips to maximize the cooling off period:
- Get your financing pre-approved so you can shop with confidence and have a 3 day buffer to confirm details with your lender
- Consider adding a clause for access to the property during the cooling off period to do an inspection
- Line up your home inspector in advance so you can book them within the 3 day window
- Make the offer conditional on review of strata documents for condos
- Sleep on it before deciding if you want to rescind your offer
Having your ducks in a row ahead of time will allow you to make the most of the 3 days should you need or want to exercise your cooling off rights.
Impact on Sellers
For sellers, the key implications are:
- You can no longer accept a “clean” offer without subjects and be guaranteed the sale will firm up in 24 hours
- There is risk the buyer may back out upon further reflection during the 3 day period
- You may see more offers with a financing condition to account for the cooling off period
As a result, sellers can’t fully count on a sale until the rescission period has passed. Price accordingly and avoid making major financial decisions based on an offer until it becomes firm.
How Does the New Cooling Off Period Affect Work Permit Holders Buying Houses in Canada?
Work permit holders in Canada may face new challenges when buying houses in canada as a permit holder. The introduction of a cooling off period adds an extra layer of consideration. During this period, potential homebuyers need to ensure they are fully aware of any agreement before making a decision. It is essential for permit holders to understand the impact of this cooling off period to make informed choices when it comes to purchasing property.
Will This Help Cool BC’s Real Estate Market?
While the jury is still out, the cooling off period adds some balance and protections that were missing from BC’s frenzied housing market in 2021-2022.
By deterring buyers from rash decisions and uninsured offers, it may increase inventory and reduce unsustainably rapid price growth. According to data from the BC Real Estate Association, the market was already cooling rapidly in the latter half of 2022 as interest rates rose.
Time will tell, but better protecting consumers is rarely a bad thing for markets in the long run.
Q: What is the 3-Day BC Cooling Off Period For Homebuyer B.C.?
A: The 3-Day BC Cooling Off Period For Homebuyer B.C. is a new cooling-off period for buyers in British Columbia who are purchasing residential real property within the Province, where the buyer has up to three business days to think about their purchase without penalty or fee of 0.25% of purchase price (capped at $1,000). This cooling-off period was introduced by Finance Minister Selina Robinson and came into effect on January 3, 2021.
Q: Who does the 3-Day BC Cooling Off Period apply to?
A: The 3-Day BC Cooling Off Period applies to all buyers in British Columbia who are buying residential real property within the province. It also includes those purchasing a home with a value of over $1 million.
Q: What happens if a buyer exercises their rescission right during the cooling-off period?
A: If a buyer exercises their rescission right during the cooling-off period, they will have to pay the rescission fee to the seller as per the contract of purchase and sale. The fee is calculated as 0.25% of purchase price (capped at $1,000).
A: Yes, this cooling off period is regulated by BC Financial Services Authority (BCFSA). It was introduced by Finance Minister Selina Robinson under Regulation 6/2021 – Real Estate Professionals Act.
Q: When did this three day cooling off period start in British Columbia?
A: This three day cooling off period started in British Columbia on January 3rd 2021.
Q: What is the purpose of having this cooling off period for buyers?
A: The purpose of having this cooling off period for buyers is to provide an opportunity for them to think about their purchase and make sure they are making informed decisions before committing to buy a house.
Q :What should I do if I want to exercise my right to rescind after signing a contract?
A :If you wish to exercise your right to rescind after signing a contract, you need to notify your real estate agent or lawyer within three business days from signing the contract. You will then be required to pay a rescission fee which is 0.25% of purchase price (capped at $1,000) according to Regulation 6/2021 – Real Estate Professionals Act.
Q :Does Vancouver have its own homebuyer protection rules besides this new provincial rule?
A: Yes, Vancouver has its own homebuyer protection rules which are separate from this new provincial rule but both must be complied with when purchasing property in Vancouver.
Q: Does this new rule apply only when buying property in BC?
A: Yes , this new rule applies only when buying property in British Columbia.
Q: How often can I exercise my right of rescission within one year?
A: You can only exercise your right of rescission once within one year . Any additional attempts will not be allowed.
Q: Are there any other fees associated with exercising my right of rescission?
A: No, there are no other fees associated with exercising your right of rescission other than the 0 . 25 % fee capped at $ 1,000.
What Are the Closing Costs Involved When Buying a Home in BC?
Closing costs of buying a home in bc encompass various fees and charges that buyers encounter during the property purchase process. These costs typically include legal fees, property transfer taxes, mortgage default insurance, home insurance, and appraisal fees.
Final Thoughts
BC’s new cooling off period modernizes the home buying process to account for today’s heated real estate climate. It brings a common sense buffer to what is for most people the largest purchase of their lives.
While not a silver bullet solution to housing affordability, it is a prudent step by the BC government to calm markets and shield homebuyers from undue pressure.
As a realtor, I’m pleased to see this increased consumer protection for my clients. Now I can focus on helping homebuyers make a confident, informed decision – not just a rushed one.
If you have any other questions about BC’s cooling off period, I’m happy to help explain the details. Buying a home should be exciting, not stressful. With this new 3-day reprieve, now it can be!
Ready to turn your real estate dreams into reality? Contact Richard Morrison, Vancouver’s top realtor with 20+ years of experience. As a Medallion Club member and RE/MAX Hall of Fame award winning agent, he’s the expert you need on your side. Whether buying, selling, or investing, Richard’s personalized approach and deep market insights ensure a successful transaction. Reach out to Richard today at (778) 900-2235 and make your real estate journey seamless and rewarding.
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