Last Updated on April 12, 2024 by CREW Editorial
On January 3, 2023, the B.C. government implemented the Home Buyer Rescission Period (HBRP) for residential real estate transactions.
This “cooling-off period,” gave homebuyers up to three business days to rescind an offer on a home after the offer had been accepted, with certain exceptions. The period excludes weekends and holidays. Under the HBRP, only buyers have the right to rescind a contract. To do so, buyers must notify the seller in writing before the rescission period ends and pay a rescission fee, which amounts to 0.25% of the offer price.
In March this year, however, the BC Real Estate Association (BCREA) has requested the government to replace its current Home Buyer Rescission Period with a Pre-Offer Period.
The goal of this proposed change is to enhance consumer protection for both buyers and sellers, especially in overheated market conditions. It would also enable buyers to conduct their due diligence before submitting an offer, rather than afterward.
Concerns With The HBRP
The BCREA’s reservations about the HBRP stem from several factors.
The HBRP was introduced to address issues In 2020, when the real estate market experienced high demand and low supply, leading to intense competition among buyers, frustration, and rushed decisions. However, by the time the HBRP was implemented, the market had cooled down, reducing multiple offers and hasty purchases. In the following years, market activity slowed further, creating favourable conditions for buyers and reducing the need for the HBRP.
In September 2023, the BCREA surveyed REALTORS® about the HBRP. Nearly 93% of respondents reported that they had no buyers use their right to rescind. They also reported many buyers mistakenly believed they could use the HBRP for due diligence, such as property inspections.
Instead of providing the intended buyer protections, the HBRP has caused confusion and unintended consequences for both buyers and sellers. Some buyers exploit the HBRP to tie up multiple properties, leading to delays and pressure on sellers to renegotiate agreements. Buyers may skip proper due diligence, creating significant issues.
Instead, BC REALTORS® proposes replacing the HBRP with a five-day pre-offer period starting from the date of listing. During this period, sellers cannot consider or accept any offers on the property.
Throughout the pre-offer period, sellers would grant access to the listed property for viewings and inspections and make all related documents readily available upon listing.
This approach is supported in both the BCREA’s “A Better Way Home: Strengthening Consumer Protection in BC Real Estate,” and the BC Financial Services Authority’s report, “Enhancing Consumer Protection in BC’s Real Estate Market,” as it offers a better opportunity to conduct thorough due diligence before making an offer. This significantly reduces the likelihood of buyer’s remorse, as well as the need for the HBRP. As a result, it also mitigates the adverse unintended effects of the HBRP on sellers.
The BCREA plans to continue advocating for this proposal and will follow up further with MLAs.
