Countdown to Closing: Navigating the 3 Day Rescission Period in British Columbia
The British Columbia Financial Services Authority (BCFSA) recently announced a new rule that will affect how people buy and sell homes in the province of British Columbia. The rule is called the "3-day rescission period," and it is designed to give people more time to think about their home purchase and make sure it's the right decision for them.
When someone decides to buy a home in British Columbia, they will now have three days to change their mind and cancel the purchase. This three-day period is called the "rescission period," and during this time, the buyer can back out of the purchase a penalty.
The right to rescission cannot be waived by either the buyer or the seller.
The rescission fee is 0.25 per cent of the accepted purchase price, or $250 for every $100,000, for those who cancel their contract.
If your buyer client has made a deposit to a REALTORS brokerage account, the rescission fee amount must first be deducted and paid to the seller, with the remainder (if any) returned to the buyer.
The three-day rescission period excludes weekends and holidays.
HBRP applies to transactions of residential real estate property, regardless of whether a real estate licensee is involved in the transaction.
If the buyer cancels and their brokerage is not holding a deposit, the seller is advised to seek legal advice on how to pursue the buyer for the money owed.
The idea behind the new rule is to give buyers more time to review the paperwork and think about the purchase before committing to it. It also gives them time to arrange for a home inspection or seek the advice of a lawyer or other professional. This can help to ensure that buyers fully understand the terms of the purchase and the condition of the home before making a final decision.
The 3-day rescission period only applies to the purchase of the property and not to any other agreement (Like a rental agreement) that may come with the property.
The BCFSA hopes that the new rule will help to protect buyers from making hasty decisions and ensure they have all the information they need to make an informed choice about buying a home. It also aims to promote fairness and transparency in the home buying process. Licensees must disclose two forms. The first disclosure is included in the Disclosure of Representation in Trading Services (“DORTS”) and is made before the creation of an agency relationship. The second, more detailed Disclosure of Buyer’s Right of Rescission, is required when you prepare an offer to purchase on behalf of your client, or when you present an offer to purchase to your client. Licensees must provide general HBRP information to all consumers, including those who wish to be unrepresented, through the Disclosure of representation form.
It is important for home buyers in British Columbia to be aware of this new rule and take advantage of the rescission period to make sure they are completely satisfied with their purchase before moving forward.
If you are thinking of Buying or Selling your home we would love to help with all your real estate needs…get in touch!
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