What is the "Cooling Off Period"?: Home Buyer Rescission Explained

Effective January 3, 2023, British Columbia introduced the Home Buyer Rescission Period (HBRP), commonly known as the "cooling-off period." This statutory provision grants homebuyers the right to unilaterally cancel a residential real estate purchase agreement within three business days following the seller's acceptance of an offer, without the need to provide any reason .

🏡 Key Features of the HBRP

• Duration: Buyers have three business days (excluding weekends and statutory holidays) to rescind the contract after acceptance.
• Applicability: The HBRP applies to most residential real estate transactions, including detached homes, semi-detached homes, townhouses, apartments, and manufactured homes affixed to land.
• Exemptions: Certain property types are exempt from the HBRP, such as:
  • Residential real property located on leased land.
  • Leasehold interests in residential real property.
  • Properties sold at auction.
  • Properties sold under court order or the supervision of a court.
• Non-Waivable Right: The right of rescission under the HBRP cannot be waived by either party.

💰 Financial Implications

• Rescission Fee: If a buyer exercises their right of rescission, they must promptly pay the seller an amount equal to 0.25% of the purchase price. For example, on a $1,000,000 property, the fee would be $2,500.
• Payment Process: If a deposit has been paid, the rescission fee is deducted from it, and the remainder is returned to the buyer. If no deposit was made, the buyer must pay the fee directly to the seller within 14 days of rescission.

📝 How to Exercise the Right of Rescission

To rescind a purchase agreement under the HBRP, the buyer must provide written notice to the seller or the seller's agent within the three-business-day period. This section is on the bottom portion of the CPS ( Contract of Purchase and Sale). The notice must include:

• The address or description of the property.
• The buyer's name and signature.
• The seller's name.
• The date the right of rescission is being exercised.

The notice can be delivered by registered mail, fax, or email with a read receipt, as specified in the contract.

🔍 Additional Considerations

• Subject Conditions: If a purchase agreement includes subject conditions (e.g., financing approval, home inspection), and the buyer decides not to proceed based on these conditions, they can withdraw without paying the 0.25% rescission fee.
• Pre-Sale Properties: Pre-sale or new construction homes are subject to a separate seven-day rescission period under the Real Estate Development Marketing Act (REDMA).

‍

‍