What does the new legislation mean for residential home sellers and buyers? Arsen Krekovic, real estate litigation specialist at Hoogbruin & Company explains, “Homebuyers now have the added protection of a three-day cooling-off period. This comes into effect on January 1, 2023 and enables residential property buyers, who may have felt pressured to make a “no subjects” offer on their home purchase, to take the opportunity to perform their due diligence and be more informed in their decisions about buying property.
The legislative changes add a right of rescission to the Property Law Act. This means a purchaser of residential real property may rescind the contract of purchase and sale for a property. They must serve written notice of the rescission on the seller within three business days after the date that the acceptance of the offer was signed.
If a homebuyer decides that after completing their due diligence, they wish to exercise their right of rescission and back out of the residential real estate purchase, the buyer will be charged a fee of 0.25% of the purchase price, or $250 for every $100,000. On a $1-million home, the purchaser exercising their right of rescission would be required to pay $2,500 to the home seller.
What remains the same is that buyers can still may make offers conditional on home inspections or financing at any time. This 3-day protection period will offer homebuyers the opportunity for due diligence at times when conditions are not in place.
Are pre-sales affected by the cooling-off period?
The right of rescission does not apply to a contract of purchase and sale to which section 21 of the Real Estate Development Marketing Act applies or if title to the residential real property has been transferred from the seller to the purchaser.
Consult with an experienced real estate law specialist to understand fully how the new cooling-off period impacts your real estate transaction.
While the new provisions taking effect in January 2023 are set to protect individual buyers of houses and condominiums, it may impact sales of apartment buildings. Entire buildings are essentially a business transaction but the Act’s use of the generalized phrase “residential property”, may be applied to these real estate transactions in the BC housing market and may even include seniors’ multiple unit residences.
It impacts residential real estate sales as the amendments to the Property Law Act, which were passed by the Legislature in April 2022, give the Government authority to enact regulations which enhance buyer protection in the real estate market.
A look ahead in the new real estate law provisions
With legislative changes coming into effect with the new government regulations, how residential properties including apartment buildings and other real estate properties will be impacted will be clearer.
Arsen Krekovic will also be looking to see if the new provisions will stipulate exemptions that impact commercial brokers and investors in BC’s real estate market. They will need to be aware of these new regulations and ensure they are built into agreements.
As Hoogbruin & Company’s real estate law specialist, he is informed as details develop on the Province’s regulations to support real estate consumer protection in BC. Reach out for his expertise if you find yourself in a real estate transaction that requires experienced real estate litigation to navigate the new laws correctly and to obtain a just solution for you.