To better protect consumers in British Columbia’s real estate market, the Government of British Columbia is introducing legislation that requires “cooling off periods” for resale properties and newly built homes. This change will be similar to the cooling off periods already in place for pre-construction condominium sales.
In brief, “cooling off periods” are limited periods of time in which buyers can change their minds and cancel the purchase with no or diminished legal consequences.
Currently in B.C., a cooling off or rescission period exists as a safeguard for buyers of pre-construction condominium sales (i.e., a residential condominium unit that is being marketed and sold, prior to completion of construction). Pursuant to the Real Estate Development Marketing Act, this mandatory cooling off period applies to pre-sale condominium developments only. Buyers of strata properties under construction, have a seven-day period, from the time they receive a copy of a signed Contract of Purchase and Sale or acknowledge receiving a disclosure statement, where they are allowed to withdraw their offer.
In addition to the Contract of Purchase and Sale, the buyer will have been provided with a Disclosure Statement document, and will sign an acknowledgment of receiving, and having been given the opportunity to read this document. The Disclosure Statement is a document that the developer is required to file to sell new residential condominium units. This document contains all relevant information pertaining to the future development.
During this seven-day “cooling off” or rescission period, the buyer can cancel the contract with written notice to the developer. This rescission period is legislated by the Government of British Columbia and cannot be waived or adjusted.
The BC Government will introduce legislation in the spring of 2022, with the aim of giving homebuyers a chance to change their minds on the purchase of a home, according to the province (N.B. including resale properties and newly built homes).
In a statement on November 4, 2021, the Province said a cooling-off period would allow buyers to back out with no or diminished legal consequences.
The B.C. Financial Services Authority (i.e., BC’s real estate regulator) said it also will be consulting with those in the real estate industry and other experts on more ways to protect consumers, including a review of the blind bidding system, which can significantly raise the price of purchase.
The BC Financial Services Authority further confirmed, that it is consulting stakeholders on the appropriate length of a cooling off period and whether or not to include penalties for exercising the right to recission.
In addition, the Ministry of Finance has also requested consultation on the following consumer protection policies:
- blind bidding,
- price baiting,
- risks associated with unconditional offers,
- home inspections,
- financing, and
- other conditions.
The Ministry of Finance’s press release on these matters, can be found here.
If you have any questions or would like advice related to the current or proposed legislation, or if you have questions in relation to matters of real estate, corporate law, intellectual property and wills or trust matters, please contact us at 604-688-4900 or via email to Paul Barbeau at firstname.lastname@example.org or to Morgan Best at email@example.com
Technical Detail of the Current Law
The Real Estate Development Marketing Act Section 21, sets out the rights of a buyer to rescind an agreement.
Subsection (2) provides for a seven-day right of rescission under certain circumstances.
Subsection (3), confers a general right to a purchaser to rescind an agreement at any time when a purchaser is entitled to a disclosure statement in respect of a development property but never received the disclosure statement. These rights of rescission remain effective regardless of whether title (or the other interest for which a purchaser has contracted) to a development unit has been transferred.