The Home Buyer Recession Period (HBPP), formerly known as the Homebuyer Protection Period and Cooling-off Period, is expected to be implemented across the province in January 2023. Many details are yet to be determined by the BC government, we have heard from REALTORS® with questions. In this post, we answer some of these questions.
Bookmark this page as we’ll update this post as we get more details from the BC government. If you are also interested in subscribing to BCREA’s regular advocacy newsletter, please email [email protected].
What is the Home Buyer Cooling Off Period (HBRP)?
The HBRP, commonly known as the “cooling off period,” gives buyers the right to withdraw from a purchase contract within a specified period of time after accepting an offer. Without a cooling off period, if a buyer wanted to cancel a contract they would have to negotiate with the seller and would typically face significant fines or legal consequences.
What properties are subject to the HBRP?
The policy applies to the following types of structures:
- family houses,
- semi-detached houses,
- Apartments in a two-family house or other multi-family house,
- Residential plots,
- manufactured houses attached to land, and
- Cooperative interests that include a right to use or occupy an apartment.
What are REALTORS® requirements to inform their clients?
All real estate licensees are required to provide general information about the HBRP to all consumers on a form approved by the Superintendent. Licensees must also provide an additional mandatory disclosure at the time of preparing an offer on behalf of a buyer and making an offer to a customer that includes all of the following:
- the HBRP cannot be dispensed with,
- the length of the cancellation period,
- the dollar amount of the cancellation fee,
- deposit processing and
- HBRP Exceptions.
Are brokers required to keep a copy of a cancellation notice?
Yes, brokers must keep a copy of the cancellation notices that they prepare and send to the seller or that the broker receives.
How should sellers receive a cancellation policy?
Buyers must deliver the notice of withdrawal to the Seller in one of the following ways: registered mail, facsimile, email with read receipt, and personal delivery. Notices of withdrawal must contain:
- address, PID or description of the property,
- name and signature of the buyer,
- Name of seller(s) and
- Date of Notice.
What does “three business days” mean?
For HBRP, “business day” means any day other than a Saturday, Sunday or public holiday. The cancellation period is three working days, starting on the day after the conclusion of the contract.
What is the cancellation fee?
Buyers who exercise their right of withdrawal must pay a fee of 0.25% of the purchase price. For a $1,000,000 home, this would result in a $2,500 fee being paid to the seller.
How does an HBRP affect other issues in my contract?
Other subjects are not affected by the HBRP.
What about For Sale by Owner (FSBO) real estate?
The HBRP applies to all residential property sales, including FSBO.
Can the HBRP be waived?
The HBRP cannot be dispensed with.
Are there exceptions?
. There are narrow exceptions, including:
- Sale of residential real estate on leased land,
- Sale of heritable building rights to residential real estate,
- sale at auctions,
- sale by way of a contract assignment,
- Pre-construction sales of multi-unit development lots already subject to a seven-day cooling-off period, and
- Sales pursuant to a court order or judicial oversight.
Is the cancellation fee deducted from the deposit?
If a deposit is held in escrow, brokers must refund the cancellation fee to the seller upon cancellation. Any remaining balance will be returned to the buyer, regardless of what is provided for in the contract.
Who receives the cancellation fee?
The amount of the cancellation fee will be made available to the seller.
How can I learn more about the details of the HBRP when they are available?
This blog post will be updated as we learn more about the BCFSA and Treasury Department HBRP. In addition, you can follow BCREA’s advocacy news that includes updates on the HPRP by subscribing to our advocacy update. Please send an e-mail about this [email protected].
What are the next steps for BCREA?
BCREA staff update and create new standard forms and update professional development courses to ensure REALTORS® are equipped with the tools needed to serve clients effectively. Staff also meet regularly with the BCFSA to address open questions.
Will the Treasury implement additional consumer protection measures?
In May, BC’s real estate regulator, the BC Financial Services Authority, released an independent report entitled “Enhancing Consumer Protection in BC’s Real Estate Market” that provided the Treasury Department with advice and recommendations on how to improve consumer protection. There was significant overlap between the BCFSA’s advice and the BCREA’s paper ‘A Better Way Home’.
The Treasury Department has not indicated whether it will implement additional consumer protection measures in the coming months.
What guidelines does BCREA recommend to improve consumer protection?
Earlier this year, BCREA published a white paper entitled “A Better Way Home” which contains more than thirty recommendations to improve consumer protection. BCREA does not support HBRP as it is unlikely to have a significant impact on consumer protection and may have unintended affordability implications.
If you have any other questions, we encourage you to contact us and share them [email protected].
Below is a list of other HBRP resources:
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