Seller Beware? Proposed “Cooling-Off Period” Will Allow Buyers of Residential Real Estate in B.C. to Walk Away

Purchasers of residential real property in British Columbia (B.C.) may soon benefit from a statutory “cooling-off period” — to be known as the Homebuyer Protection Period — under changes to the Property Law Act (British Columbia) introduced by the province on March 28, 2022.
 
If brought into force, Bill 12 – 2022: Property Law Amendment Act, 2022 would provide purchasers of residential real property with a right to rescind (cancel) a purchase and sale agreement within a specified number of days (to be determined by regulations) following acceptance.
 
Structured as a statutory right of rescission, the amendments would allow purchasers to walk away from a signed purchase and sale agreement, whether or not the agreement gives them that right, simply by giving written notice to the vendor. This new right would not apply to purchase and sale agreements for new developments, which already benefit from a seven-day statutory right of rescission under the Real Estate Development Marketing Act (British Columbia). Nor would this right apply after the transaction has completed and title has transferred.
 
These changes come in response to government concerns that B.C.’s highly competitive housing market places undue pressure on purchasers to submit offers without conditions designed to protect their interests, such as home inspection and financing conditions, and mark the government’s latest foray into B.C.’s residential real estate market.
 
Many details surrounding the content and implementation of the Homebuyer Protection Period are expected to be defined by forthcoming regulations, including:

• the duration of the cooling-off period;

• any financial compensation to be paid by the purchaser to the vendor for exercising its right of rescission;

• if, and in what circumstances, a purchaser can waive its right of rescission;

• impacts on deposits, including the timing for payment of a deposit and the return of a deposit if the purchaser exercises its right of rescission;

• the definition of “residential real property” and if exemptions will apply for certain classes (for instance, if properties classified or zoned as “residential” that are commercial in nature, such as development property, apartment complexes and mixed-use developments, will be exempt);

• exemptions for certain classes of purchasers or purchase and sale agreements; and

• if the right of rescission will apply uniformly across the province or if regional variations will apply as was suggested by the government’s press release.

The above details, and potentially other consumer protection issues, are expected to be informed by a consultation that the B.C. Financial Services Authority (BCFSA) has completed with various industry stakeholders. The results of the BCFSA’s consultation are expected in spring 2022 and will inform the regulations that will be used to implement the Homebuyer Protection Period by summer 2022.
 
For further information, please contact any member of our Commercial Real Estate group.