It’s Getting Hot in Here – So here’s three days to cool off!
The 2023 real estate market has started with a bang, but not in the normal sense. With a shift in the general market dynamics due to increased interest rates, slowing sales and lowering prices, buyers and sellers are certainly in a different position than they were in over the past few years. In addition to the general market shift, there have also been several legislative changes introduced that will impact the way real estate deals are done. This article will focus on one of these changes, the British Columbia cooling off period, and our next article will focus on the newly implemented federal Prohibition on the Purchase of Residential Property by Non-Canadians Act.
Effective January 3, 2023, changes were made to the Property Law Act in British Columbia and associated regulations through the Property Law Amendment Act, 2022 to implement a three-day cooling off period applicable to some (but not all) residential real estate contracts whereby a purchaser may rescind there offer. Section 42 of the Property Law Act states the following:
Residential real estate – right of rescission
42 (1) A purchaser of residential real property may rescind the contract of purchase and sale for the property by serving written notice of the rescission on the seller within the prescribed number of days after the date that the acceptance of the offer was signed.
(2) Subsection (1) does not apply to a contract of purchase and sale to which section 21 of the Real Estate Development Marketing Act applies.
(3) Subsection (1) does not apply if title to the residential real property has been transferred from the seller to the purchaser.
There are specific notice requirements (method and location of providing notice) and a financial cost to a buyer who provides a notice of rescission with respect to a contract. The rescission amount payable by a buyer who exercises a right of rescission is 0.25% of the purchase price for the property offered in the contract being rescinded. This change has raised additional questions on how to enforce payment of that fee as deposits are often not paid until after conditions are removed. An updated form of purchase contract has been released by the British Columbia Real Estate Association and The Canadian Bar Association British Columbia Branch that includes additional terms surrounding addresses for notice as well as specifying the rescission amount based on the purchase price.
Prospective buyers and sellers should educate themselves on the process and cost of exercising such rights and continue to include appropriate conditions in real estate contracts to provide protection in light of their particular situation. If unclear, it is recommended that buyers and sellers discuss these changes with their real estate professional or lawyer/notary representative.
This information is general in nature only. You should consult a lawyer before acting on any of this information. This information should not be considered as legal advice. To learn more about your legal needs, please contact our office at (250)448-2637 or any of our lawyers practicing in the area of real estate at the following:
Jane Otterstrom: email@example.com
Una Kuzio: firstname.lastname@example.org