B.C.’s cooling-off period and it’s issues.

• B.C. has implemented a mandatory three-day cooling-off period for homebuyers to allow additional time for due diligence on their purchase.

• The homebuyer rescission period includes a cancellation fee of 0.25% of the purchase price.

• Concerns have been raised about whether buyers might use the period to tie up more than one property and about the impact on sellers.

British Columbia is now the first province to introduce a mandatory three-day cooling-off period for buyers after they’ve signed an agreement to buy a home.

B.C.’s government says the homebuyer protection period, also known as the homebuyer rescission period, was implemented on Jan. 3 to allow homebuyers additional time to do due diligence on their purchase.

The cooling-off period was first announced in November 2021 when the market was overheated, and unconditional offers were rampant. In a balanced, and in some cases, buyer’s market, many say it’s fixing a phantom problem.

Changing Market

In a fast changing market like this one, it is already a bit too late to implement 3 day rescission period. The subject-free, multiple offers are long gone and are not expected to come back anytime soon.
This policy will only hurt the sellers.

Trevor Koot, CEO of the British Columbia Real Estate Association (BCREA), agrees it’s unlikely to see any rescissions in the current market.

He confirms the association was initially consulted when the policy was announced, and it provided 34 recommendations around public protection.

Koot says BCREA’s main recommendation was a mandatory five-day pre-offer listing period to prevent bully offers and give buyers and sellers time to make their decisions.

“All of it was ignored,” he states, “(The government) ignored all of the feedback and recommendations that came forward from the industry as well as the regulator.”

One sided policy

Another of BCREA’s concerns is that the policy is unbalanced and creates an unfair playing field between buyer and seller.

“I don’t think three days is enough time to do due diligence. I don’t think it’s fair to the seller,” says Koot.

“Very often (the seller) is a buyer in their own right on another property. It affects their ability to make any decisions on their next move because the buyer holds all the cards.”

The protection period includes a cancellation fee of 0.25 per cent of the purchase price, or $250 for every $100,000, for those who cancel their contract in an effort to dissuade bad actors. However, if there is no deposit in place, collecting that fee will be very difficult.

‘Get out of jail free’ card?

Concerns have been raised about whether buyers would leverage the rescission period as an opportunity to tie up more than one property and only follow through on one.

“I think there may be an opportunity for that, but I think that, anecdotally, is probably being overblown. I don’t see that logistically playing out. I think realtors are there to protect both sides of transactions,” says Koot.

Roy calls the rescission a “‘get out of jail free’ card” and expects it to become apparent when the market eventually heats up again.

He envisions a “highly probable” scenario where a buyer and their realtor may put in two offers on two homes at once.

“(Buyers) are going to offer a crazy amount on both, and they’re going to walk away from whichever one they want to if they end up getting both. There’s now no risk to playing fast and loose.”

Roy adds while it may be unethical, it’s perfectly legal under the new rules, “Your risk before used to be that you were contractually obligating yourself to two homes.”