The Home Buyer Rescission Period is a new law that has recently come into effect in British Columbia. This law gives home buyers a period of time to reconsider their purchase and potentially back out of the deal. However - this comes with a 0.25% penalty which is paid directly to the seller.
The rescission period is usually three business days from the date that the purchase and sale agreement is signed by both the buyer and the seller. During this time, the buyer can decide whether they want to proceed with the purchase or cancel the agreement. If the buyer chooses to cancel, they must provide written notice to the seller and the penalty will apply.
It's important to note the rescission period is separate from any subjects that are written into the offer (ie subject to financing / inspection / strata documents review ) and often the subject removal period will be longer than the rescission period, resulting in no penalty to the buyer if they don't remove conditions for a bonafide reason.
The rescission period applies to residential properties, including single-family homes, townhouses, and condos, but does not apply to commercial or industrial properties.
The purpose of the rescission period is to give home buyers a chance to review their decision and make sure that they are fully informed about the property they are purchasing. During this time, the buyer can have the property inspected, review any documents related to the property, and consult with legal and financial advisors.
Although it gives a small degree of uncertainty to the seller in some cases, in hot markets it will likely give some relief to purchasers and help even the playing field for regular buyers that can't risk making purely subject-free offers. All things considered, it's probably a good thing for our industry and another way our government is helping to regulate the home-buying process for citizens.
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