A new cooling-off period for homebuyers took effect today (Jan. 3) and one Victoria analyst says it will protect people from high-pressure situations.
The homebuyer protection period creates a mandatory three-business-day period to give homebuyers more time to secure financing or arrange home inspections.
Leo Spalteholz, a Victoria-based housing analyst, said the balance of power had tilted too far toward sellers.
“Lack of time for buyers to complete due diligence can exacerbate risk or be used to hide property defects that otherwise may have been discovered,” Spalteholz said in a news release. “Though the market has cooled dramatically in recent months, it’s good to proactively put buyer protections in place. The rescission period strikes a sensible balance between protecting buyers while the fee should protect sellers from frivolous invocation of it.”
The homebuyer protection period, also referred to in the industry as the homebuyer recission period, includes a rescission or cancellation fee of 0.25% of the purchase price, or $250 for every $100,000, for those who cancel their contract to help ensure that all parties are taking the transaction seriously. For example, if the buyer exercises the right of rescission on a $1-million home, they would be required to pay $2,500 to the seller.
As the province’s financial services regulator, the B.C. Financial Services Authority’s (BCFSA) has been educating real estate agents and other real estate licensees about their accountabilities around the homebuyer protection period since the legislative changes were announced in July 2022.
“Consumer protection is core to what BCFSA does,” said Blair Morrison, CEO of BCFSA and superintendent of real estate. “We’ve worked extensively with real estate licensees to get them ready for the introduction of this new protection in B.C. in 2023. We urge consumers with questions about the [homebuyer protection period] to speak directly to their real estate licensee.”
READ MORE: Canada’s real estate market is cooling. Here’s what to expect
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