British Columbia's 3-Day ‘Cooling Off’ Period
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Are you considering buying a home in British Columbia? If so, then it’s important to keep an eye on the changing real estate landscape. By 2023, all offers made on properties located in BC must include a 3-day cooling-off period as part of provincial law. This change promises to give buyers more time and information to evaluate their decisions when making one of life’s biggest investments. In this blog post, we will cover what exactly is the BC cooling-off period, why it’s such an important regulation, and how it affects BC home buyers and sellers moving forward.
- The 3-Day Cooling-Off Period in British Columbia gives buyers 3 days to back out of a home purchase.
- The purpose of the cooling-off period is to give buyers the time to prepare their finances, consult advisors, and schedule inspections.
- Buyers who back out will have to pay a rescission fee of 0.25% of the purchase price to the seller.
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What is the 3-Day Cooling-Off Period in BC?
The 3-Day Cooling-Off Period for home purchases in British Columbia is when a buyer can cancel a contract to purchase a home without penalty. The period begins on the day the contract is signed and ends at midnight on the third day following the signing of the contract.
The purpose of the cooling-off period is to give buyers the time to prepare their finances, consult advisors, and schedule inspections. These opportunities were not easily available to buyers back when the market was hotter; this will allow buyers to make sound decisions instead of rushing forward with a huge purchase.
Here’s what you need to know about the 3-day cooling-off period:
- The rule was effective starting January 1, 2023
- Buyers will have 3 days to back out of their contract after signing and are entitled to a full refund.
- Buyers who back out of their contract within this three-day period will have to pay a rescission fee of 0.25% of the purchase price to the seller.
- This period is only applicable to residential real estate.
- This period cannot be waived, and exemptions are few.
What Types of Properties Does the Cooling-off Period Apply?
The cooling-off period applied to residential properties only. These include:
- detached homes;
- semi-detached homes;
- apartments in a duplex, triplex, or another multi-unit dwelling;
- residential strata lots
3-Day Cooling Period Exemptions and Waivers
While there are no waivers to the 3-day cooling-off period, there are a few exceptions. Residential real estate located on leased land or leasehold interest in residential real estate is excluded from the cooling-off period rule. The same applies to any sale of residential property in an auction or any sale taking place under court supervision.
Notably, presale properties (for example, condos that are still in development) are exempt since they already have their own cooling-off period of 7 days.
3-Day Cooling Period Fees
If the buyer backs out of their contract within the 3-day cooling-off period, they will have to pay a rescission fee of 0.25% of the purchase price to the seller. For example, if the property costs $500,000, the buyer will have to pay the seller $1,250. Other than that, all funds dispensed by the buyer will be refunded to them.
The Notice of Rescission
A notice of rescission must be presented to the seller if the buyer backs out of the contract within the 3-day period. The notice must be sent through registered mail, fax, email with read receipts turned on, or personal service.
Issues that Could Arise from the 3-Day Cooling-off Period
BC’s 3-day cooling-off period is meant to be a piece of legislation aimed at consumer protection. However, it was met with some criticism, as it can create a disadvantage for sellers. Properties could be “off the market” for days at a time if buyers keep backing out which, in the case of blind bidding, means the seller will have to start all over again.
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What is a Cooling-off Period?
The 3-Day Cooling-Off Period for home purchases in British Columbia is a period of time during which a buyer can cancel a contract to purchase a home without penalty.
When Does the 3-Day Cooling Off Period Begin?
The cooling-off period begins the moment the contract is signed by the buyer and ends three days later.
Does the 3-day period replace the existing 7-day cooling period?
No, as the 7-day cooling-off period in BC only applies to pre-construction sales of multi-unit properties, such as condos.
If you’re thinking of buying a home in British Columbia, it’s important to know about the 3-Day Cooling-Off Period. This is the period of time during which you can cancel your contract without penalty, and it starts from the moment you sign the contract. Knowing about this opportunity will give you the chance to make sure that everything is in order before going ahead with such a big purchase. Get started today by getting a mortgage rate quote from us.
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