Home Buyer Rescission
Period Expiration Calculator
Buying a home is one of the most important choices you’ll ever make, and it’s not always the right decision. Sometimes people realize they need more time to be ready to be homeowners, or something comes up, and buying a home is no longer a wise idea. In these situations, the Home Buyer Rescission Period can save you from a major headache.
What is the Home Buyer Rescission Period?
The Home Buyer Rescission Period, or HBRP, allows you to withdraw from your purchase agreement after the seller accepts your offer. If you wanted to back out without a rescission period, you’d have to negotiate with the seller and would likely face legal ramifications and a steep financial penalty.
The HBRP was implemented throughout British Columbia in January 2023. Previously, the HBRP was also known as the “cooling-off period” and the “Homebuyer Protection Period.”
Why is the HBRP Important?
Sometimes things happen between when you sign your purchase agreement and when the seller accepts the offer. Here are a few examples:
- You lose your job and may no longer be financially able to afford your loan.
- Your job requires you to transfer to a different city or province, so buying that downtown townhouse no longer makes sense.
- A family emergency requires you to move back in with your parents for the time being.
- You found another mortgage lender who can offer you a better deal.
- After discussing things with your spouse, you want to wait another year before buying a
home. You found another mortgage lender who can offer you a better deal.
How Long Do You Have to Rescind?
Usually, you have three business days to rescind, but that varies based on the terms of your agreement. Business days are Monday thru Friday and do not include holidays, such as Canada Day, Family Day, or Christmas Day.
What Properties are Impacted by HBRP?
The HBRP is implemented in many pieces of real estate, including:
- Apartments in multi-unit dwellings of two or more
- Townhouses
- Detached and semi-detached homes
- Manufactured homes affixed to land
- Residential strata lots
- Cooperative interests occupying a dwelling or have a “right of use” for it.
How Much Does It Cost to Rescind?
Unfortunately, you can’t rescind your offer without paying a fee. If you take advantage of the HBRP, you’ll be required to pay the seller 0.25% of the purchase price. If the townhouse you were looking to buy costs $800,000, you would pay $2,000 ($800,000 x 0.25%).
Upon rescission, brokerages must release the rescission fee to the seller if a deposit is held in trust. Any remaining balance is then returned to you. For example, if you have a $5,000 deposit for a townhouse costing $800,000 and utilize the HBRP, $2,000 would be released to the seller, while the remaining $3,000 gets returned to you.
How Do You Notify the Seller?
You must provide the seller with a formal rescission notice either via registered mail, an email with a read receipt, fax, or personal service.
Your notice must include:
- The data of your rescission notice
- Your name and signature
- The seller’s name
- The address, description of the property, or parcel identifier number
What Are the Exemptions to the HBRP?
Currently, here are the exemptions to the rescission period:
- Any sale under a court order or court supervision
- Properties purchased at auction
- Residential real estate property that’s located on leased land
- Assignment of Contract sales
Multi-unit development properties sold in pre-construction are also exempt because they already have a seven-day rescission period.
What Are Realtors Required to Tell You?
According to the Real Estate Board of Greater Vancouver, your realtor has to provide an “additional mandatory disclosure” when presenting you with an offer. This disclosure states how long the rescission period is, that the protection period cannot be waived, how much the rescission fee will be, deposit handling, and exemptions to the homebuyer protection period.
What Else Should You Know About the HBRP?
There are still some details that our government is figuring out regarding HBRP. Since it’s so new, there’s sure to be some fine-tuning as buyers navigate their rescission periods.
If you have more questions about the HBRP or other programs, like the first-time home buyer incentive, send us a message! We’d love to assist you with your home-buying experience and share how we can help.
The post What is the Home Buyer Rescission Period? appeared first on Kim Lee.
source https://www.kimlee.ca/what-is-the-home-buyer-rescission-period/
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