If you’re planning on buying or selling a home in the lower mainland or BC, it’s important to keep up to date with new regulations that can affect your home buying or selling process.

In 2023, BC implemented a new provincial law that all offers made on properties in BC must have a 3-day cooling off period.

In this article, we’ll dive into what that is, how it affects buyers and sellers, and other considerations to keep top of mind.

Table of Contents

What is The Cooling-Off Period in BC?

The 3-Day Cooling-Off Period is a unique provision that offers some considerable benefits to homebuyers in British Columbia. It allows buyers to cancel a contract to purchase a home without incurring any financial penalties.

During this time, buyers can rethink their decision, reevaluate their finances, seek expert advice, and schedule property inspections without the fear of repercussions.

Previously, if a buyer collapsed a residential real estate deal after signing a contract, there would be penalties and financial consequences for the buyer. Not anymore.

Recommended Reading: The Real Estate Glossary for Buyers and Sellers

When Does the 3-Day Cooling-Off Period Begin?

This period commences from the day the contract is signed and concludes at midnight on the third day following the signing.

Understanding what constitutes a "business day" is vital when calculating the three-day period. In this context, a business day does not include Saturdays or holidays. The term "holiday" encompasses Sundays, statutory holidays, and December 26, as defined by the B.C. Interpretation Act.

What type of properties does the Cooling-Off period apply to?

There are several residential property types that this new regulation applies to. For those in Metro Vancouver, the definitions defined by the act apply to a significant portion of properties in the Lower Mainland.

Specifically, it applies to:

  • detached homes;
  • semi-detached homes;
  • townhouses;
  • apartments in a duplex, triplex or other multi-unit dwelling;
  • residential strata lots;
  • manufactured homes that are affixed to land; and
  • cooperative interests that include a right of use or occupation of a dwelling.

Exemptions

The Order of the Lieutenant Governor in Council also outlines the types of residential property that are not included in the new legislation and cooling off period:

  • residential real property that is located on leased land;
  • a leasehold interest in residential real property;
  • residential real property that is sold at auction;
  • residential real property that is sold under a court order or the supervision;
  • of a court.

Luckily for developers who build presale properties, this new law does not apply, because they are already subject to a rescission period under the Real Estate Development Marketing Act.

Recommended Reading: Guide to Choosing Resale vs New Construction Property

How it affects sellers

The Cooling-Off period does not present the perfect situation for sellers. This is because the law is designed to help buyers avoid rushing into a home purchase, review their decisions and finances before making that big step.

Uncertainty with the Deal

Picture this – you’ve accepted an offer on your property, and you’re ready to move on to your next adventure. With the Cooling-Off period, though, there’s a new wrinkle in your real estate journey. You’ll need to wait for three additional days before you can be certain that the deal will indeed proceed. While it’s a safeguard for buyers, sellers might find this extended period of uncertainty a tad nerve-wracking.

Other Missed Opportunities

During the Cooling-Off period, your property effectively goes "off the market." It can’t be shown to other potential buyers, and it’s temporarily listed as "unavailable." This hiatus in marketing might lead to missed opportunities, particularly in BC’s competitive real estate scene, where interested buyers are often ready to pounce on new listings.

Financial Considerations

Sellers should also be aware of potential financial implications. If a buyer decides to rescind the contract during this period, you, as the seller, might incur costs related to re-listing the property. This could include paying commissions to real estate agents and possibly adjusting the price to attract new buyers.

While it introduces some uncertainty and shifts in the sales process, it’s all part of the evolving landscape of real estate. Remember, it’s a step towards creating a more transparent and fair environment for both buyers and sellers in the beautiful province of British Columbia.

Recommended Reading: Selling a Condo in Any Market: 8 Tips

How it affects buyers

For buyers, this new regulation provides significant benefits before you finalize the deal and make one of the biggest decisions of your life, buying a home.

Time to Review

Instead of feeling rushed, you now have three extra days to step back, take a deep breath, and ensure that you’re making a decision that truly aligns with your dreams and goals.

It gives you a chance to weigh the pros and cons, ensuring that you move forward with your purchase confidently.

Protection in a Busy Market

In a sellers market, properties are flying off the shelves, there’s often immense pressure to make quick decisions. The Cooling-Off period acts as your trusty safety net, ensuring that even in the hottest of markets, you have the time to make thoughtful decisions.

Right Financial Commitment

Buying a home is a significant financial commitment. This Cooling-Off period allows you to review your finances carefully. You can double-check your budget, make sure you’ve got the funds for the down payment, and ensure that you’re making the right decision for where you’re at financially.

Recommended Reading: Top Questions to Ask When Buying a Home in BC

5 Key Takeaways from the 3-Day Cooling-Off Period

Overall, this regulation is one to be aware of during any home buying and selling process. Here are the key takeaways to keep in mind.

Effective Date

As of January 1, 2023, the 3-Day Cooling-Off Period became a legal right for BC homebuyers.

Cancellation Rights

Buyers have a generous three-day window to reconsider their decision after signing the contract and are entitled to a full refund if they choose to back out.

Rescission Fee

However, if a buyer decides to cancel during this period, they must pay a rescission fee equal to 0.25% of the purchase price to the seller. For instance, on a $1-million home, this fee amounts to $2,500.

If you haven’t given any money as a deposit yet, you need to pay the seller directly, and you should do this promptly, no later than 14 days after you decide to cancel the deal. However, if you did put down a deposit when you agreed to the deal, the folks in charge of holding that money will take out their fee before giving you back the rest.

Residential Real Estate

Importantly, this Cooling-Off period applies exclusively to residential real estate transactions.

Non-Waivable and Limited Exemptions

It’s crucial to note that this period cannot be waived, and exemptions are rare. This ensures that all buyers are on an equal footing when making one of life’s most significant investments.

Need Help Navigating The Market?

Navigating the changing real estate landscape doesn’t have to be confusing. Don’t let uncertainty cloud your real estate journey. Contact us today to discuss your unique needs and take advantage of our expertise.

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