Written by Mark V. Lewis, Mandev Mann and Kiera Stel
On November 4, 2021, the B.C. Government announced that it will introduce new legislation that requires a cooling-off period for resale properties and newly built homes. The Ministry of Finance and B.C. Financial Services Authority (BCFSA), stated in their announcement that the new legislation will include a limited period of time during which a buyer can change their mind and cancel their future purchase with limited legal consequences.
The Ministry of Finance stated that this cooling-off period will be similar to the seven day period that is already in place for pre-construction condominium sales under section 21 of B.C.'s Real Estate Development Marketing Act (REDMA). Under that section, regardless of whether the vendor has transferred title or any other interest, a purchaser of the development unit may rescind the purchase agreement by serving written notice of the rescission on the vendor within seven days after the later of (i) the date on which the purchase agreement is made; and (ii) the date on which the vendor receives written confirmation from the buyer that the buyer has had an opportunity to read the required disclosure statement. This right applies to development properties such as strata lots, bare land strata lots, subdivision lots, cooperative interests, time-share interests, shared interests in land, and leasehold units, where a disclosure statement is required to be provided under REDMA.
The Ministry of Finance asked the BCFSA to engage in the coming weeks with key stakeholders such as real estate boards to help determine the parameters of this cooling-off period and to present the advice to the government in early 2022. The enabling legislation will then be drafted and introduced in spring 2022.
The real estate market has seen a volatile response to the COVID-19 pandemic. Overall benchmark home prices according to the Real Estate Board of Greater Vancouver were 20.5 percent higher in October 2021 than they were in October 2020. Prospective homeowners have been increasingly likely to take risky actions, such as waiving the requirement for a home inspection, to make their offer competitive. The BCFSA has also signaled that it intends to consider additional potential customer protection measures for the residential real estate market, such as implementing certain rules in connection with the waiving of conditions precedent in purchase agreements and eliminating the current blind bidding process.