What is the HBRP 3 day recission period?
There is a new 3 Day Recission Period coming to BC real estate January 3rd, 2023. Below are some tips for Buyers and Sellers to understand how this change will affect them.
Beginning January 3rd, 2023, all residential real estate transactions in British Columbia are mandatorily subject to a 3 day Home Buyer Recission Period (HBRP). There are a few small exceptions to the rule: residential leasehold properties or residential real estate on leased land, residential property sold at auction, residential property sold by order of a court, or most new development covered by Developers Disclosures are all exempt from the new rule.
What is the Home Buyer Recission Period (HBRP)?
The HBRP is a mandatory subject to be included in all offers to purchase residential real estate in BC that states that all buyers will have a period of 3 full business days, not including weekends or holidays, to use the Recission Period to rescind their offer if they so choose, for any reason whatsoever. If they choose to exercise this right and rescind an accepted offer using the Recission Period, then they owe to the seller The Recission Fee, 0.25% of the agreed purchase price, to be paid in a prompt manner from the buyer to the seller directly.
Who is affected?
Both Buyers and Sellers are affected. All offers received on residential property will include the 3 day Recission Period as a subject to the sale, regardless whether there are other subjects or not. This subject cannot be waived and is mandatory for all residential real estate sales, including for sale by owner and non-Realtor transactions. The clock to begin the countdown for the 3 day period begins midnight the morning of the next business day after acceptance date, and continues until midnight at the end of the 3rd business day.
How does the timing work?
Generally, most offers contain some subjects to the sale of the property, such as a financing or a building inspection subject. Most often these subjects have dates that extend longer than 3 business days as it takes time to book professionals. Both the HBRP subject and any other subjects have their clock run at the same time, meaning Buyers will have an opportunity for 3 days to rescind their offer for any reason for a fee; but after that 3 day period, the only way to rescind their offer is to not remove one of their other subjects.
Using the HBRP
If a buyer chooses to rescind their offer using HBRP, they will then owe the Seller directly a fee equal to 0.25% of the purchase price. If the agreed purchase price of the property is $1,000,000 (one million dollars), then the associated fee would be $2,500 (two thousand five hundred dollars). If any monies are held by the brokerage as a deposit for the property, then the brokerage has the right to pay the Seller directly the 0.25% and then return the rest of the deposit monies to the buyer. However, if monies are not being held in trust by the brokerage, then the Seller must seek compensation from the buyer directly, possibly using small claims court or the civil resolution tribunal if the buyer is unwilling to pay.
It should be noted that a Buyer can choose to collapse an offer because of an existing subject, such as a building inspection finding or inability to acquire financing, at any time during the term of that subject, even during the initial 3 day period without incurring the fee. The fee only applies when using the HBRP as the reason for collapsing the offer.
As with any changes to the Property Act, the details can be confusing. Be sure to enlist the services of Rebecca Ryane REALTOR® to help you understand all the potential risks when entering into a purchase agreement contract.