Under the HBRP Regulation (which is in effect as of January 3, 2023), buyers who have an accepted offer on a residential real property, as defined under the Property Law Act, will be able to rescind their offer within three business days (excluding weekends and holidays as defined in BC’s Interpretation Act) by providing a written notice to the seller and paying a rescission fee of 0.025% of the purchase price to the seller.
"Residential real property" (as defined in the Property Law Act) means any of the following:
1:) a detached house;
2:) a semi-detached house;
3:) a townhouse;
4:) an apartment in a duplex or other multi-unit dwelling;
5:) a residential strata lot, as defined in section 1 (1) of the Strata Property Act;
6:) a manufactured home that is affixed to land;
7:) a cooperative interest, as defined in section 1 of the Real Estate Development Marketing Act, that includes a right of use or occupation of a dwelling.
What Types of Properties are Exempt? While most residential transactions are included in the list above, there are some property types that are exempt. These include:
• a residential real property that is located on leased land;
• a leasehold interest in residential real property;
• a residential real property that is sold at auction;
• a residential real property that is sold under a court order or the supervision of a court; and
• a purchase and sale of property under the REDMA where section 21 of that Act applies.
The Home Buyer Rescission Period applies to residential real property transactions, whether or not consumers are represented by a licensee. Therefore buyers purchasing “for sale by owner” properties also have a right of rescission under the HBRP Regulation.
The rescission period begins on the next day following the final acceptance of the offer or counter-offer. These three days exclude Saturdays, as per the Regulation, and holidays, as defined by the Interpretation Act. Realtors should note that the Act's definition of a holiday differs from the definition of a federal statutory holiday, so they should be mindful when explaining the Regulation to their clients and making the calculations. Below is a list of all holidays as defined in the Home Buyer Rescission Period Regulation:
• "Holiday" (as defined in the Interpretation Act) means any of the following:
o Christmas Day;
o Boxing Day (December 26);
o Family Day; o Good Friday;
o Easter Monday; o Victoria Day; o Canada Day;
o British Columbia Day; o Labour Day; o National Truth and Reconciliation Day;
o Thanksgiving; o Remembrance Day; o New Year’s Day; and
o a day set by the Parliament of Canada or by the Legislature, or appointed by proclamation of the Governor General or the Lieutenant Governor, to be observed as a day of general prayer or mourning, a day of public rejoicing or thanksgiving, a day for celebrating the birthday of the reigning Sovereign, or as a public holiday.
BCREA has created the Home Buyer Rescission Period Expiration Calculatorn that can be used by Realtors to determine the rescission period.
The rescission period is not intended to replace the inclusion of subject clauses, such as financing or property inspections, and does not provide the buyer a right to access the property if they do not include a subject clause requesting that right.
Does a day-in-lieu holiday constitute an extra day when determining the length of the rescission period?
No. If a holiday falls on a weekend, the length of time contained in section 4 of the Home Buyer Rescission Period Regulation (the “Regulation”) is not affected. Relevant definitions are contained in sections 1 and 2 of the Regulation and in the Interpretation Act.
Final Acceptance Date
Because the three-day timeframe begins on the day following a contract’s acceptance, it is important to know what constitutes the final acceptance date. Section 26 of the BCREA’s Contract of Purchase and Sale - Residential includes a space for the final acceptance date which serves as the starting point to determine the three business days a buyer has to rescind the accepted contract.
Should a seller accept a backup offer, subject to the seller ceasing to be obligated under another accepted offer, the rescission period would begin when the backup offer was accepted in the backup position, and NOT when the backup offer becomes the primary offer. Realtors should advise their buyer clients that, if they wish to submit a backup offer on a property subject to the HBRP and then exercise their rescission rights, they would be required to pay the seller the 0.25% rescission fee.
Applying the Rescission Amount to Offers
If an offer is being made on a non-exempt property for $500,000, the calculation would be as follows: 500,000 x .0025. The rescission amount added to the Contract of Purchase and Sale - Residential would then be $1,250.
Applying the Rescission Amount to Counter Offers
Should a seller client counter the offer, the seller’s Realtor would recalculate the rescission amount. For instance, if the $500,000 offer was countered back to the buyer for $525,000, the new rescission amount of $1,312.50 would be updated on the CPS by the seller’s Realtor. As with all changes in a counter-offer, the seller would initial next to the updated information.
Because the 0.25% rescission amount is set by legislation, sellers cannot negotiate a higher rescission fee to be paid. Sellers who wish to receive additional compensation, where a buyer chooses to rescind either under HBRP Regulation or during their due diligence, should obtain legal advice.
If a Realtor is using the Contract of Purchase and Sale – Residential form, section 1 provides that “The parties acknowledge and agree that if the Buyer exercises the Rescission Right, the Buyer will pay (or cause to be paid) the Rescission Amount to the Seller promptly and in any event within 14 days after the Buyer exercises the Rescission Right.
If a brokerage is holding a buyer’s deposit in trust at the time the buyer exercises their right of rescission, the Regulation requires the brokerage to pay the fee to the seller from the deposit funds.
When buyers and sellers engage in real estate transactions without the benefit of a Realtor, or when the buyer and seller agree that the buyer will provide the deposit upon subject removal, or have the deposit held by a third party that is not a brokerage, that buyer will be responsible for paying any rescission fee directly to the seller.
Legislation requires the rescission amount to be paid promptly when buyers exercise their right of rescission. However, If a buyer pays a deposit to the brokerage by way of a cheque, it is acceptable for the brokerage to wait until the deposit cheque clears prior to paying any rescission fee owed to a seller or any remaining deposit funds to a buyer.
Where there is no deposit held by a brokerage and a buyer exercises the right of rescission, the buyer will need to promptly pay the seller the rescission fee. In some instances, a buyer and seller may even agree that a deposit is to be provided, but it will either be held by one of the parties to the contract, or by a third party, such as a lawyer.
If a deposit is less than what the rescission fee would be, the brokerage holding the funds would be required to pay the entire deposit to the seller if the buyer exercises their rescission rights. The buyer must pay any outstanding balance to the seller. For example, if a brokerage representing a buyer is holding a deposit for $1,000 but the rescission fee was calculated to be $2,600, and if the buyer rescinds their offer in accordance with the HBRP Regulation, the brokerage would release the $1,000 to the seller and the buyer client would be responsible to pay the additional $1,600 to the seller.
When deposits are to be paid is often influenced by market conditions. For example, in a sellers' market deposits may be provided to the buyer’s brokerage when presenting an offer to a seller to make that offer more appealing. Sometimes an offer will stipulate that a deposit will be paid upon the seller’s acceptance of the offer, or a short time thereafter. Conversely, in a buyers' market the offer will often state that the deposit will be provided upon subject removal or shortly thereafter.
If the deposit is to be provided upon subject removal, or shortly thereafter, and the subject removal period extends beyond three business days, the brokerage will not have a deposit held in trust at the time a rescission notice is given. The buyer would then be responsible under the HBRP Regulation for paying the seller.
When a buyer is purchasing a residential real property that is not exempt under the HBRP Regulation, and the buyer determines that it is in their best interest to rescind an accepted offer, the Regulation mandates that written notice be provided to the seller within the rescission period and by serving notice as prescribed under the HBRP Regulation. The right of rescission can be viewed from two different angles: from the position of a seller and a buyer. Let's start with the buyer's point of view. First of all, the notice of rescission must be delivered in a certain way in order to meet the requirements of the legislation. The HBRP Regulation requires that the rescission notice is sent in one of the following ways:
• 1 Email, with read receipt requested
• 2 Registered mail, or
• 3 Fax
No reason for rescission needs to be provided.
If a buyer consists of multiple parties any one party can rescind the contract. If a notice of rescission is served via email, a "read receipt" must be requested. Email providers, specific devices and types of browsers may vary. It is in the best interest of the seller to choose the technology that allows for a "read receipt" to be requested. When using Outlook, in the new email window, the "Option" menu can be expanded. Then, under "Voting and Tracking options, both "Request a delivery receipt" and "Request a read receipt" can be selected.
Although notice is deemed to be delivered when transmitted, if a seller has authorized their Realtor to receive notice by providing the listing Realtors email on the Contract of Purchase and Sale - Residential, the listing Realtor must be vigilant in ensuring that they are checking their email (including spam folders) for notices of rescission that may have been sent, so they can promptly notify the seller. uyers' Realtors, in addition to sending the notice, may want to follow up with a text or phone call to notify the seller (or the individual receiving notice on behalf of the seller) that a notice of rescission has been sent and the method it was sent by. Buyers' Realtors may wish to document this to demonstrate the measures they took in serving the notice. t's important that buyers and their Realtors ensure there is adequate time to deliver notice.
For example, if a seller only provides an address but no fax number or email, a buyer would need to deliver notice by registered mail. If the seller provides multiple options for the delivery of notice (mailing address, fax, or email), although not required, a buyer may wish to deliver notice in multiple ways to help evidence that notice has been served. Sellers may prefer to include their Realtor's contact information instead of their own. If the Realtor agrees to accept service on their client’s behalf, the Realtor will be responsible for ensuring that the seller receives the notice promptly.
This means that a clear direction from the seller as to how to communicate any rescission notice to them should be received and followed. When a seller or their Realtor receives a rescission notice from a buyer that was served in accordance with the HBRP Regulation, it should be immediately reviewed by the seller and their agent to ensure that:
• the seller’s information and listing brokerage are correctly captured;
• at least one of the buyers on the accepted offer matches the name on the rescission notice;
• the date the contract was entered into is correctly captured;
• the property information listed is correct;
• the date of the rescission notice falls within the three business days allowable under the HBRP Regulation;
• the notice has been served to the contact information and in the manner specified in the contract or in the BCFSA's disclosure form;
• the buyer initialed and signed the document. Serving the Notice The notice will be considered served when it is sent or transmitted, and not when the seller receives it.
For instance, if a buyer sends the rescission notice to the seller by email and requests a “read receipt”, they do not have to wait for the “read receipt” to be sent back before the notice is considered served. Offers on Tenant-Occupied Properties Should an offer be accepted by a seller on a tenant-occupied property, and it is requested by the buyer that the seller provide a notice to vacate to the tenant, it is best practice not to provide that notice until after the rescission period has ended. Per section 49(5) of the Residential Tenancy Act, a landlord may end a tenancy in respect of a rental unit if the landlord enters into an agreement in good faith to sell the rental unit, and all the conditions on which the sale depends have been satisfied. Because a buyer has sole discretion in determining whether or not to rescind an offer, it would be prudent for the seller to consider the rescission period as they would any other condition for this purpose.
Money laundering occurs when an individual attempts to disguise the source of ill-gotten funds by using those funds in a series of legitimate purchase transactions. The individual will then sell the purchased goods, receiving back “clean” money from a reputable source such as from a seller or a financial institution. They may do this several times to muddy the waters and make it more difficult to trace the source of the funds and connect them back to the “dirty” money. A new consideration with the addition of the HBRP Regislation is that criminals may now provide illicit funds to a brokerage as a deposit and then exercise their rescission rights to obtain the funds back without a need for a separate signed release agreement from the seller. In most cases, when a buyer determines that they are unable to satisfy or waive their subject conditions, the buyer's Realtor, upon request of the buyer, will provide a general written release to the seller.
This can happen at any time prior to the subject removal date. Even if a seller is notified that a buyer will not be moving forward with the transaction because they are not satisfied with their due diligence pertaining to their subject conditions during the rescission period, no rescission fee would be owed to the seller and a separate written agreement would be required for the brokerage to release any deposit funds. Buyers however must ensure they make best efforts to fulfill their conditions precedent.