British Columbia introduces rescission right for homebuyers

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British Columbia introduces right of cancellation for homebuyers

Buyers will be able to cancel their offer within three days following its acceptance, subject to a penalty.

The measure, which will come into effect in January 2023, targets unconditional offers, which are common in the most competitive markets such as Vancouver.

British Columbia is implementing a right of cancellation for homebuyers within three days of accepting an offer to purchase, to protect them from ” high risk sales”.

Finance Minister Selina Robinson made the announcement Thursday at a news briefing in Vancouver. Make sure people have time to make a good decision, she said.

Too many people have had to forego an inspection to buy a home , she added in a press release.

This measure, which will come into effect in January 2023, targets unconditional offers, which are common in the most competitive markets such as Vancouver.

This is a recommendation from the AMF of British Columbia Financial Services that the Minister had already promised to implement.

Within three days of acceptance of the offer to purchase of a property, any buyer will have the right to cancel the transaction, subject to the payment of a penalty equivalent to 0.25% of the sale price.

For example, for a house sold for $1 million, the penalty will be $2,500.

These three days of reprieve will give buyers time to have their home inspected. the property and obtain the necessary financing for the purchase, according to the government.

Buyers can continue to make offers at any time conditional on an inspection or obtaining financing, the statement from the Ministry of Finance added. The protection period gives buyers the opportunity to do due diligence when these conditions are not in place.

There is still work to be done, said Selina Robinson. We are considering other measures to strengthen public confidence in the real estate market.

According to real estate agent at Remax Crest Louise Boutin, this decision comes a little too late, in particular because the increase in interest rates caused a significant slowdown in the market.

It has already caused sales to plummet, and people are taking more time to see, to put conditions on the contract, she said. It was really crazy in the spring, but now it's quiet.

Louise Boutin says that offers to purchase without conditions are rather rare at the moment.

She believes, however, that the measure has good sides, and will benefit buyers.

For the professor at the École des Hautes Etudes Commerciales (HEC) in Montreal and director of the Sales Institute, Jean-Luc Geha, the implementation of this right to cancellation is a very good thing.

In the effervescent market we are currently experiencing, buyers are under pressure, you have to decide quickly, arrive already with financing, outbid, he says. In the excitement of the moment, the buyer has some form of pressure.

According to him, rising interest rates can take people by surprise and the opportunity to reflect head rested for a few days after submitting an offer to purchase can only be positive.

Jean-Luc Geha would like to see such an initiative extended to the rest of Canada. That would be a great idea, he says.

With information from Catherine Dib

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