Home Buyer Rescission Period Calculator
Making a home purchase can be one of the most significant decisions of your life, but it doesn't always have to be the best option. There may be times when investing in real estate is not wise, and that's where the Home Buyer Recession Period comes into play and helps you avoid major headaches down the line.
What is the Homebuyer Rescission Period?
After the seller has accepted your offer, you have 30 days to withdraw from your purchase agreement. However, suppose you wish to do so without a rescission. In that case, negotiations must take place between yourself and the seller or face serious legal repercussions and financial penalties.
British Columbia implemented the Homebuyer Barrier Period (HBRP) on January 1, 2023. Prior to that time, it had been known as either the "cooling period" or "Homebuyer Protection period."
Why is HBRP Essential?
Things can happen between signing your purchase agreement with the seller and accepting their offer. Here are some examples:
- Your job might end and you won't have the financial means to repay your loan.
- Buying a downtown house may not be feasible if your job requires that you relocate.
- Living with parents will likely be necessary in case of an emergency in the family until things improve.
- Another mortgage lender may provide you with a better deal.
- After consulting your spouse, you decide to wait one year before buying a house.
- Another mortgage lender might provide an even better deal.
- How long do you have before being able to resign?
In general, you have three days from the date of signing to cancel your agreement. However, this depends on the terms of the arrangement. Business days are Monday through Friday (excluding holidays such as Canada Day, Family Day and Christmas Day).
What Are the Effects of HBRP on Properties?
HBRP can have an impact on many real property types, including:
- Apartments in multiunit dwellings with two or more units
- Homes that are semi-detached or detached
- Manufactured Homes attached to Land
- Residential strata lots
- Cooperative interests have the right to occupy or utilize a dwelling.
- What's the cost to sell your house?
- Unfortunately, you must pay a fee in order to cancel an offer. In the case of a townhouse that costs $800,000 and you want to take advantage of HBRP benefits, then the seller needs to receive 0.2% of the purchase price as compensation - that comes out to $2,000 ($800,000 x 0.25%)).
Brokerages must reimburse you any rescission fee paid to the seller when your deposit has been held in trust. Any balance remaining would then be returned to you; for example, if a $800,000.00 deposit is used for a townhouse purchase, then you would receive $3,000 back.
How can you notify the seller?
A formal notice of rescission must be sent via registered mail or email with a reading receipt, fax, personal service, or email.
Your notice must include the following elements:
- Your notification must include:
- Signature and name
- Seller's name
- Property or parcel identifier number
- Exemptions to HBRP
What exceptions exist from this time limit for rescission notifications:
- Any sale subject to court supervision or an order of the court
- Properties purchased at auction
- Residential property located on leased land used for real estate assignments
- Multi-unit development properties sold before construction are exempt, as they already have a seven day rescission window in place.
What Do Realtors Need to Tell You About Your Home?
According to the Real Estate Board of Greater Vancouver, your realtor must provide an "additional mandate disclosure" before making an offer on a property. This document outlines the duration of protection periods, deposit handling fees and which items are exempt from homebuyer's protection periods.
What Additional Information Should You Be Aware of the HBRP
The government is still working out details regarding HBRP. Buyers must adjust their rescission times accordingly as this new system is still developing.
We would be delighted to answer any queries about the Home-Buyer Relief Program or other programs such as the home-buyer incentive. Drop us a note! Our expertise will be invaluable during your home-buying journey.
Kim Lee - Vancouver realtor
400-1286 Homer St, Vancouver, BC V6B 2Y5