Amendments to the Property Law Act introduced on Monday, March 28, 2022, will enable the creation of a new Homebuyer Protection Period to protect people buying a home in a challenging real estate market.
The Homebuyer Protection Period, sometimes called a “right of recission,” responds to concerns that in the highly competitive housing market, buyers are reporting pressure to submit offers without basic conditions intended to protect their interests.
The amendments would enable the creation of a period to give people buying a home more time to consider their offers, ensure financing and obtain a home inspection, instead of feeling like they need to waive these conditions. Regulations will be introduced this year to define the specific time homebuyers will have to exercise this right as well as the financial costs of retracting an offer. The legislation also allows for regional variation within the province, recognizing the housing market varies between regions.
“People need to have protection as they make one of the biggest financial decisions of their lives,” said Selina Robinson, Minister of Finance. “In our overheated housing market, we have seen buyers feeling pressure to waive conditions just to be considered, and new homeowners discovering costly problems only after a deal has closed. We want to make sure people buying a home have time to get the information they need to make a sound decision within limits that still give sellers the certainty they need to close sales.”
A new homebuyer protection period is one part of the Province’s efforts to protect people during the home-buying process. The parameters of this new tool, as well as any other new consumer protections to be implemented, will be informed by the result of a consultation that BC Financial Services Authority (BCFSA) completed with a range of real estate industry stakeholders, including home inspectors, appraisers, Realtors, academics and representatives from the legal and financial services sectors.
BCFSA’s analysis of the consultation is expected this spring and will inform development of the regulations that will implement the homebuyer protection period with the goal of having protection measures in place by summer.
Michael Renaud, recent B.C. homebuyer –
“I am lucky that I am Red Seal tradesperson and could inspect homes I viewed myself and with friends. I would be very uncomfortable making an offer on a million-dollar home without a house inspection or the time to get good advice. As a recent buyer, both viewing and financing felt rushed, and I would have appreciated more time to review everything on such an important purchase. I think this is a step in the right direction and I hope more policy is implemented to help first-time buyers in particular.”
Helene Barton, executive director, Home Inspectors Association BC –
“Every B.C. homebuyer must be allowed the opportunity to conduct their own due diligence prior to a purchase and avoid the high risk of buying without a home inspection.”
Paul Taylor, president and CEO, Mortgage Professionals Canada –
“The introduction of a short, unrestricted cooling-off period or a separate, longer period to ensure appropriate financing can be arranged would remove uncertainty from home purchases and sales, and potentially save both buyers and sellers considerable costs over time.”
- Industry representatives estimate that more than 70% of offers in B.C.’s most competitive markets over the past year may have been made without conditions, which can lead to major repair and renovation costs or the loss of a deposit if the buyer’s financing falls through.
- B.C. would be the first province to implement a homebuyer protection period for resale properties and newly constructed homes.
- Seven-day cooling-off periods for pre-construction sales of multi-unit development properties such as condominiums are already in place under the Real Estate Development and Marketing Act.
- BCFSA is responsible for the supervision and regulation of the financial service sector, including real estate professionals, mortgage brokers, insurance, pensions, trusts, credit unions and the Credit Union Deposit Insurance Corporation.
- Other consumer protection issues included in BCFSA’s consultation include the blind bidding system, condition waiving and other practices that may pose risks to consumers, particularly in highly competitive markets.