HBRP - Home Buyer Rescision Period
HBRP in a Nutshell: Cooling Off Period in Residential Real Estate Purchases
TLD;DR: Too little, too late; The Home-Buyer Rescission period (HBRP) is a cooling-off period added to residential real estate purchases to prevent buyers from succumbing to the excitement of bidding on housing.
Do you remember when home buyers were blindly bidding on homes, often paying over a hundred thousand dollars more than the asking price? In the frenzied post-lockdown world, a perfect storm emerged: record-low interest rates, community amenities shut down (remember the police tape across the parking lots in provincial parks?), and a shift towards remote work had everyone searching for a slightly different home. Additionally, the largest cohort of first-time buyers ever, millennials, flooded the market with down payments gifted by well-wishing parents.
With the market conditions becoming chaotic, the province of BC faced mounting pressure to take action.
Fast forward 24 months... the Bank of Canada raised interest rates higher and faster than at any time in the past two generations. Variable rates shot up like rockets, posing a threat to recent buyers and causing the real estate market to slam on the brakes so hard that real estate agents and mortgage brokers are left with whiplash from the sudden drop in transaction volume.
Now, the provincial government, like a rudderless dirigible in a typhoon of its own making, has finally managed to course-correct with some new policies that would have been more useful 24 months ago but are now no longer needed:
- When buying a property, there is now a mandatory 3-business-day cooling-off period for the buyer.
- A buyer who submits an offer with no conditions can use this cooling-off period to withdraw from the deal, provided they pay a small fee to the seller (0.25% of the transaction amount).
- This provision is not applicable when the buyer has other conditions, and most deals today do have other conditions.
- Sellers do not have the same "cooling off period" and must adhere to the terms of the contract and the lead of the buyer.
- The HBRP introduces additional paperwork and confusion into most deals.
As of Q3, 2023, there is a petition circulating to have this HBRP regulation scrapped. If history is any guide, it will take the province two years to respond. In the meantime, please feel free to reach out to your agent with questions about this or other rule changes in the real estate market in Victoria.