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Cooling-Off Period: What You Need to Know
The new, mandatory Home Buyer Rescission Period (“HBRP”) or ‘cooling-off period’ comes into effect in January 2023 for residential real estate transactions.
As licensees, you need to ensure that your clients are aware of how to exercise it, and of the implications.
Making HBRP Disclosures
You must make two disclosures concerning HBRP to your clients. The first disclosure must be included in the Disclosure of Representation in Trading Services (“DORTS”) before engaging a client. The second, more detailed Disclosure of Buyer’s Right of Rescission must be made when you prepare an offer to purchase on behalf of your client, or when you present an offer to purchase to your client.
The Disclosure of Buyer’s Right of Rescission must contain the following information:
- The rescission period cannot be waived;
- Accurate calculation of the rescission period and when it expires;
- Accurate calculation of the dollar amount of the rescission fee;
- Information about the return of the deposit held in a brokerage trust account (if applicable); and
- Exemptions to the right of rescission.
HBRP disclosures must be made using only the forms approved by the Superintendent of Real Estate. BCFSA will post the updated DORTS, and new Disclosure of Buyer’s Right of Rescission forms on our website before January. It is your responsibility to ensure you are using the approved forms.
Serving a Notice of Rescission
If the buyer wishes to cancel their offer, they must notify the seller in writing before the rescission period expires. The notice must contain prescribed information and be served in a correct manner. You will need to understand the process for serving notice in order to advise your client.
Managing the Rescission Fee
If your buyer client has made a deposit to your brokerage account, the rescission fee must first be deducted and the remainder returned to the client. In contrast with other instances where a brokerage is holding a deposit as a stakeholder, mutual release is not required. You will have made this disclosure to your client in the second disclosure form, and you need to ensure they fully understand how the deposit will be managed should they rescind the contract.
Finally, if a buyer’s brokerage is not holding a deposit and they decide to back out, you need to advise your seller client to seek legal advice on how to pursue the buyer for the money owed.
Should you have any questions regarding HBRP, you can contact BCFSA’s Practice Standards Advisors.