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Your real estate licensee must advise you of all offers that are submitted on your property. Some sellers will allow buyers to submit offers whenever they want, while others prefer to ask buyers to submit offers on a specified date and time so they can all be considered at once.
When you are ready to entertain offers, you and your real estate licensee will go through the contract line by line and ensure that you understand the contract including all the terms and clauses added by the buyer.
Should you receive an offer you are willing to accept without changes, your real estate licensee will show you where to initial and sign making the document a legally binding contract. Both you and the buyer will be bound by the contract and must each perform your obligations as stated.
The specifics of the Home Buyer Rescission Period are set out in the Property Law Act (“PLA”) and the Home Buyer Rescission Period (“HBRP”) Regulation .
The legislation comes into effect on January 3, 2023, and provides buyers with an opportunity to rescind their offer to purchase residential properties up to three days after an offer is accepted. If a buyer chooses to rescind their offer in the time period provided, they must pay the seller 0.25% of the offer price. This rescission period applies to residential transactions of residential real property regardless of whether a real estate licensee is involved in the transaction, and cannot be waived by the buyer or seller.
The types of residential real property that are subject to the legislation are as follows:
- A detached house;
- A semi-detached house;
- A townhouse;
- An apartment in a duplex or other multi-unit dwelling;
- A residential strata lot, as defined in section 1(1) of the Strata Property Act;
- A manufactured home that is affixed to land; and
- A cooperative interest, as defined in section 1 of the Real Estate Development Marketing Act, that includes a right of use or occupation of a dwelling.
The following types of properties are excluded from the legislation and the rescission period does not apply:
- Residential real property that is located on leased land;
- A leasehold interest in residential real property;
- Residential real property that is sold at auction; and
- Residential real property that is sold under a court order or the supervision of a court.
An exemption also exists for any purchase and sale of property under the Real Estate Development and Marketing Act where section 21 applies.Learn More about the Home Buyer Rescission Period
The purpose of a subject clause (also known as a condition precedent) contained in an offer to purchase is to set out a specific condition which must be fulfilled before the sale can go through, although the contract is legally binding once it is signed by both parties. Subject clauses must be carefully and precisely worded. You would be wise to get professional help in composing them; however, it is ultimately your responsibility to be sure the clauses mean what you want them to mean.
There can be as many subject clauses as you are able to negotiate with the seller; however, the fewer you put into an offer, the more serious you seem as a buyer and the better the chance is that your offer will be accepted. Remember that you are, in effect, asking the seller to take the home off the market during the period while you are attempting to fulfill the conditions you have set.
Some possible items a buyer might wish their offer to be “subject” to include:
- A satisfactory professional building inspection;
- The arrangement of the financing you require;
- The lender’s approval of your application to assume the seller’s existing mortgage;
- The sale of your present home; and
- If the home is a strata lot, a satisfactory review of all relevant strata documentation, including engineer’s reports and/or building inspection reports, if any.
When you place “subject” clauses on your offer to purchase, you are required to use every reasonable effort to see that the conditions are satisfied. It is important to know that subject clauses are not “escape” clauses that allow you to avoid your legal responsibilities in the contract. Once you have fulfilled the conditions, written notification should be given to the seller that you are removing the subject clauses.
If the buyer is unable to meet the conditions after making every reasonable effort to do so, the contract ends and there is no legal obligation to complete the purchase. It is important to remember that if the brokerage is holding the buyer’s deposit, both you and the buyer must sign a deposit release form prior to the deposit being released to you. If the buyer exercises their right to rescission, and the brokerage is holding a deposit, the rescission fee will be paid directly to you with the remainder of the deposit going back to the buyer. No deposit release is required in that situation.
You may wish to accept an offer containing subject clauses, yet you will still be free to consider other offers until the buyer has removed their conditions. You may ask for a clause in the agreement which permits you to require the buyer to remove all subject conditions within a specified time period if you have received another attractive offer. If the buyer cannot do so, your conditional contract comes to an end.Learn More about Deposits
When you receive an “offer to purchase,” you have four options.
If you sign a buyer’s offer without making any changes, a legally binding contract has been formed. Again, legally binding means both you and the buyer will be bound by the terms of the contract (subject to the rescission period), and must each perform your respective obligations as stated. Your performance can be enforced in a court of law.
You are under no obligation to accept a buyer’s offer or to make a counter-offer.
Should you feel that there is no reasonable way the buyer will be able to come to an agreement with you, you may choose to just ignore the offer instead of advising the buyer that you have rejected it. The offer will have a deadline for you to respond. If the deadline passes, it is as if you have rejected the buyer’s offer. Should you or the buyer wish to revive the negotiations after that time has passed, a new offer must be drafted.
If you change anything at all on the buyer’s original offer, you are considered to have rejected their offer and are making a new offer back to them. This new offer is usually referred to as a “counter-offer.” When the buyer receives a counter-offer, they then have the same three options as you had when you first received the offer: accept, reject or make a further counter-offer. The process of counter-offers may continue until an agreement is reached. If the counter-offer is unacceptable to the buyer or if they have changed their mind about the purchase, you do not have the option of returning to the original offer and accepting it.Learn More About Multiple Offers
With each offer that you receive from a buyer, your real estate licensee will provide you with a form called the Disclosure to Sellers of Expected Remuneration. This form will outline for each offer, how much in dollar figure your real estate licensee’s brokerage will earn, and how much they will be paying to the brokerage that is representing the buyer. This information will ensure that you understand the financial impacts of accepting a particular offer.
This disclosure must be made on the form prescribed by BCFSA, and must include information on every offer, and counter-offer. This information includes:
- The amount being paid to your real estate licensee’s brokerage;
- The amount being paid to the brokerage representing the buyer;
- The amount being retained by your real estate licensee’s brokerage; and
- The amount of any remuneration your real estate licensee might receive or anticipate receiving other than commission.
At the time an offer is given to you, or your real estate licensee, you will also receive a disclosure of the buyer’s right of rescission. The disclosure can be made in the contract of purchase and sale or on a separate form. This disclosure will include the following information:
- The fact that the right cannot be waived by either party;
- The period during which the right of rescission can be exercised;
- The calculation of the dollar amount that the buyer must pay you and how the amount will be paid to you;
- the requirement to return to the buyer any remaining deposit funds; and
- the exemptions to the buyer’s right of rescission.