B.C. homebuyers now have 3-day cooling off period to change their minds

VANCOUVER -

Most homebuyers in British Columbia now have three business days to think about their purchase, allowing them to back out if they can’t secure financing or arrange a home inspection – or even if they just get cold feet.

The province’s Home Buyer Rescission period came into effect Tuesday and takes effect at midnight following the acceptance of an offer.

The government says it will give buyers some protection in the face of rising interest rates and what it calls high-pressure sales tactics.

"Housing remains a top concern for people in B.C. and a top priority for this government," said Finance Minister Katrine Conroy said in a news release. "Buying a home is one of the biggest decisions of people's lives. This is an important milestone as we lead the way in protecting people and strengthening public confidence in the real estate market."

The cooling off period applies to detached houses, townhomes and condos but does not apply when homes are auctioned or when the home is on leased land.

Realtors are required to inform their clients of the new provision but at least one housing market analyst believes some savvy investors may use it to gain an advantage.

"The problem with the three-day rescission period that I see is, for sophisticated buyers, it provides an option value,” said UBC Sauder School of Business professor Tom Davidoff. “The right to bid on a home and then see what else is happening in the market and potentially walk away if you don't like the signals you're seeing over those three days has value."

In an effort to combat that strategy, the province has included a financial penalty for people who walk away from a deal.

If a buyer backs out, they will have to pay the seller a cancellation fee of 0.25 percent.

On a million-dollar offer, that adds up to a penalty of $2,500.