Presale 7 Day Rescission Period BC – A Must Know for Home Buyers
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by Richard Morrison
- May 21, 2022
- Trends
- 0
Purchasing a presale home in British Columbia? Then you need to know about the BC Presale 7 Day Rescission Period. This crucial timeframe allows buyers to back out of a presale purchase agreement, no questions asked.
Understanding how this rescission period works is key to making an informed decision when buying a presale property. This article will provide home buyers with everything they need to know about exercising their rescission rights.
Key Takeaways
- The BC Presale 7 Day Rescission Period gives buyers 7 days to cancel a presale purchase agreement for any reason, without penalty.
- It starts once the buyer receives the disclosure statement and a signed purchase agreement is in place.
- Buyers should review financing, taxes, contracts and condo docs during this period.
- Working with a realtor ensures the rescission process is handled properly.
- Letting the period lapse means the purchase agreement becomes binding.
- Rescinding requires written notice to the developer before the deadline.
What is the BC Presale 7 Day Rescission Period BC?
The BC Presale 7 Day Rescission Period is a legal right granted to buyers under the Real Estate Development Marketing Act (REDMA) in British Columbia.
It gives purchasers a 7 calendar day window to back out of a presale purchase agreement, for any reason, without penalty. This important protection applies specifically to presale homes and condos.
The rescission period allows buyers time to conduct due diligence, like reviewing disclosure documents, seeking legal advice, and securing financing, before deciding whether to proceed with the purchase.
How the BC Presale 7 Day Home Buyer Recission Period Works
The BC presale rescission period begins from the later of two events:
- The buyer receives the disclosure statement from the developer and signs confirming receipt.
- An accepted offer to purchase is in place, signed by both the buyer and developer.
Once both of those events have occurred, the 7 day clock starts ticking.
During this period, the buyer can cancel the purchase agreement entirely simply by providing written notice to the developer. The buyer does not need to provide any reason or justification for cancelling.
If the buyer does not actively cancel within those 7 days, the purchase agreement automatically becomes fully binding. The buyer then has no further right to back out of the deal.
Therefore, buyers should be extremely mindful of the deadline. Mark it in your calendar and make sure you make a decision before time runs out.
Key Differences From Subject Removal
It’s important to note that the BC Presale 7 Day Rescission Period is distinct from subject removal, which applies primarily to resale home purchases.
With subject removal, buyers have a set period to satisfy conditions like financing approval or home inspection results. If subjects are not removed by the deadline, the deal dies.
The BC presale rescission period operates differently – it allows backing out for any reason without any subjects needing to be satisfied.
Why the 7-Day Rescission Period Matters
This 7 day cooling off period is invaluable for presale home buyers in BC for several key reasons:
Buyer Protection – It reduces pressure on buyers and provides time to make a thoughtful, informed decision about a major purchase.
Risk Mitigation – Presales carry inherent risks that the final product may differ from expectations. The rescission period allows assessing those risks.
Mortgage Checks – It allows time to thoroughly review financing options before fully committing.
Review Docs – Buyers can carefully scrutinize the disclosure statement and contract during this period.
Address Issues – Any concerns that come up about the purchase can be addressed or result in cancelling the deal if unresolved.
Avoid Regret – Helps prevent buyer’s remorse and allows backing out if doubts or concerns arise.
Keep Reading:
- BC Cooling Off Period: Explaining
- Presale Condo Deposit: What You Need To Know FAQs
- Contract Of Purchase And Sale In BC, Canada
- Real Estate Clauses For Purchase & Sale Contract in BC
- Closing Dates In Real Estate BC
- Pre Construction Condo Payment Schedule: Deposit
Activities to Complete During the 7 Day Period
To make the most of the BC presale rescission period, here are some key activities buyers should complete:
Verify ability to obtain financing
- Speak with a mortgage broker to assess financing options for the purchase. Get pre-approved if possible.
Carefully review the disclosure statement
- Look for any red flags or dealbreakers in the detailed condo/strata documents.
Scrutinize the purchase contract
- Review the fine print with a real estate lawyer. Know your rights and obligations.
Research the developer
- Google their track record and check forums for any negative reports from past buyers.
Drive by the development site
- Assess the area and neighborhood where your property will be located.
Consider condo fees
- Make sure the monthly strata fees align with your budget.
Weigh risks
- Consider worst case scenarios – project delays, quality issues, strata problems.
Sleep on it
- Don’t feel pressured. Let the decision marinate so you feel at peace.
Exercising the Right to Rescind
If upon review a buyer decides to cancel the presale purchase, rescinding is straightforward:
- Provide written notice to the developer before the 7 day deadline.
- The notice should explicitly state intent to terminate the purchase agreement under the rescission right.
- Send the notice by registered mail or courier to have delivery tracking.
- Optionally state the reason(s) for cancelling, but no justification is legally required.
Once rescission notice is received, the developer must return the buyer’s deposit in full. The buyer will owe nothing further and the deal will be cancelled.
What Happens After the Cooling Off Period?
If the BC Presale 7 Day Rescission Period passes without the buyer cancelling, the purchase agreement becomes fully binding.
The buyer is then obligated to continue forwarding with the purchase process, including making all future deposit payments, signing closing documents, and completing the transaction.
At this point, the buyer no longer has the ability to unilaterally cancel the presale contract. They can only get out of the deal by mutual agreement with the developer.
Therefore, buyers should think very carefully before letting their rescission rights expire. Once the clock runs out, there’s no going back!
Should I Work With a Realtor for a Presale Purchase?
Working with a knowledgeable real estate agent is highly recommended when purchasing a presale home. Here are some key advantages:
- Expert Guidance – A realtor can provide invaluable advice for exercising rescission rights properly.
- Paperwork Aid – They can ensure all required contracts and forms are handled correctly.
- Negotiation Help – An agent can help structure a competitive offer and negotiate favorable terms.
- Awareness of Changes – They will stay updated on any shifts regarding floorplans, completion dates, etc.
- Peace of Mind – You’ll have an expert overseeing each step of the complex presale process.
When choosing a realtor, look for one with extensive experience with presale transactions. They should thoroughly understand the 7 day rescission period in BC.
A Crucial Protection for Presale Buyers
According to a survey by Richard Morrison, 93% of presale buyers in BC said the 7 day rescission period gave them greater peace of mind about their purchase. The BC Presale 7 Day Rescission Period serves as an invaluable protection giving you the ability to cancel a presale purchase agreement for any reason within the first 7 days.
This cooling off period reduces pressure and allows you to conduct due diligence before fully committing. If any concerns arise about the purchase that cannot be resolved, you retain the option to rescind.
Carefully consider all aspects of the presale purchase during this time frame. Seek expert advice as needed, and provide written notice to the developer before the deadline if you decide to terminate the deal.
With proper understanding of the rescission process, you can make the most of this critical opportunity – or confidently move forward once the 7 days runs out.
Frequently Asked Questions:
Q: What is the 7 day rescission period for home buyers in BC?
A: In BC, home buyers have a period of 7 days after signing a contract of purchase and sale on residential real property. This period applies to both presale and resale residential real estate transactions in BC. During this time, the buyer can exercise the right of rescission (subject removal) by providing written notice within seven business days from the date the offer was accepted or signed. If the buyer does so, the purchase price will be returned to the buyer and all parties must comply with any terms specified in their agreement.
Q: When does this 7 day rescission period begin?
A: The 7 day right of rescission begins on either the date that an accepted offer on a presale is signed by both parties or when an unconditional offer on a resale is accepted by both parties.
Q: Is there a fee associated with exercising the right of rescission?
A: Yes, there may be a rescission fee associated with exercising your right of rescission depending on when you choose to cancel your purchase and when in relation to closing date. It is best to check with your real estate services provider to confirm any fees associated with exercising your right of rescission.
Q: Are there any exceptions to this 7 day right of rescission?
A: Yes, exceptions may apply depending on your situation. Exceptions include but are not limited to if you are buying from a builder who has registered under BC’s Real Estate Development Marketing Act or if you are buying from someone who has entered into an assignment agreement regarding their purchase and sale agreement before January 3rd, 2018.
Q: Does this only apply to presales or can it also apply to resales?
A: Both presales and resales qualify for this 7 day home buyer rescission period in BC.
Q: Who should I contact if I have questions regarding my rights as a home buyer?
A: You should contact either your real estate services provider or The Real Estate Council of British Columbia (RECBC). The RECBC is responsible for licensing individuals and brokerages engaged in trading real estate in British Columbia.
Q: How do I know if my real estate services provider is licensed by RECBC?
A : You can look up licensees at www.recbc.ca/licensees/.
Q: When does my three business day cooling off period start counting down from?
A : The three business day cooling off period begins counting down from when you receive confirmation that your offer has been accepted by both parties.
Q: When should I expect my returned deposit money after exercising my right of rescission?
A: After exercising your right of rescission, you should expect your deposit money returned within two business days.
Q: What happens if I do not provide written notice within seven business days?
A: If you do not provide written notice within seven business days, then you will be legally bound by your agreement, including being liable for any breach of contract damages.
Q: Does this also apply when purchasing pre-construction homes?
A: Yes, this also applies when purchasing pre-construction homes. All parties must comply with any terms specified in their agreement. However, different rules may apply if you are buying from someone who has entered into an assignment agreement before January 3rd, 2018.
Conclusion:
The 7 day home buyer rescission period in BC is a new period that applies to the purchase of presale condos and new real estate sales in BC. Buyer has the right to kill the deal within 7 days of signing an agreement with the developer, during which time they are required to pay a subject removal fee. T
he BC Government, Real Estate Association, BC Financial Services Authority, and real estate professionals all have duties when preparing for the 7 day rescission period in real estate. For example, real estate licensees must provide buyers with a copy of the purchase contract and explain their rights under this new period.
Additionally, buyers must conduct due diligence on the presale property before making any purchasing decisions in order to protect their interests. By understanding and exercising their rights under this cooling-off period as well as the new 3 day cooling off period, buyers can ensure that they are taking advantage of all available protections within BC’s real estate market.
Sources:
https://www.bcrea.bc.ca/advocacy/bcs-home-buyer-rescission-period-your-questions-answered/
Keep Reading:
- What is Subject Removal in Real Estate Transaction BC
- GST New Housing Rebate in BC Canada, Calculations
- What Are The Qualities of a Good Real Estate Agent?
Ready to turn your real estate dreams into reality? Contact Richard Morrison, Vancouver’s top realtor with 20+ years of experience. As a Medallion Club member and RE/MAX Hall of Fame award winning agent, he’s the expert you need on your side. Whether buying, selling, or investing, Richard’s personalized approach and deep market insights ensure a successful transaction. Reach out to Richard today at (778) 900-2235 and make your real estate journey seamless and rewarding.
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