To Rescind or Not Rescind, That is the Question!
In January of 2023 a new rule will take effect and it will affect both buyer’s a sellers of real estate here in Kelowna BC.
It’s called the Home Buyer Recission Period.
Under the new regulation, some buyers for some residential properties will have three business days to change their mind, for any reason, and walk away from an accepted Contract of Purchase and Sale.
There is a cost to enacting this, more on that in a minute.
So let’s walk through a hypothetical example…you find the home of your dreams, you write an offer, negotiate and get that offer accepted which is of course in writing.
You go home and are all excited, but there is something that is eating away at you and you just can’t place it.
In the morning you wake up to something we call buyer’s remorse and have decided that you don’t want to follow through with the purchase after all and you decide to exercise your option to rescind the contract.
You would have three days to make that decision, but that decision would come with a price to it, it would cost you .25% of the purchase price of the home.
And you would owe that money to the seller. If you had a deposit that was delivered after acceptance of the contract by the seller, then that .25% would come out of your deposit.
If there was no deposit, you would owe the seller that money, so to keep the math simple, on a $1 Million dollar purchase, you would owe $2500.
How is This Different Than Just Walking Away From Conditions?
So you might be thinking how this is different if you had conditions in the offer and wound up walking away from the house on inspection or financing?
In those instances, you would have acted in good faith and worked hard to get the purchase of your dream home to go through by paying for a home inspection and working with your bank or mortgage broker to get your financing approved.
Once you exercise this option, there is no going back, so not only do you need to be absolutely sure about the home that you are purchasing but you must be rock solid on whether you are going to kill the deal using this out because it could cost you.
Now, I think that the government is about 2 years too late with this piece of legislation. This idea was brought about when the market was hot and when there was a lot of emotion in the decision making process.
This legislation would have provided an out for that buyer that wound up feeling remorseful.
There are some exemptions in this legislation, here's a link to the BCREA website that will give you all the detail that you will need moving into 2023.
As always, if you are looking for a guide to help you find that perfect Okanagan home, or an experienced marketer to help you with the sale of your existing Kelowna property, then we should talk.
You can always email me at firstname.lastname@example.org or give me a call at 778-716-7527.