Uncovering issues with your new home after possession: Your legal rights in BC

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Home buyers in British Columbia suffering from buyer’s remorse now have the right to back out of their real estate deal.

A three-day Home Buyer Rescission Period came into effect across the province on Jan. 3, giving buyers a cooling-off period and some time to properly assess the contract they’ve entered into and to arrange financing.

Although finding a fault is not a requirement, buyers now have the right to rescind an offer within three days, regardless of any conditions — no questions asked.

But backing out comes at a price: The would-be buyer must pay .25 per cent of the purchase price within 14 days before the deposit is returned to them. On a $1 million home, for example, that amounts to $2,500.

Cooling market

The new legislation was envisioned 18 to 24 months ago during the overheated housing market when buyers were tripping over one another trying to secure a piece of real estate. During the height of that sellers’ market, it was common to avoid any discussion of a house inspection for fear that it would turn off the seller and leave the buyer out in the cold.

The current real estate environment presents a much different reality. Interest rates have been increasing, as has the cost of living and there are very real concerns that a recession is looming. This has all conspired against sellers, dramatically cooling off residential property sales and resulting in a drop in transactions.=

A year ago, our office routinely conducted about 70 to 80 transactions every month. Now we’re seeing fewer than 50 residential real estate deals each month. That tracks with the numbers from the Real Estate Board of Greater Vancouver, which shows a year-over-year dip in sales of about 34 per cent.

Waiting game for buyers, sellers

Prices are expected to climb upward again eventually, and until they do, there is an expectation that both buyers and sellers will wait for a more favourable shift in the market. The current environment may well continue for another year or so.

Critics argue that the rescission legislation would have made more sense in the spring when the market was booming as a way to “prevent buyers from regretting their purchase, or getting in over their heads in the heat of the moment” amid competing offers.

But from my perspective, it offers an important safety net, particularly for first-time home buyers, and there are already indications it has proven useful.

Our client’s experience

Just weeks after the Home Buyer Rescission Period came into effect, one of our clients lost a sale when the would-be buyer’s home inspector discovered water damage in the crawl space. The purchaser pulled out of the deal within the three-day window and paid the seller 0.25 per cent of the purchase price. The seller then focused on remediating the property before finding another buyer.

It’s important to highlight that sellers are required to disclose any material latent defects with the property that could impact livability. If the seller knows about the issue but doesn’t inform the buyer, the latter may have grounds for legal action.

Still, the doctrine of buyer beware very much applies when purchasing real estate. Buyers who choose to forgo a home inspection and later discover an issue with the home will have limited recourse.

If you are considering purchasing a residential property on Vancouver Island, make sure you work with an experienced real estate lawyer who can protect your interests.

*This post is not intended to be legal advice and should not be taken as such. Please contact McConnan Bion O’Connor & Peterson if you have any questions regarding this post or require assistance or legal advice concerning an agreement of purchase and sale.