BC’s finance minister, Selina Robinson, says that as of late spring, the government will have solidified its plan for a new ‘cooling-off’ period for homebuyers.
This will be similar to the seven-day cooling-off period given to homebuyers that purchase pre-build condos in BC, but the exact number of days that this new cooling-off period will consist of has yet to be defined.
The goal of this new legislation is to give some control back to the buyer, as homebuyers have been waving off conditions (like home inspections) just to remain competitive in Vancouver’s market. According to Robinson, in the last two years 70% of offers in BC’s markets have been made without conditions (Vancouver Sun, 2022).
“People need to have protection as they make one of the biggest financial decisions of their lives,” says Robinson (Vancouver Sun, 2022).
Unfortunately, not everyone agrees. BC’s Real Estate Association says that this could lead to challenges for those attempting to sell their home, as this new period could cause buyers to retract their offers last minute (Global News, 2022).
Having time to ‘cool-off’ after placing an offer sounds good in theory, but what does this really mean for new homebuyers in BC? Will this new legislation help cool-off the housing market come summer 2022? To make things simple, Clark Woods LLP’s real estate lawyers are sharing their thoughts.
The New ‘Cooling-Off Period’ Explained
Real estate lawyer, Keith Barron, says that providing protection for buyers in this heated market is a good notion.
“A cooling-off period gives buyers a chance to think about the decisions they may have made while in the midst of a bidding war. If a buyer is getting cold feet, it’s better they back out before completing the deal, and not after they own the home and feel like the only option is taking the seller to court,” says Barron.
Going through the court system is always costly, so having a ‘cooling-off’ period to allow for home inspections and other conditions could save homebuyers from biting off more than they can chew.
However, Barron mentions that the potential impact on the seller is also something to consider.
“Many people selling a home are doing so to buy their next home,” says Barron. “If a seller gets signed off on to purchase but can’t rely on securing the money from their sale because of the cooling-off period, then they will be delayed on making an offer on their next home.”
A cooling-off period increases uncertainty around if the contract a seller receives will be honoured or not, which doesn’t provide much security.
The ‘cooling-off’ period is part of the Homebuyer Protection Period in BC’s Property Law Act. Barron and the team of conveyancers at Clark Woods LLP help clients in the purchase or sale of their home, so this new legislation is important to comprehend.
The real estate lawyers at Clark Woods LLP ensure that their clients have all their paperwork filled out correctly, so that transactions complete on time and properly. With this new cooling-off period looming, more homebuyers and sellers may want to seek consultation from real estate lawyers to make sure that they understand the new legislation.
Ultimately, Barron explains that there isn’t enough information on this cooling-off period to understand how it will impact the housing market.
“Without seeing the legislation, it is hard to predict the outcomes. However, increasing the time to close a deal will do little to cool the housing market, it just attempts to provide some protections for buyers while the market is so hot,” says Barron.
If you’re looking to enter the housing market or sell your home this summer, Keith Barron and the members of Clark Woods LLP’s conveyancing team are available to answer your questions. Call 604-330-1777 to set up a consultation or visit our Real Estate page.