On Monday, March 28 the government of British Columbia introduced amendments to the Property Law Act which will create for the first time a "Homebuyer Protection Period" in residential resale transactions.
Similar to most markets in North America, BC has struggled with chronic low real estate inventory over the last 2 years in the face of strong demand. This has led to increases in real estate prices as multiple Buyers compete for the same listing. This competition is not just limited to the purchase price on real estate contracts, but also other fundamental components of an offer such as closing dates, deposits, inclusions, and conditions. As a way of strengthening offers, it has become commonplace for Buyers to write on a home without the benefit of conditions surrounding financing, inspection, review of title and insurability. Taking the time to complete this due diligence will often uncover issues that may have been unknown to both the Buyer and the Seller. Therefore with an unconditional offer financial risk is transferred from the Seller to the Buyer, improving the value of the offer to the Seller.
The Homebuyer Protection Period will give buyers a short period of time where they can rescind an offer for a financial penalty. This time period and the financial penalty have not yet been defined, but should be rolled out by the Summer.
This intervention may not address affordability (prices), but the intention is to improve transparency for home buyers. The goal is to transfer the risk of major defects back to the Seller from the Buyer, regardless of market conditions. Many Buyers are Sellers as well, and for these clients timing of purchases and sales may be especially important as these new rules roll out.
-Mark Salter