B.C.’s financial regulator is recommending a new pre-offer period and a cooling-off period in an effort to calm the province’s hot housing market.
On Thursday, the B.C. Financial Services Authority — which oversees credit unions, mortgage brokers, and insurance brokers in addition to real estate — made recommendations for a pre-offer period and a cooling-off period in B.C. real estate transactions, in addition to other changes.
The five-day pre-offer period would require a listing remain on the market for a minimum of five days before offers are accepted. Sellers would also be required to share property disclosure forms and key strata documents up front as part of the listing process.
The three-day cooling-off period, referred to as the homebuyer protection period, would allow a buyer three business days following an accepted offer to conduct due diligence such as inspections, seeking legal advice and to confirm financing.
The buyer would then either move forward with the purchase or be permitted to rescind their accepted offer if they are dissatisfied with the purchase terms. Buyers who decide not to proceed with the purchase would also be subject to a termination fee of 0.1 to 0.5 per cent of the purchase price, in an effort to limit abuse of the homebuyer protection period.
The cooling-off period would be non-waivable and only strict exemptions would be allowed.
Last November, the province announced plans to implement a cooling-off period, where a buyer has seven days to change their mind and back out of a sale after agreeing to buy a property, but the B.C. Real Estate Association had pushed back against that plan. Instead, the BCREA had pitched a pre-offer period.
The BCFSA also recommended a requirement for buyers to disclose offers made on other properties, to discourage buyers from submitting multiple concurrent offers and to allow sellers to make an informed decision if there is the possibility a buyer may walk away from a sale for reasons other than those related to the immediate sale.
Other suggestions made by the BCFSA include requiring sellers to disclose how many and what price of offers have been received in cases of bidding wars where potential buyers are being asked to revise their offers, as well as standardizing certain clauses in home purchase contracts, such as financing, home inspection and legal advice.
The BCFSA’s recommendations will be reviewed by the B.C. government as it develops new real estate legislation, and discussions will be ongoing.
More to come.
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