On March 28, 2022, the British Columbia Government introduced Bill 12, the Property Law Amendment Act, 2022 (“Bill 12”). Bill 12 contains a series of proposals to amend the Property Law Act, RSBC 1996, c.377 and, consequentially, the Real Estate Services Act, SBC 2004, c.42 (“RESA”).
The main purpose of Bill 12 is the creation of a “cooling off” time period in which residential home buyers can withdraw from a contract of purchase and sale after their offer is accepted by the seller. The proposed amendments are likely an attempt to address concerns that home buyers are feeling pressure, especially in a particularly competitive real estate market, to submit offers without basic conditions such as inspections or financing. The cooling off period is intended to allow time after the acceptance of an offer to purchase for the buyer to ensure they have financing in place, arrange a home inspection, or simply change their minds.
This proposed cooling off period is consistent with the current regime under the Real Estate Development Marketing Act, SBC 2004, c.41 (“REDMA”). The existing REDMA regime provides a mandatory seven day cooling off period for presale developments in which a buyer can cancel a presale real estate purchase without consequence.
Bill 12 will have very real effects on home buyers, but also on sellers, and real estate licensees on both sides of a transaction. Sellers will need to understand the risk of buyers walking away. Real estate licensees will need to become intimately aware of these risks, from both the buyer’s and seller’s perspective, in order to properly advise their clients. In fact, Bill 12’s associated amendments to RESA propose that failure to comply with the Bill 12 amendments may amount to a finding of professional misconduct on the part of a real estate licensee.
The BC Government has not yet clarified how long the cooling off period will be, nor have they specified the extent of costs or other consequences that may arise from a buyer retracting an offer to purchase. If this legislation passes, further clarification is likely to follow by government-issued regulations, since Bill 12 explicitly contemplates regulations regarding waivers of the right to withdraw an offer, providing notice of withdrawal, monetary penalties should a buyer exercise the right of withdrawal, procedures for payment of the deposit, and more.
Bill 12 has only passed the first reading in the Legislative Assembly to date and there is currently no timeline for approval of the bill. However, the proposed law raises many more questions about licensee obligations and impacts on established real estate transaction conventions than it provides answers, so it warrants a close eye as the legislation develops.