How the Home Buyer Rescission Period Protects You in BC Real Estate Transactions

Buying a home is a significant financial commitment, and sometimes, decisions made in the heat of the moment can lead to buyer’s remorse. Recognizing this, British Columbia has implemented a Home Buyer Rescission Period (“HBRP”) to offer buyers a safety net. Here’s what you need to know about this essential protection mechanism.

What is the Home Buyer Rescission Period?

The HBRP, often referred to as a “cooling-off period,” is a statutory timeframe during which home buyers can back out of a purchase agreement without incurring severe penalties. This period aims to give buyers the chance to reconsider their decision, seek additional advice, or conduct further due diligence. Further, parties to a real estate transaction cannot waive the right to rescind within the HBRP.

Key Features of the Home Buyer Rescission Period

  1. Duration: The HBRP lasts for three business days. This period begins the day after the buyer’s offer is accepted by the seller.
  2. Scope: The HBRP applies to most residential real estate transactions, including detached homes, townhouses, apartments and condominiums. However, the HBRP does not apply to transactions of real property on leased lands, leasehold interests, property sold at auction, property sold under a court order or the supervision of the court, or property under section 21 of the Real Estate Development and Marketing Act. Further, the HBRP does not provide the right to rescind once title of the property has been transferred from the seller to the buyer.
  3. Notice Requirement: If a buyer decides to rescind their offer, they must notify the seller in writing within the rescission period. The notice must include the identification of the property, the buyer’s name and signature, the seller’s name, and the date that the right of rescission is being exercised.
  4. Costs: Exercising the right to rescind is not entirely free. Buyers who rescind their accepted offer are required to pay the seller 0.25% of the agreed-upon purchase price. If a deposit has been paid, this amount can be paid from the deposit, with the remainder of the deposit to be returned to the buyer. This payment helps compensate the seller for the inconvenience and potential loss of opportunity.

The HBRP is a crucial consumer protection measure. It provides buyers with the time to conduct thorough inspections, secure financing, seek professional advice, and avoid impulsive decisions.

If you are considering purchasing a new residence, visit our FAQ page for definitions, and explore our blogs on real estate law or homeowner liability. Additionally, contact us for assistance in updating your will and trust after your new purchase. For more information, check out our Wills & Estate Law blogs.

Understanding Fraudulent Misrepresentations in Real Estate Contracts

A recent decision out of Ontario (1000425140 Ontario Inc. v 1000176653 Ontario Inc., 2023 ONSC 6688) illustrates how fraudulent misrepresentations in real estate transactions can lead to the rescission of the contract. The case involved Aiden Pleterski, the self-described “Crypto King”, and NBA basketball star, Shai Gilgeous-Alexander. The defendants fraudulently misrepresented to the plaintiff, Gilgeous-Alexander, that the luxury home was private and secure, and omitted to disclose the ongoing safety risk of defrauded investors attending the property and threateningly demanding to know where Mr. Pleterski was. There was ample evidence to support the ongoing safety risk, including Mr. Pleterski being kidnapped, held hostage and physically harmed by people he had defrauded. The Court found that the defendants knew of the safety risk at the property. The Court held that the safety concerns of the plaintiff were legitimate and not simply “sensitivities or superstitions.”

The defendants argued that they were shielded from liability by the “buyer beware” doctrine and argued that they did not make any fraudulent misrepresentations. However, the Court held that rescission of the contract was the appropriate remedy in this case, putting the parties back to their original positions.

What is a Fraudulent Misrepresentation?

A fraudulent misrepresentation occurs where a representation of fact is made without any belief in its truth, with the intent that the person to whom it is made shall act upon it and actually causing that person to act upon it. A fraudulent misrepresentation may be a direct lie or a significant omission, also known as a half-truth. Generally, an executed contract for the sale of land can only be rescinded if fraud is present.

What is the “Buyer Beware” Doctrine?

The “buyer beware”, or caveat emptor doctrine operates to protect sellers of land by holding buyers responsible for defects that would be discoverable upon a reasonable inspection. Simply put, a seller is not responsible for everything that could potentially impact a property, but they may be responsible where they knew of, or ought to have known of the presence of the defect and failed to disclose it to the purchaser. As such, fraudulent misrepresentations are one exception to the doctrine. A seller who makes a fraudulent misrepresentation cannot rely on caveat emptor to shield themselves from liability.

Could this Outcome Occur in British Columbia?

Had this case occurred in British Columbia, it is possible that the outcome would be the same. However, it would require exceptional facts. In a case out of the Court of Appeal for British Columbia (Wang v Shao, 2019 BCCA 130), the seller’s omission about a murder on the property was not found to be a fraudulent misrepresentation, and the buyer was not entitled to rescission. In another case out of BC (Karner v Kuhnke, 2021 BCSC 1942), a couple selling a home failed to disclose a geotechnical report identifying a dangerous rock wall behind the house requiring costly remediation work. The sellers only disclosed that some rocks had fallen onto the deck but did not disclose the full extent of the risk. By intentionally revealing only parts of the truth, the buyers were led to believe that the rock wall was not an issue. The Court found that the half-truths told by the sellers regarding the rock wall amounted to a fraudulent misrepresentation. The sellers were liable for the tort of deceit. The plaintiff buyers in this case did not seek rescission, however, rescission of the contract may have been an alternative remedy had they not wanted to keep the property.

If you think you’ve been a victim of a fraudulent real estate transaction, book a consultation with Nanaimo’s best team of legal experts in real estate law and litigation.

How BC’s Short-Term Rental Accommodations Act Affects Your Property

The government of British Columbia has recently enacted new legislation regarding short-term rentals. The Short-Term Rental Accommodations Act (the “Act”) came into effect in October 2023 and will continue to be rolled out over the course of two years. The primary aim of the Act is to address the housing shortage by transitioning short-term rental units into long-term housing options. However, there are certain exemptions to the new legislation including hotels, motels, student accommodations, as well as ski and resort regions, and farmlands.

A short-term rental is defined as the service of accommodation by a property host, in exchange for a fee, that is provided to members of the public for a period of less than 90 consecutive days. The Act limits short-term rentals to where the host utilizes the property as their principal residence, meaning they reside at the residence for a longer period of time in a calendar year than any other place. Further, the property host may offer for rent a secondary suite or an accessory dwelling unit where the property is the host’s principal residence. The principal residence requirement applies to communities with a population higher than 10,000 people, including smaller neighbouring communities. Communities such as Tofino and Whistler are not included in the principal residence requirement, however, their local governments may choose to opt-in to include this requirement.

The Act also imposes obligations on the host of short-term rentals as well as the platform service providers, such as Airbnb and VRBO, to be registered with the province. The host must include their provincial registration number, and where applicable, a business licence number on the rental listing.

The Act will have impacts on short-term rentals found on Airbnb, VRBO and other platforms, however, rentals will still be available where the property is the principal residence of the host. Where it is the principal residence, the host can rent the property, as well as one secondary suite or one accessory dwelling unit.

Do you have questions about turning your primary residence into a short-term rental, or how the Act affects secondary properties? Contact Heath Law to schedule your consultation.

*This blog is up to date as of June 1, 2024*

I have had a Builders Lien filed against my property; what can I do to remove it?

Generally, a builders’ lien is a charge on property by a person who has supplied work or material to a building under construction. Since builders’ liens are typically simple and inexpensive to file against property, an owner may find themselves in a situation with multiple liens against their title. The filing of a builders’ lien can have an immediate and serious impact. It may affect the ability to gain financing or interfere with the sale of the property. Therefore, it may be necessary for persons affected by a lien to have methods at their disposal to obtain a discharge of the lien.

The Builders Lien Act (“BLA”), ss. 22 to 25, outline procedures for how persons who have interests in the liened property can obtain the discharge of liens. For example, section 24 of the BLA provides that a claim of lien can be cancelled by “giving security”. This process essentially involves money being paid into court. The money paid is considered to be sufficient to cancel the claim of lien and allows the person who has the interest in the property to carry on activities as usual. There are other legal means to discharge a builders’ lien, and our team of real estate and litigation experts can provide you with this advice. Call our office at 250-753-2202 to request an appointment.

Filing a Builders Lien against the owner of a property for lack of payment

The Builders Lien Act (BLA) can be an important tool for those in the construction industry.

One of the main purposes of a builders lien is to ensure that owners are not able to obtain an improvement to their land without paying for work and materials used to create such an improvement. In order to claim a builders lien a person may be a contractor, subcontractor, or worker as defined under s. 1(1) of the BLA; and have performed or provided work, supplied material or both in relation to an improvement. For example, a subcontractor can file a lien to recover monies owed for improvements made on the construction of a new multi-residential building. Section 1(1) of the BLA provides clarification in the form of definitions of contractor, subcontractor and worker. They are as follows:

  • Contractor: A person contracting with or employed directly by an owner to perform or provide work and/or to supply materials in relation to an improvement.
  • Subcontractor: A person engaged by a contractor or another subcontractor to perform or provide work or supply materials in relation to an improvement. Note that the definition does not include a worker or person engaged by an architect, engineer, or material supplier.
  • Worker: A person engaged by an owner, contractor, or subcontractor for wages in any kind of work, whether employed under a contract of service or not, but the definition does not include an architect or engineer, or person engaged by an architect or engineer.

The BLA also defines an owner as:

  • a person who has any legal or equitable interest in the land on which an improvement is made, at whose request and
    • 1. on whose credit or behalf,
    • 2. with whose knowledge or consent, or
    • 3. for whose direct benefit the work is done, or material is supplied. [section 1(1)]

Filing a builders lien can be complicated as there are many important deadlines. Obtain legal advice and direction from a lawyer when considering filing a lien to ensure that the lien is filed correctly and within the permitted time.

Conditions Precedent – What is it and what does it mean?

In real estate or commercial purchase contracts, “Conditions Precedent” are specific conditions or requirements that must be fulfilled or satisfied by either the buyer or the seller (and in some cases both) before the contract becomes legally binding and enforceable.

These conditions act as prerequisites or contingencies that protect the interests of both the buyer and the seller and ensure that certain key elements are in place before the transaction can proceed.

The fulfillment or waiver of the condition precedents, or subject clauses, is normally referred to as “subject removal.” A common example of a condition precedent is: “the Buyer’s obligation to complete the purchase of the Property is subject to the Buyer being satisfied with the results of a physical inspection of the Property on or before [month, day, year].”

Conditions Precedent may vary depending on the specifics of the contract, but common examples include:

Financing: This condition requires the buyer to secure financing or a mortgage for the purchase of the property before the contract is finalized. If the buyer fails to obtain the necessary financing within the specified timeframe, the contract may be terminated without any penalties.

Inspection/Site Investigation: This condition allows the buyer to conduct a property inspection of the land, building or equipment by a qualified professional to determine whether the condition or state of the asset being acquired is satisfactory. If significant issues are found during the inspection, the buyer may request repairs, negotiate the purchase price, or even withdraw from the contract if the seller refuses to address the concerns.

Title Investigation: This condition involves a title search to ensure the property’s title is clear of any liens, charges, encumbrances, or legal disputes. The sale can only proceed if the title is free and marketable or if contractual language is included to address the discharge of any financial charges or encumbrances.

Zoning/Bylaws: The contract may include conditions that require the seller to obtain any necessary zoning approvals, building approvals or permits or other local government approvals for the property.

Third-Party Consents or Approvals: In some cases, the contract may stipulate that the purchase is contingent on obtaining consents or approvals from third parties, such as government authorities or regulatory bodies. Another example is where a business is occupying leased space and the consent of the landlord is required to a change in tenant. A further example is where a franchise is being purchased and the consent of the franchise system to a transfer of the franchise is required.

Have Questions about real-life uses of Conditions Precedent? 

Purchase of a Business – What Are Usual Or Typical Conditions Precedent That a Purchaser Would Want in an Asset Purchase Agreement

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In British Columbia, certain adjustments need to be considered to ensure a fair distribution of costs between the Buyer and the Seller. Adjustments are typically based on the Buyer and Seller’s ownership of the property throughout the year. There are many potential adjustments that may be required in a transaction. However, in this article, we will explore the typical adjustments involved in the purchase or sale of a home in British Columbia.

  1. Property Taxes: Property taxes are payable once in a calendar year. The Seller pays taxes up to the closing date, while the Buyer assumes responsibility thereafter. Often the precise amount of taxes is not known at the time of the adjustment calculation, so a 5% increase from the previous year’s taxes is used. However, upon receipt of the tax bill, the amount may have to be readjusted.
  2. Strata Fees: For transactions involving strata properties, the strata fees are adjusted. The Seller pays the fees up to the closing date, and the Buyer takes over from then on. If a Special Levy has been issued prior to closing, it is usually the Seller’s obligation to pay it in full.
  3. Utilities: Utilities, such as electricity, gas, sewer, garbage collection, and water, are often adjusted. The Seller is responsible for paying the utility costs up to the closing date, while the Buyer takes over the expenses from the closing date onward.
  4. Deposits: Any deposit made by the Buyer is credited to the Buyer on the Buyer’s statement of adjustments.
  5. Rent and Security Deposit: If the transaction involves a rental property, an adjustment for rent may be needed unless the adjustment date falls on the same day that rent is payable. The Security Deposit is usually credited to the Buyer as it becomes an obligation owed by the Buyer to the tenant.

Are you purchasing or selling a home in Nanaimo and have a question? Contact us to ensure that all of your obligations and rights are covered.

This article will explore the conditions that a Purchaser may want to consider when buying a vacant residential lot in British Columbia.

  1. Due Diligence Period: One of the first conditions that should be included in the purchase contract is a broad due diligence period. This allows the Purchaser to conduct thorough investigations into the property before finalizing the purchase. The Purchaser may look into the implications of the Speculation and Vacancy Tax if they plan on leaving the lot vacant for a period of time prior to building. Another consideration is to assess whether the transaction will be subject to the Goods and Services Tax (GST). Further, the Purchaser may want to determine whether the property is subject to a Heritage Designation, or archaeological site. It may be prudent to conduct environmental and engineering assessments of the property prior to purchasing it. A Purchaser may want to consult with the City or Municipality to determine the size or siting of a future residence intended for the property. The Purchaser may want to consult with Geotechnical engineers on potential construction issues and soil testing. Lastly, a Purchaser may want to inquire about available utility services, such as sewer, water, hydro and gas.
  2. Zoning and Land Use: Verifying the zoning regulations and land use designation is necessary to ensure you can build your dream home. The Purchaser must ensure that the lot is zoned appropriately for residential use and that it aligns with their building plans. Additionally, checking for any building restrictions or design guidelines imposed by local authorities or homeowner’s association helps protect the Purchaser’s interests.
  3. Buyer Financing: Including a financing clause in the contract allows the Purchaser to withdraw if they are unable to obtain satisfactory mortgage financing within a specified timeframe. This condition is essential as it ensures that the Purchaser is not obligated to proceed with the purchase of the home if their financing falls through.
  4. Review of Title: This condition allows the Purchaser to perform a review of the land title to address the potential encumbrances on the land. These could include covenants, liens, easements, and statutory building schemes. A thorough review of the title is essential to ensure that the property meets the Purchaser’s needs.

It is critical to make sure that you understand any restrictions on the zoning of your property, as well as the property itself to ensure that you don’t lose thousands, or end up in a lawsuit for demolishing a heritage-designated and protected home. A little bit of effort can make all the difference. Call Heath Law if you’re purchasing a residential property lot on Vancouver Island.

Completing a real estate transaction as a Seller in Nanaimo involves various steps and considerations. The Buyer’s lawyer prepares almost all of the documents in a real estate transaction. The Seller’s lawyer will review the agreement of purchase and sale as well as the remainder of the transaction documents to ensure the Seller’s interests are protected. This article will provide a concise guide outlining the standard procedures after there is a contract of purchase in place and the conditions have been satisfied.

  1. Deposit: Once the conditions have been satisfied, the Buyer will provide the remaining deposit required under the purchase contract, if any. The deposit is typically held in trust by the Realtors until completion.  
  2. Document Execution: The Buyer’s lawyer will prepare and forward to the Seller’s lawyer a set of documents that must be signed by the Seller. Once signed, the documents are returned to the Buyer’s lawyer. The Seller’s lawyer must provide the Buyer’s lawyer with an undertaking to clear from the title any financial charges or encumbrances, such as a mortgage or lien.
  3. Completion: The funds provided by the Buyer are first used to pay out the Seller’s existing mortgage, outstanding taxes, and other encumbrances on title that must be cleared. Once the Seller’s lawyer completes their undertakings, the remaining funds are transferred to the Seller. The Realtor’s commission is usually paid by the Buyers and deducted from the monies due to the Seller.
  4. Possession: The date of possession is often the day after completion. The Realtors exchange keys, transferring possession to the Buyer.

Discharging Mortgage: Once the existing mortgage has been paid out, the Mortgage Lender will either file a Discharge of Mortgage with the Land Titles Office or forward the Seller’s lawyer a signed Discharge of Mortgage to be filed with the Land Titles Office.

Did you know: Sellers are as at-risk of being taken advantage of as home buyers? Don’t be left with costs that should be incurred by the purchaser or lose a good deal because you didn’t have a lawyer experienced in local real estate backing you. Contact Heath Law today.

Completing a real estate transaction as a Buyer can be a complex process. Once the Buyer and Seller have a contract of purchase and sale in place and the conditions have been satisfied, the Buyer’s lawyer will conduct a land title search and review any charges on the title. The Buyer’s lawyer will also prepare the conveyancing documents, and coordinate signatures, registration and money transfers.

  1. Completing the Purchase of Sale: The Buyer’s lawyer prepares almost all of the documents in a real estate transaction in Nanaimo. These include conveyancing documents, mortgage documents (if any), land title searches, and a statement of adjustments. Any financial charges on title are to be discharged by the Seller.
  2. Prior to Closing: The Buyer’s lawyer meets with the Buyer prior to closing to review the entire transaction and sign the documents. The transfer documents are sent to the Seller’s lawyer to be executed by the Seller. The documents are then returned to the Buyer’s lawyer. Once the Buyer’s lawyer has received the down payment from the Buyer, and the Buyer has satisfied all conditions of the mortgage lender, the lawyer registers the land title transfer document, along with the mortgage document at the Land Title Office.
  3. Closing: Once the documents are registered and the Buyer’s lawyer receives the mortgage proceeds, then the down payment and mortgage proceeds are paid to the Seller’s lawyer. Often, the Buyer takes possession the next day after closing.
  4. Post-Closing: The Buyer’s lawyer will provide a final reporting letter to the Buyer once the state of title certificate is received from the Land Title Office and will also provide the state of title certificate to the Mortgagee.

Don’t let the above steps in the real estate process fool you with their seeming simplicity. These four steps each have their own complexity in the home buying and selling process and missing the wrong step can cost you thousands of dollars, or even the sale of your desired property. Be certain you’ve done everything right. Contact an experienced real estate lawyer at Heath Law, in Nanaimo BC.