This is new regulation initiated by the BC Government which gives all home buyers the chance to “sleep on it”. Basically, it grants every home buyer the right to back out of a purchase contract for three business days following an offer acceptance, but not without penalty. Exercising your right to rescind an offer will cost you 0.25% of the purchase price as agreed in your offer. Note: This new regulation does not affect the 7-day rescission period which is still granted to all buyers on new and pre-sale homes.
Most transactions will not be affected by this regulation assuming they have subjects longer than three business days. Nothing has changed regarding contract law and subject clauses. Buyers will still be able to back out of contracts, if their subject clauses are not satisfied by the subject removal date, without penalty.
Subject-free (cash) offers and offers with subjects less than three business days will be most affected by this new change. Any offers that are rescinded within 3 days of an acceptance will likely be under careful scrutiny by any prudent seller to determine if a penalty is owed to them.
Obviously, there is no requirement to exercise the option to rescind, but it should also be noted that this right cannot be waived or amended. This means that no buyer can gain an upper over their competition by either waiving their right to rescind or by increasing the potential penalty associated with a potential rescission. That being said, there are still many ways to submit an “ultra-competitive” offer without altering the terms of the rescission rights and obligations. One example, which is commonly practiced in commercial real estate but rarely in residential, is to make a deposit upon offer acceptance. Now, this is the case for cash/no-subject offers anyways, but not necessarily for offers with subjects. This is not a recommendation; it is merely an idea or option. Another example of an aggressive offer tactic is to provide a non-refundable deposit. This would mean that, if you had and did not remove subjects on an offer, the seller would still be entitled to your non-refundable deposit. Understandably, this is a risky proposition for the buyer and is not recommended, but again, just an idea or option at your disposal.
If you are working with an agent, they should explain the home buyer's recission period to you when they are explaining agency, as required, and also at the time of preparing an offer. You can also ask your agent if you have any further questions or require any additional details.