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Michael Drouillard, Drouillard Lawyers

B.C. looking at cooling-off periods, other consumer protections for real estate market

Wednesday, November 24, 2021 @ 9:39 AM | By Ian Burns


British Columbia is aiming to bring in a “cooling-off” period for some real estate sales in the province next year and is asking the province’s financial regulator to look at other ways to strengthen protection for home buyers.

The legislation on cooling-off periods, which the province said it will introduce next spring, would be focused on resale properties and newly built homes, similar to what is already in place for pre-sale strata (condominium) sales under the Real Estate Development and Marketing Act (REDMA). A cooling-off period is a limited period of time when a buyer can cancel a real estate purchase with no, or limited, legal consequences.

Finance Minister Selina Robinson said people in British Columbia “need to know they are protected as they make one of the biggest financial decisions of their lives.”

“Especially in periods of heightened activity in the housing market, it’s crucial that we have effective measures in place so that people have the peace of mind that they’ve made the right choices,” she said. “With this step, we’re moving ahead to protect people and their interests in the real estate market by bringing in a cooling-off period for homebuyers and looking at additional measures to ensure effective safeguards are in place.”

The B.C. Financial Services Authority (BCFSA), which assumed regulatory authority over real estate earlier this year, is being asked to consult with key stakeholders and experts to review the parameters of a cooling-off period and review other potential consumer protection measures, which could include looking at the practice of blind bidding, where buyers attempt to offer the highest purchase price for a property without knowing what the other bids are.

“Ensuring fair markets and promoting public confidence in B.C.’s real estate market is a key priority of BCFSA, and we welcome the direction from the minister to lead this valuable consultation work,” said BCFSA CEO Blair Morrison, who also serves as B.C.’s superintendent of real estate. “BCFSA’s goal is to ensure that British Columbians are protected when buying and selling homes — one of the most important financial transactions of their lives. Both buyers and sellers need to be supported and have time to make good financial decisions.”

Michael Drouillard, Drouillard Lawyers

Michael Drouillard, a real estate lawyer based in Vancouver, said the BCFSA and its predecessors have generally seen their legislative mandate as regulating licence holders like real estate professionals “and they don’t so far seem to have taken the view that they can just modify the law of contract between buyer and seller.”

“But in order to do a cooling-off period right, they will have to have a regulatory regime which sticks and is effective,” he said. “And they are going to have to go beyond what they have done in the past, which is to just modify and add additional language to the standard form contract that realtors use as well as regulate how realtors interact — otherwise you are just going to have buyers and sellers finding ways to work around the regime.”

Victor Alfonso of Vancouver’s English Bay Law Corporation said it is generally “buyer beware” when it comes to real estate contracts in the province.

“Unless there is something the seller knew and had to disclose, a latent defect or some other issue, it is really up to the buyer to know what they are purchasing and home inspections are central to that. They can’t go back to the seller after a closing and sue them for any sort of issue they would have been able to discover without a proper inspection,” he said. “So, there is a lot of risk being passed on to buyers when an inspection isn’t possible — and providing some sort of way to mitigate that risk, if it is a cooling-off period or requiring inspections to be done as part of the normal buying process, would help when making a purchase offer.”

Drouillard said concerns about people buying houses without proper knowledge is “definitely an issue” in the province.

“And it is people who are not getting an inspection done, or not reviewing their strata documents,” he said. “They are going into it without any due diligence at all, and they will find out something afterwards that might have been caught if they put their mind to it.”

Those looking to provide input on the BCFSA’s consultations can e-mail coolingoff@bcfsa.ca. All communications received will be forwarded to the B.C. Ministry of Finance for consideration.

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