Cooling Off Period
What is it?
Effective Jan 1, 2023 a cooling off period for the sole benefit of the buyer is applicable in all purchase contracts.
This Allows a buyer to change their mind about an offer within 3 (business days) after acceptance for a fee payable to the seller. Basically, in realtor lingo…”getting cold feet”.
This applies to residential property only.
So what’s the difference between a buyer walking away from a subject offer?
It’s the deposit. During this 3 day (cooling off period) The deposit would be sent back to the buyer (less the fee) without the seller consent. On a subject offer, both the seller and buyer have to agree to release the deposit.
How much is the fee?
0.25% of the purchase price. (e.g.: $1.5M purchase agreement will cost $3,750) I could give my thoughts on this… but I won’t.
As a seller, this fee is considered a service so don’t get so happy and spend it before you pay the GST of $187.50
This clause cannot be waived by either party. So you better be sure you want to proceed with this purchase if there is no subjects in place for your due diligence.
Business days are defined as not a Saturday or a holiday. What about Sunday?
There may be a gray area regarding properties that are mixed use.
The gov has good intentions in protecting a buyer who may have offered too much for a property because of FOMO. However, there is a rescinding period in pre-sales already. Which makes sense because you’re buying paper and not being able to walk through the property.
Unless you’re adding conditions like inspection and financing, It would be best to put in the contract the seller to allow for inspection within those three days.
I’m sure there will be many amendments to this legislation prior to Jan 1 (We hope)
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