Pre-sale properties have become a significant part of British Columbia’s housing market. Many first-time home buyers are drawn to pre-sale properties as a way to enter the coveted housing market. Pre-sale properties are also marketed to those seeking the prospect of price appreciation before completion, increased time to save for various payments, and the appeal of owning a brand-new home. Meanwhile, developers sell units before the development is complete as a way to secure financing for construction.
BC Buyers Have 7 Days to Cancel a Pre-Sale Contract
When entering an agreement for a pre-sale unit, under the Real Estate Development Marketing Act (REDMA), buyers have seven days to cancel a pre-sale contract. This is called the “rescission period”, and it begins on the latter of:
- the date the buyer signs the purchase agreement; or
- the date the buyer signs a written acknowledgement confirming receipt and review of the disclosure statement.
Developers Required to Provide Disclosure Statement
Prior to selling a pre-sale development unit, developers are required to provide interested purchasers with a disclosure statement. The disclosure statement explains what the developer is selling and the buyer’s right under REDMA to cancel the purchase agreement within seven days of signing it.
If a developer fails to provide a buyer with a disclosure statement that the buyer is entitled to under REDMA, the buyer may have the right to rescind the contract. This is because the disclosure statement contains key information about the development.
Written Notice of Rescission and Return of Deposit
Should a buyer wish to cancel a pre-sale agreement for permitted purposes under REDMA, they must provide written notice of rescission to the developer or the developer’s representative that clearly states the buyer’s intention to rescind. Once received, if the rescission is valid under REDMA, the deposit should be returned to the buyer. The buyer may also be entitled to interest earned on their deposit amounts paid, depending on their contract provisions and the reason for rescission.
Conditions for Pre-Sale of Strata Lots
As per Policy Statement #5 to REDMA issued by the Superintendent of Real Estate, a developer may sell strata lots prior to the proposed strata plans being deposited in the Land Title Office (“LTO”) if the creation of the proposed strata lots has been approved, all monies are held in trust, and a disclosure statement has been accepted and filed with the Superintendent.
Policy Statement #6 to REDMA issued by the Superintendent of Real Estate also states, in part, that a developer may also sell strata lots prior to the proposed strata plans being deposited in the LTO if the developer has made adequate arrangements to ensure payment of the cost of utilities and other services associated with the development units, all monies are held in trust, and a disclosure statement has been accepted by and filed with the Superintendent.
When Development Approval Is Granted Before Building Permits
In some circumstances, the Superintendent will accept disclosure statements for filing where the developer has been granted development approval prior to the issuance of a building permit, or if the developer has not obtained a satisfactory financing commitment, subject to the developer meeting certain requirements in terms of their disclosure statement, amendments made to the disclosure statement, and marketing measures.
In order to comply with the requirements, an amendment to the disclosure statement should, amongst other things, disclose the particulars of the issued building permit and financing commitments of the development within the period of 12 months or less from the date the developer filed the disclosure statement. Failure to provide this information within the required time period may also impact the developer’s right to continue marketing the property.
Buyer Can Terminate Pre-Sale Before Amended Disclosure Received, REDMA Non-Compliance
A purchase agreement for a pre-sale unit may be terminable at the buyer’s option if the buyer does not receive the required amendments setting out particulars of the development’s issued building permit and financing commitments, until the required amendments are received by the buyer. Once a buyer has received the amendments, the purchase agreement is no longer terminable on this basis.
If a developer fails to comply with REDMA, such as accepting more than 10% of the purchase price of a unit as a deposit before a building permit is issued for the development, the buyer may have the right to cancel the purchase agreement and receive a refund of their deposit.
Meridian Law Group: Vancouver Real Estate Litigation Lawyers Advising on Pre-Sale Properties
If you think that you may not be in receipt of the required building permit and financing commitment particulars and are considering terminating your pre-sale agreement due to a potential lack of disclosure, contact Meridian Law Group. The firm’s skilled property dispute lawyers will review your materials, advise on your particular circumstances as they relate to the requirements for developers and pre-sale properties, and advocate for your rights. To book a confidential consultation, contact the firm online or call (604) 687-2277.
