The Superintendent of Real Estate in B.C. has issued Policy Statement 17 in response to COVID-19 to extend the early marketing period under REDMA from 9 months to 12 months, effective April 17, 2020.
Prior to the issuance of Policy Statement 17, real estate developers could market a pre-sale development for a period of 9 months before the developer needed to have a building permit or a satisfactory financing commitment pursuant to Policy Statement 5 and Policy Statement 6.
The effect of Policy Statement 17, however, is to allow developers to market their development for 12 months instead of the usual 9 months before the developer needs to have a building permit or a satisfactory financing commitment.
Which Developments Will Benefit
This extension applies to development properties marketed under “disclosure statements” filed under the Real Estate Development Marketing Act [REDMA] between:
- April 17, 2020 and July 17, 2020 disclosing this extended early marketing period and estimated date for the issuance of a building permit and/or satisfactory financing commitment; and
- June 17, 2019 and April 16, 2020 for which an amendment will be filed to disclose this extended early marketing period and estimated date for the issuance of a building permit and/or satisfactory financing commitment.
All Other Provisions Remain Unchanged
Despite the extension in Policy Statement 17, all other aspects of Policy Statement 5 and Policy Statements 6 remain unchanged, including all other early marketing requirements and, notably, the following:
- A purchaser has right to cancel the purchase agreement if the purchaser does not receive an amendment to the disclosure statement setting out particulars of the issued building permit and/or satisfactory financing commitment within 12 months after the initial disclosure statement was filed. A purchaser’s right to cancel arises at any time after the end of that 12 month period and before the amendment is received.
- A purchaser also has right to cancel the purchase agreement within 7 days after receipt of the amendment setting out particulars of the building permit only if the layout or size of the applicable development unit, the construction of a major common facility, or general layout of the development, is materially changed by the issuance of the building permit.
- All deposits paid by a purchaser, including applicable interest earned, must be promptly returned to that purchaser upon purchaser providing notice of cancellation.
- The deposit to be paid by purchaser before receiving an amendment to the disclosure statement setting out particulars of the issued building permit and/or satisfactory financing commitment should not be more than 10% of the purchase price.
COVID-19 has had a significant impact on the operations of those who play an important role in ensuring early marketing provisions are complied with, being municipalities and lenders. Policy Statement 17 is intended to provide some developers with reprieve from upcoming expiries of the early marketing periods when they are otherwise unable to obtain a building permit or arrange financing on an expedited timeline.
While it is surely welcomed by those developers dealing with deadlines approaching, all developers should review Policy Statement 17 and consider how COVID-19 and these changes may impact their real estate projects.
For more information about these changes, please contact Jordanna Cytrynbaum.
Read the policy statements here:
- Policy Statement 17: https://www2.gov.bc.ca/assets/gov/housing-and-tenancy/buying-and-selling/consumer-protection/redma-policy-statements/redma-policy-statement-17-extension.pdf
- Policy Statement 5: https://www2.gov.bc.ca/assets/gov/housing-and-tenancy/buying-and-selling/consumer-protection/redma-policy-statements/policy-statement-5-oct-2014.pdf
- Policy Statement 6: https://www2.gov.bc.ca/assets/gov/housing-and-tenancy/buying-and-selling/consumer-protection/redma-policy-statements/policy-statement-6-jan-2008.pdf