I help Buyers buy resale property and new / pre-sale property. Both are valuable sides of the real estate market and I'm happy to participate on both sides. And though by far the majority of my current business is on the resale side, I worked solely on the new / pre-sale side for more than five years, so I know and understand both sides. All this said, I have growing concerns about the Real Estate Development Marketing Act (REDMA) that governs the new development side of the market. (Actually, REDMA applies to more than just pre-sale stratas, but it's most often associated with this slice of the market.)
- The dual purpose of the legislation to both protect purchasers and to facilitate the efficient and profitable pursuit of real estate development is a tight-rope walk and difficult to balance. Though REDMA has sometimes been viewed by the courts as consumer protection legislation, other aspects of it provides developers with significant benefits. For example, per Mc Millan, "developers may change anything that affects the price, value or use of the property, and, so long as those changes are disclosed in an amended disclosure statement, a purchaser cannot rescind the contract".
- The B.C. Legislature made changes to REDMA which came into force on May 29, 2014. McMillan writes, "Some proposed changes are sensible and are not obviously detrimental to purchasers", but "there are important changes in remedies available to purchasers and the handling of deposits". Changes in remedies available to purchasers? A full read of the article will explain that these changes are NOT advantageous to the purchaser and that "developers will be emboldened to vigorously defend purchasers' claims for return of their deposits" (read - tough fight to get your money back, even if/when you feel it's justifiable).
- The change to how deposits are handled is particularly troubling. With the change, "release of the deposit is based solely on the certification of the developer, not an independent person or the court.... This effectively makes the developer judge, jury and executioner with respect to whether a purchaser has a right of recission."
- Fully review the pre-sale contract and disclosure statements
- Undertand the risks
- Seek independent legal advice if you don't understand the contract