On October 1, 2014, amendments to BC’s Real Estate Development Marketing Act (REDMA) come into effect and will significantly affect how developers and marketers of new homes do business, especially with regard to disclosure statements.
At a September 11 sold-out meeting presented by the Urban Development Institute (UDI), a panel of experts weighed in on how these new tools will benefit and change the residential construction industry.
Here are the seven key changes and how they will affect the industry.
#1. Date Ranges on Disclosure Statements
Disclosure statements can now provide an estimated “date range” of up to three months (rather than a single, specific date) for data such as start of construction — a move expected to significantly reduce the number of amendments filed.
#2. Disclosure Statements via Email
While it’s been a de facto standard, disclosure statements can now officially be delivered electronically as long as consent for email communication has been obtained in writing and a proof of delivery receipt issued. Onus will be on the developer to ensure a buyer has not only received, but read, the disclosure and to keep backup files.
#3. Consolidate Disclosure Statement Format
As suggested by the name, a new consolidated disclosure statement format will now create an opportunity to combine the original disclosure statement and all amendments into a single document — easier for buyers to understand and potentially lower cost for developers. Purchasers, however, retain the right to request all documents in their original format.
#4. Phased Disclosure Statement
Also new is a phased disclosure statement allowing all phases of a project to be covered by a single disclosure that would reduce the often-overwhelming number of amendments. However, the panel provided a strong warning that, as useful as this new tool is expected to be, it will be more critical than ever to be meticulous with all paperwork.
#5. Material Facts
Of note in the closely watched case of Woo vrs Onni earlier this year, the BC Court of Appeal set a precedent that only facts that adversely affect the value, use or price of a unit are considered “material” and therefore required to be disclosed. Those that benefit the purchaser may not need to be included — something that is new but now part of provincial law.
#6. Funds Held in Trust
The process of releasing deposit funds held in trust has been clarified so these funds are no longer released solely to the purchaser regardless of any breach of contract. And in the event a buyer defaults on subsequent deposits or fails to pay the balance of the purchase price, it is now mandatory for the deposit trustee to release these funds directly to the developer rather than continue to hold them until litigation is underway.
#7. Buyer’s Right of Recission
A buyer’s right of rescission has been clarified and narrowed to help reduce abuse from buyers looking for an easy “out” from their contract. Focus is now more squarely on whether the buyer is truly not receiving what they contracted for or simply suffering a case of cold feet — a distinction that is both substantial and welcomed as positive for the building industry. And while the REDMA still allows buyers to rescind after they have closed, a new one-year time limit gives developers greater security.
The UDI panel was made up of moderator Mark Lewis (Partner, BLG and Chair of UDI Legal Issues Committee), Beverley Ellingson (Partner, Terra Law), Ed Wilson (Partner, Lawson Lundell), Arnon Dachner (Partner, Dentons), Darren Donnelly (Partner, Clark Wilson) and Lisa Martz (Partner, McCarthy Tetrault).
Download the latest version of the Real Estate Development Marketing Act here.