This fall, after almost three years of deliberation and consultation between government, industry and other stakeholders, amendments to BC’s Real Estate Development Marketing Act (REDMA) came into effect.
Designed to bring increased clarity and transparency to home buying and home building, these new regulations are a carefully crafted balance between the needs of consumers and the residential development industry. Surprisingly, though, this significant change appears to have garnered little attention, despite the fact that the vagaries of Metro Vancouver’s housing market has long been first on the top 10 of dinner party and workplace watercooler conversation topics.
Here are some of the things you need to know if you’re considering purchasing a new home in BC. (For how it affects developers and agents, click here.)
Email Disclosure Statements
It’s been a de facto standard for years, but consumers can now officially receive their disclosure statement and amendments in digital format. Darren Donnelly, a partner at law firm Clark Wilson, describes this as a welcome “modernization of the act” that’s more in line with the way most people want information delivered.
Not only is it a more environmentally savvy alternative, online delivery also virtually eliminates the hassle many condo/apartment dwellers experience when a package that’s too large to fit into their sticks ’n’ bricks mailbox arrives — no more heading to the post office to retrieve the delivery.
To take advantage of this new format, buyer acceptance must be written into the purchase agreement. While the logistics of implementation are still being developed, secure data rooms will likely be one of the methods of choice.
The new, consolidated disclosure statement is anticipated to be particularly helpful to consumers who are purchasing either later in the building process or in later phases of a multi-phase development. Previously, the developer was required to provide every amendment associated with every building — meaning buyers often faced the daunting task of sifting through many hundreds of pages of documentation.
Under the new rules, consumers can elect to receive a single document that contains only the most current information — information that is directly relevant to the phase they are purchasing. A consolidated disclosure must be clearly identified as being such, and consumers who do want to examine all previous amendments retain the right to request all documentation in its original format.
Disclosure statements can now provide an estimated “date range” of up to three months (rather than a single, specific date) for significant dates like start of construction and completion — a move expected to benefit both buyers and developers by significantly reduce the number of amendments filed.
Previous fuzziness in defining the all-important completion date has also been removed. “Completion is now defined as the date of the occupancy permit for the first unit that is finished,” notes Mark Lewis, partner at BLG and chair of UDI Legal Issues Committee.
Right to Rescind
Consumers’ right to rescind was another element put under a microscope during the revision process. While buyers can still rescind a presale agreement if they are truly not receiving something that was of material importance in their decision to purchase (eight-foot ceilings rather than the nine-foot heights they anticipated, for example),many technical loopholes have been closed — meaning it will be more difficult to take this step based on trivial issues.
“A number of years ago, a case went to court because the developer did not disclose the make, model and exact colour of the fridge,” Lewis says by way of example.
While there will undoubtedly be consumers who cry foul over the loss of this easy out, Donnelly notes there’s a very real, if not necessarily obvious, benefit for the majority of buyers. Since most developers require construction financing — financing that requires up to 70 per cent presale — lenders had become increasingly hesitant to extend newer, less experienced builders the financing they needed because the financial institution couldn’t count on the reliability of those presale contracts.
“When buyers could get out of their purchase agreement on a technicality, it potentially set up a scenario where a very good builder doing his first, six-unit infill project couldn’t get financing.” The result: less competition and less choice of product for buyers.
Want to know more? Download the latest version of the Real Estate Development Marketing Act from here