In Vancouver’s real estate market, pre-construction property purchases carry a special type of protection for buyers, according to real estate litigation lawyer, Arsen Krekovic. An example is the buyer who purchased a property at a presentation centre years earlier. They may be facing a significantly different mortgage rate in the present than when they put their deposit down. With market conditions dramatically changed, can that buyer get out if they need to? A real estate litigation specialist may be able to help using the Real Estate Development Marketing (REDMA). Read on to learn how this legislation is referred to by real estate litigators at Hoogbruin & Co. to determine whether a deposit is in jeopardy, or if the buyer can be released from their obligation to go through with the sale.
What is REDMA and how can it help ‘pre-construction’ real estate property buyers?
The BC legislature passed the Real Estate Development Marketing Act (the “Act” or “REDMA”) in 2004. It was intended to protect consumers buying pre-sale condos and to provide enhanced rights to those consumers. So, in brief, REDMA:
- is a regulatory framework in British Columbia, Canada
- governs the marketing and sale of pre-construction real estate developments
- protects buyers and ensures fair practices within the industry.
Developers who market and sell residential properties before they are built, such as condominiums, townhouses, and single-family homes, must register under REDMA. Developers must do so before they can promote or sell their projects. The process involves providing detailed information about the development, its financial viability, and the developer’s background.
Vancouver’s real estate market and REMDA
REDMA took on more significance when the real estate market heated up to the point that purchasers focused less on their rights than the rush to flip condos and other properties for a profit.
The recession produced yet another dramatic change in the real estate landscape of BC. Purchasers of pre-sale condo units, for example, either could not close on their deal, or were hesitant to do so. Some of these pre-sale purchasers sought opinions from lawyers, and some moved onto the courts to clarify their rights. As REDMA is consumer protection legislation, and is a statutory right, it might be thought that a buyer’s reasons or motives for not wanting to close on a deal, or being unable to close on a deal would be mostly irrelevant.
Consulting with a real estate litigation lawyer is always advisable to get further guidance on REDMA’s intricacies and implications.
How REDMA affects sellers of real estate property
REDMA primarily focuses on the marketing and sale of pre-construction residential properties by developers. However, it indirectly affects sellers of real estate properties in certain circumstances. These are some examples:
Sellers may be required to provide certain disclosure documents to potential buyers. These documents may include information about the property’s history, previous marketing materials, and any known defects or issues.
Sellers of resale properties may face increased competition from new developments for potential buyers’ attention and investment— as buyers may be more cautious when considering pre-construction developments.
Enhanced consumer protection may have a positive impact on the overall consumer confidence in the market. It might also mean more transparency in the industry. Confident and well-informed buyers can benefit sellers by creating a more favourable environment for property transactions.
REDMA regulations and implementation may improve conditions in the pre-construction sector. Developers may adjust their marketing and sales strategies to comply with REDMA and this could potentially affect market dynamics and buyer behaviour. They may – even indirectly – help sellers by influencing demand, pricing, and competition.
Project developers’ obligations under REDMA
Developers are required to provide potential buyers with a disclosure statement. It contains important information about the development, including details about the property, amenities, estimated completion dates, and potential risks.
Buyers must be provided with a seven-day “cooling-off” period after they sign a purchase agreement. During this time, buyers can cancel the agreement and receive a full refund of their deposit.
Deposits and Escrow
REDMA mandates that deposits from buyers be held in trust in a separate account. This is often referred to as an escrow account. These funds are protected and can only be released to the developer under specific circumstances outlined in the legislation.
Sellers need to stay informed about the changing market conditions and understand how consumer protections and disclosure requirements may impact their selling process.
Consulting with a real estate litigation lawyer can help sellers with valuable insights and guidance specific to their situation.
More ways pre-sale property buyers are protected under REDMA
Buyers benefit from all of the above obligations from sellers and developers. There are some additional advantages, as well.
REDMA includes provisions for dispute resolution between developers and buyers. If disputes arise, buyers can seek resolution through mediation or arbitration, rather than going through the court system.
Enforcement of regulations The Real Estate Council of British Columbia is responsible for enforcing REDMA. They have the authority to investigate complaints and take action against developers who do not comply with the legislation, further safeguarding buyers’ interests.
Regulations under REDMA provide important protections for buyers of pre-construction properties in British Columbia. Buyers can make more informed decisions, assess potential risks, and have a recourse mechanism if they encounter issues during the purchase process.
It is crucial for buyers to familiarize themselves with REDMA’s provisions and seek legal advice or guidance from litigation lawyers experienced in British Columbia real estate law to ensure their rights are upheld throughout the buying process.