CondoAdvisory Blog

In a recent post I told you about a developer that was continuing to market a project when it had been put on hold. Three days later the Financial Institutions Commission released a alert to inform consumers of the laws around this type of activity. It is good to see that there are provisions in place to protect the consumer, although still seems to be heavily weighted to the developer in the amount of time they have to get things in place. You be the judge, the alert is as follows:

October 2008
Consumer Alert
Purchaser’s right to cancel contract of purchase and sale
Recent difficulties in global financial markets have led to delays in obtaining financing
commitments and building permits for some development properties marketed in British
Columbia under the Real Estate Development Marketing Act.
Developers who have not obtained a building permit or satisfactory financing to build a
development are permitted to market a development under the Superintendent of Real
Estate’s Policy Statements 5 and 6 for a period of nine months on certain conditions.
Those conditions allow marketing if the estimated date for the issuance of a building
permit and for obtaining a satisfactory financing commitment, as disclosed in the
disclosure statement, is nine months or less from the date the developer filed the
disclosure statement with the Superintendent.
At the end of that nine month period, if a building permit or satisfactory financing
commitment has not been obtained and disclosed by the developer, the developer must
immediately cease marketing the development until an amendment has been filed
which discloses that the necessary building permit or financing commitment, as the
case may be, has been obtained.
Additionally, if an amendment to the disclosure statement is not received within
12 months after the initial disclosure statement was filed, the Policy Statements
require provisions in the purchase agreement to allow the purchaser, at his or her
option, to cancel the purchase agreement at any time after the end of that 12
month period until the required amendment is received by the purchaser. The
purchase agreement must also contain a provision that all deposits paid by a
purchaser, including interest earned, if applicable, be returned promptly to the
purchaser upon notice of cancellation from the purchaser.
Purchasers who wish to consider cancelling their contract should immediately contact
their real estate broker or lawyer if they have any questions about the cancellation of
their agreement or how to cancel the agreement.