Real Estate Development Marketing Act
The Real Estate Development Marketing Act, SBC 2004, c 41 (“REDMA”), was created to apply universal disclosure requirements for those who wish to market multi-unit development properties. It is a piece of protective legislation designed principally to ensure that there is an honest and open exchange of information regarding new properties marketed in British Columbia.
REDMA was seen a direct response to the boom in condo pre-sales that began in the mid to late 90s. This period of time witnessed a wave of development and a concern over potentially unscrupulous developers and products that weren’t fulfilling the buyers’ expectations. Now purchasers have a right of rescission under REDMA, if the developer has breached its disclosure obligations and the information was both material and reasonably relevant to the purchaser’s decision to buy.
When does REDMA apply?
REDMA is directed at developers who are selling an interest in a development property including timeshares, leaseholds, strata lots and subdivision lots. It is intended to capture all new developments that are marketed in British Columbia. Of particular note is that the property being marketed does not have to be situated in BC. For example, if a developer in Ontario wants to market an Ontario property in BC, they must conform to REDMA.
What obligations does REDMA impose?
The most important aspect of REDMA is in regard to the required disclosure. Section 14 of REDMA states that a developer must not market a development unit unless the developer has:
(a) prepared a disclosure statement respecting the development property in which the development unit is located, and
(b) filed with the superintendent
(i) the disclosure statement described under paragraph (a), and
(ii) any records required by the superintendent under subsection (3).
A disclosure statement must, among other things, contain all “material facts” in relation to the development unit. A material fact is one which affects (or could reasonably be expected to affect) the price, value, or use of the development property. The scope of a material fact is thus immensely broad, and principally designed to protect purchasers.
Further, s. 16 of REDMA requires developers to amend their disclosure statement as soon as they are aware that it is no longer correct or there has been a material change.
What remedies does REDMA afford?
REDMA operates to allow a purchaser out of a purchase contract and a return of any deposits made, when there has been a breach of the disclosure requirements, subject to some exceptions, and for a limited period of time after closing. In addition, under certain circumstances, REDMA gives purchasers a right of action for damages. The legislation has consumer protection as its focus. As a result, developers need to be careful to ensure compliance. Purchasers, on the other hand, who are unhappy with their purchase may wish to review the disclosure they received and consider whether it met the standards set out in the Act.