PRELIMINARY
PRELIMINARY
SUBDIVISION
APPROVAL AND REAL
ESTATE MARKETING
Presented by:
Bradley C. Cronquist, Partner
Pushor Mitchell, LLP
General Overview
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The Real Estate Development Marketing Act
(“REDMA”) applies to a developer who markets
development units in BC
REDMA came into force on January 1, 2005
REDMA is consumer protection legislation
designed to protect purchasers buying
development units
REDMA is administered by the Superintendent
of Real Estate
WHAT DOES REDMA APPLY TO?
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All development units marketed in BC, whether
located in BC or elsewhere
All forms of interests in land
 Subdivision
Lots
 Bare Land Strata Lots
 Building Strata Lots
 Cooperative Interests
 Time Share Interests
 Shared Interests in Land
 Leasehold Units
ARE THERE EXEMPTIONS?
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REDMA does not apply to the following:
 Interests
in First Nations Land
 Commercial or Industrial development units
WHAT DOES REDMA COVER?
When Subdivision Lots Can Be Marketed
 Marketing Requirements
 Deposits
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When Subdivision Lots Can be Marketed
REDMA Section 4
 A developer must not market a subdivision lot or
bare land strata lot unless, in relation to the
subdivision lot or bare land strata lot,
(a) a subdivision plan or bare land strata plan,
as applicable, has been deposited in a land title
office; or
(b) an approving officer has given preliminary
layout approval.
When Subdivision Lots Can Be Marketed
Option 1 - Marketing After Subdivision Plan Filed
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If the subdivision lot is located in a municipality
in BC, a Disclosure Statement under REDMA is
not required.
If the subdivision lot is located outside a
municipality, a Disclosure Statement under
REDMA is required
When Subdivision Lots Can Be Marketed
Option 2 - Marketing After Preliminary Layout
Approval (No Subdivision Plan Filed)
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A Disclosure Statement is required whether the
subdivision lot is within a municipality or not
When is Preliminary Layout Approval given
 Not defined in REDMA or Local Government Act
 Superintendent of Real Estate says all conditions
must be met under developer’s control
When Subdivision Lots Can Be Marketed
Option 3 – Marketing Without Preliminary
Layout Approval
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Section 10 of REDMA permits marketing prior to subdivision
approval and Preliminary Layout Approval if:
(a) there is approval in principal from government authority
(b) the Superintendent of Real Estate grants permission to begin
marketing
“Approval in Principal” is deemed to have been given under Policy
Statement 5 if:
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Issuance of a Development Permit (or confirmation that a Development
Permit will be issued on conditions within the control of the developer
being met) OR
The authority has confirmed the proposed subdivision units conform
with zoning, development bylaws and Official Community Plan
The Superintendent of Real Estate says that only form and
character Development Permits apply to this Policy
Marketing Requirements
What Constitutes Marketing
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Under REDMA, “Market” means
(a) to sell or lease;
(b) to offer to sell or lease;
(c) to engage in any transaction or other
activity that will or is likely to lead to a sale
or lease
The Superintendent of Real Estate has said
the following are “marketing”:
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Letters of Intent
Priority Lists
Reservation Agreements
Conversion Rights
Rights of First Refusal
If they include a right to acquire a subdivision
lot, REDMA marketing requirements must first
be met
What Developers Can Do Without
a Disclosure Statement
advertise and communicate with potential
purchasers
 Purchasers CAN NOT gain impression
they have a right to acquire a subdivision
lot
 The Superintendent of Real Estate
suggests a disclaimer that the advertising
is not an offering for sale
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Disclosure Statements
A Disclosure Statement must be filed with
the Superintendent of Real Estate where a
developer is marketing 5 or more
subdivision units in a subdivision
 It includes development units in the same
development property marketed at
different times
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Filing Disclosure Statements
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REDMA Section 14
 The
Disclosure Statement must be filed with the
Superintendent of Real Estate
 The Disclosure Statement must plainly disclose all
material facts
 The Disclosure Statement must set out rescission
rights (7 days from later of signing Purchase
Agreement or receiving Disclosure Statement)
 The Disclosure Statement must be signed by the
developer (including all directors)
Providing Disclosure Statements to
Purchasers
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REDMA Section 15
 The
Disclosure Statement must be given to a
purchaser before entering into a Purchase
Agreement
 A purchaser must have an opportunity to read
the Disclosure Statement before signing a
Purchase Agreement
Form and Content of Disclosure
Statements
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The Superintendent has issued a policy
statement in which the form and content of
the Disclosure Statement is set out
Disclosure Statements – Key
Components
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7 day rescission right
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Purchaser’s right to rescind for 7 days from later of signing the
Purchase Agreement or receipt of the Disclosure Statement
Developer Details
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Must identify the developer and provide information on the
developer including:
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Disclose director experience in real estate development
Disclose director or major shareholder penalties or sanctions
relating to real estate business in last 10 years
Disclose if a director or major shareholder declared bankruptcy in
last 5 years
Disclose conflicts of interest
Disclosure Statements – Key
Components (Cont’d)
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General Description of the Development
Zoning
Utilities and Services
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Who is providing
Legal Description of Land
Existing and Proposed Encumbrances
Outstanding and Contingent Liabilities
Environmental Matters
Construction Dates
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Estimated Commencement and Completion Dates
Disclosure Statements – Key
Components (Cont’d)
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Development Approval
Construction Financing
Deposits – How they will be handled
Purchase Agreement
Other Material Facts
Amendments to Disclosure
Statements
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REDMA Section 16
 If a Disclosure Statement does not disclose all material facts or
contains a misrepresentation, an amendment must be filed
 Amendments must be delivered to all purchasers who have not
completed the purchase
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REDMA Section 21(1)(b)
 There is no statutory right to rescind or terminate a purchase
agreement upon delivery of an amendment
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REDMA Section 23
 Termination rights exist if a developer fails to comply with
REDMA
Developer Risks
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REDMA Section 22(3)(a)
A
purchaser is deemed to rely on misrepresentations
in Disclosure Statement
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If the subdivision is not final approved, a
developer may be exposed to damages for
breach of contract
Holding, Releasing and Use of
Deposits
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Deposits must be held by a brokerage, lawyer or
notary public in a savings institution in BC
Deposit money may not be used in development
unless the developer has arranged for deposit
insurance