Signed a Presale Contract and Having Second Thoughts? Know Your REDMA Rights to Cancel or Terminate your Condo Presale
Many people in B.C. purchase residential units in developments that are not yet constructed. These are called pre-sale residential units, which can include apartments and townhouses.
Typically, after a purchaser signs a purchase agreement with the developer, they are required to pay a deposit and wait until the development is constructed. Under the Real Estate Development Marketing Act (“REDMA”), the developer must provide purchasers of residential units with certain documents, such as a disclosure statement, among with many other requirements. REDMA is a consumer protection legislation, so developers who wish to market their products in B.C. must strictly comply with it.
If a developer fails to comply with certain requirements of REDMA, purchasers may have a legal right to back out of or terminate the purchase agreement and get their deposit back. Court decisions in B.C., such as Mazarei v. Icon Omega Developments Ltd., 2012 BCSC 673, have held that the onus is placed on the developer marketing real estate developments in B.C. to strictly comply with REDMA or face the consequences of non-compliance.
If you are a purchaser facing a difficult decision — whether due to a significant delay in the development or other life circumstances that may require you to recover your deposit —you may have the following options:
Option #1 — Purchaser’s Right of Rescission
If the developer fails to provide you with a disclosure statement, you may have the right to rescind the purchase agreement and recover your deposit. Exercised correctly, this would result in a termination of the presale contract.
Option #2 — Purchaser’s Right to Not Proceed with the Purchase Agreement
If the developer fails to comply with certain requirements of REDMA, such as accepting more than 10% of the purchase price as a deposit before a building permit is issued, you may have the right to cancel or terminate the purchase agreement and get your deposit back.
Option #3 — Purchaser’s Common Law Rights
Even if the development is governed by REDMA, purchasers who have signed presale purchase agreements with developers can still exercise their common law rights concerning contracts. For example, if the purchase agreement does not permit the developer to substantially change the size of the unit, but the constructed unit is significantly different from what was agreed upon, the developer may have fundamentally breached the purchase agreement entitling you to cancel the agreement and obtain a refund of your deposit.
Option #4 — Assignment
Depending on the terms of your purchase agreement, you may have the right to assign your condo presale agreement and its obligations to someone else. This typically requires paying a fee to the developer, but there is a possibility that they may waive the fee.
Summary
Depending on your situation, other legal rights may be available to you. Contact our team for reliable advice and representation in negotiations with developers over condo presales agreements.
