Presale / Pre-Construction

Presale purchases in BC are governed by the Real Estate Development Marketing Act (REDMA), which requires developers to file a disclosure statement with the BC Financial Services Authority (BCFSA) before marketing or accepting deposits on presale units. REDMA sets out the developer's obligations to provide buyers with accurate project information and establishes rules for how deposits must be handled. Licensee conduct related to presale transactions is also subject to the Real Estate Services Act (RESA) and its Rules, administered by the BCFSA.

Under REDMA, a buyer has a 7-day rescission period during which they may cancel their presale contract without penalty. This period begins the day after the buyer receives the developer's disclosure statement and a copy of the signed purchase agreement, whichever is later. If the developer issues an amendment to the disclosure statement that materially affects the buyer, a fresh rescission period is triggered.

REDMA requires that all presale deposits be held in trust, typically by the developer's lawyer or notary, and cannot be released to the developer until either completion of the purchase or until specific conditions set out in the legislation and the disclosure statement are met. This trust protection means that if a developer fails to complete the project under the conditions outlined, buyers generally have the right to recover their deposit. The terms governing deposit release must be disclosed in the developer's disclosure statement.

A disclosure statement is a document that a developer must file with the BCFSA and provide to each buyer before entering into a presale contract, as required by REDMA. It contains material information about the development, including the project description, estimated completion date, strata plan details (if applicable), financial arrangements, and any known risks. Buyers should review it carefully because it forms the legal basis for what the developer is obligated to deliver, and it triggers the buyer's 7-day rescission period.

Yes, many presale contracts in BC include an assignment clause that allows the original buyer to transfer their interest in the contract to a new buyer before completion, a process known as an assignment of contract. However, whether an assignment is permitted, and on what terms, depends on the specific language in the presale contract and the developer's consent requirements. Both the original buyer and the developer should review REDMA and the contract carefully, as assignment transactions also have their own disclosure, tax, and legal implications.

Property Transfer Tax (PTT) is generally payable on the fair market value of the property at the time of completion, calculated under the BC Property Transfer Tax Act at rates of 1% on the first $200,000, 2% on the portion between $200,000 and $2,000,000, 3% on the portion between $2,000,000 and $3,000,000, and an additional 2% on the residential portion exceeding $3,000,000. Buyers of newly built homes may qualify for the Newly Built Home Exemption, which provides a full PTT exemption for properties with a fair market value up to $1,100,000, with a partial exemption available above that threshold up to a certain limit. First-time buyers of newly built homes may also be eligible for the First-Time Home Buyers' Program exemption, with full exemption applying to properties valued up to $835,000; consult the BC Ministry of Finance for current eligibility criteria.

Key risks in a BC presale purchase include construction delays that may push the completion date well beyond what was originally projected, changes in market value between the time of signing and completion (the property may be worth more or less than the contract price), and differences between the finishes, layouts, or amenities shown in renderings or the disclosure statement and what is actually delivered. If the project is a strata development, buyers should also be aware that the Strata Property Act (SBC 1998, c. 43) will govern the strata corporation's operations, bylaws, and their obligations as strata lot owners once the building is complete.

Yes, when a presale property is part of a strata development, the completed purchase is subject to the Strata Property Act (SBC 1998, c. 43) and its Regulation. Once the strata plan is filed and the strata corporation is created, the buyer becomes a strata lot owner and is bound by the strata corporation's bylaws, rules, and obligations including the payment of strata fees and contributions to the contingency reserve fund. The developer's REDMA disclosure statement should include information about the proposed strata plan, estimated strata fees, and any known bylaw restrictions.

The BC Financial Services Authority (BCFSA) is the regulatory body that administers REDMA and oversees the presale real estate market in BC, including reviewing and accepting developer disclosure statements. The BCFSA also regulates real estate licensees involved in presale transactions under the Real Estate Services Act (RESA), ensuring that agents representing buyers or developers meet their professional and disclosure obligations. Complaints about licensee conduct in presale transactions can be directed to the BCFSA.

New residential properties, including presale homes, are generally subject to federal Goods and Services Tax (GST) under the Excise Tax Act (Canada), and buyers may be eligible for a partial GST New Housing Rebate depending on the purchase price and how the property will be used. GST is separate from the BC Property Transfer Tax and is a federal matter, so buyers should consult Canada Revenue Agency guidance for current rebate thresholds and eligibility rules. The presale contract should clearly specify whether the stated purchase price includes or excludes GST.