Developers of residential real estate projects in B.C. have been faced with a number of legal and practical challenges as they attempt to navigate the repercussions of the current COVID-19 public health emergency. Among other things, developers have been required to find new and safe ways to operate their construction sites, administer rental buildings, complete home inspections and closings, and continue their ongoing marketing activities.
Effective as of April 17, 2020, the Superintendent of Real Estate in B.C. has issued Policy Statement 17, with the aim of providing some relief to B.C. developers whose marketing activities have been adversely affected by the pandemic response. The key points arising out of this initiative are summarized below.
What is Policy Statement 17?
Policy Statement 17 is the latest directive issued by the Office of the Superintendent of Real Estate (OSRE) in connection with the marketing of new projects. The OSRE provides oversight and regulation of the real estate industry in B.C., including enforcement of the consumer protections afforded to presale buyers under the Real Estate Development Marketing Act (REDMA).
The purpose of Policy Statement 17 is to provide limited, temporary exceptions to the requirements of Policy Statement 5 and Policy Statement 6.
Taken together, Policy Statements 5 and 6 impose two critical timeframes on every new project which is subject to REDMA:
- a 9-month “early marketing” window, beyond which the developer must not enter into any new presale contracts unless and until it has obtained and filed disclosure of the particulars of a first stage building permit and a satisfactory financing commitment for the project (the “Required Disclosure”); and
- a 12-month window, beyond which presale buyers are contractually entitled to terminate their purchase contracts unless and until they have received the Required Disclosure.
Each of these timeframes commences on the earliest possible date that a developer can enter into presale contracts for a given project (the date of filing of the initial disclosure statement).
What does Policy Statement 17 do?
Policy Statement 17 extends the 9-month early marketing periods set out in Policy Statements 5 and 6 to 12 months for projects which have been or will be marketed under an initial disclosure statement filed between June 17, 2019 to July 17, 2020.
Depending on when the qualifying initial disclosure statement is filed, it must contain, or be formally amended to contain, disclosure of the extended 12-month early marketing window.
What does Policy Statement 17 not do?
Policy Statement 17 does not:
- amend any of the other requirements, terms or conditions of Policy Statements 5 and 6 (including the restrictions on the amount of deposits which can be collected by developers and the contractual right of presale purchasers to terminate their contracts under certain conditions); or
- benefit developers whose projects had already ceased marketing prior to March 17, 2020 as a result of the required building permit and financing commitment not yet being in place.
Developers are advised to consider whether any of their current or future projects qualify for the benefits of Policy Statement 17, and what other project marketing issues might need to be addressed as a result of the economic disruptions caused by COVID-19.
If you have any questions about this policy statement or any other development-related matter, please contact any member of our Real Estate Group.
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