In response to challenges faced by large real estate development projects, the BC Financial Services Authority (“BCFSA”) has introduced regulatory changes with the goal of increasing development viability and consumer protection. These changes include an extension to the early marketing period and a new consumer disclosure form requirement for disclosure statements. It is important for real estate developers to understand the extent and effect of the changes.
Pilot Program to Extend Early Marketing Period
On February 25, 2025, BCFSA launched a pilot program (the “Pilot Program”) that provides real estate developers with the option to extend their early marketing period under REDMA Policy Statements 5 and 6 from 12 months to 18 months, for a project of 100 or more development units. Participation in the Pilot Program is subject to BCFSA approval, which is granted on a case-by-case basis for each development project. If approved, the project will be provided with an additional six months to obtain the necessary development approvals and to secure a satisfactory financing commitment. Participating developers are required to share specific data on the project with BCFSA on a quarterly basis, throughout the 18-month marketing period.
A purchaser of a development unit that is part of the Pilot Program will not have the right to rescind their purchase agreement until after the expiry of the 18-month period.
Background
Under the Real Estate Development Marketing Act (“REDMA”), developers must satisfy certain preliminary requirements before they begin marketing a development unit, including acquiring local government approvals, such as a building permit, and obtaining a satisfactory financing commitment to complete construction of the development project. However, developers may market their units before satisfying these requirements during an “early marketing period” if certain criteria, outlined in REDMA Policy Statements 5 and 6, are met.
Currently, the early marketing period is 12 months. If a developer is unable to satisfy the preliminary marketing requirements within this early marketing period, the developer must cease marketing the development until it satisfies such requirements or files a new disclosure statement to provide for another early marketing period with a rescission right.
The Pilot Program provides developers of a project of 100 or more development units with the option to apply to extend the early marketing period for the project to 18 months. The intention of the Pilot Program is to reduce the likelihood of developers failing to meet the requirements under REDMA and consequently increase the likelihood of the development project being completed.
Information for Developers
Some key information about the Pilot Program is summarized below.
Which projects are eligible?
Residential development projects with 100 or more development units are eligible for the Pilot Program. BCFSA has indicated that these projects can generally expect to be approved for participation in the Pilot Program, unless there is or has been any significant non-compliance with REDMA by the developer.
Existing projects that are already being marketed are also eligible for the extension. In this case, the developer would be required to apply for an exemption, and if the exemption is granted, file a disclosure statement amendment or a new disclosure statement disclosing the 18-month early marketing period.
If the developer does not file a new disclosure statement, acceptance into the Pilot Program only results in a six-month extension of the early marketing period.
If a new disclosure statement is filed, the developer is provided with an additional 18 months to market the development project. However, purchasers that purchased a development unit in the project prior to the project’s participation in the Pilot Program will be entitled to the seven-day rescission period under Section 21 of REDMA.
Participation in the Pilot Program does not alter or invalidate any existing rescission rights under any contracts between a purchaser and the developer, including those that were provided pursuant to Policy Statements 5 and 6 prior to the project’s participation in the Pilot Program.
How to apply?
Developers can apply for the Pilot Program by submitting a completed application form and proof of payment of the $13,500 application fee by email to realestatedevelopment@bcfsa.ca.
For any projects that have not commenced marketing, the application should be submitted prior to, or concurrently with, filing the disclosure statement. Development projects will be approved on a case-by-case basis, with no set limit to the number of projects accepted. If the application is approved by BCFSA, an individual exemption will be granted under Section 20 of REDMA to the participating developer.
What are the reporting requirements for participants in the Pilot Program?
Participating developers will be required to submit data about the development project to BCFSA, to help BCFSA evaluate the impact of the longer early marketing period and determine whether to make the extension permanent. Developers will be required to submit general information about the development project, including the number of units, the marketing commencement date, and the number of rental units (if any). In addition, on a quarterly basis during the 18-month period, developers will be required to submit data on the development units sold, including information about the number of bedrooms, square footage of the unit, and the sale date. Finally, at the end of the 18-month period, developers will be required to fill out a survey so BCFSA can gather feedback on their experience with the Pilot Program.
The requirement to submit data continues for the entire 18-month period, even if the developer receives the required local government approvals and secures a satisfactory financing commitment within the period.
If a developer does not submit the required data, the exemption may be suspended or cancelled, and the developer may be deemed ineligible to participate in the Pilot Program for any future projects.
New Consumer Disclosure Form Requirement
BCFSA has also introduced new disclosure requirements for real estate developers, designed to help purchasers understand their rights and obligations under REDMA. Under REDMA, developers must provide purchasers with a disclosure statement that describes material facts about the development.
Effective April 1, 2025, developers will be required to attach a copy of the completed “Summary of Pre-Sale Risks and Buyer Rights” form (the “Summary Form”) to the front of any disclosure statement filed under REDMA Policy Statement 14, which applies to pre-sale developments. The Summary Form outlines key risks and contractual rights and obligations that apply to a purchaser and directs purchasers to the relevant sections of the disclosure statement to review.
Developers are not required to attach the Summary Form to any disclosure statement filed prior to April 1, 2025, or to any future amendments of previously-filed disclosure statements.
Disclaimer: This bulletin is for general information purposes and is subject to the particular facts of each case; certain requirements may have been simplified and the law may have changed since the date of this bulletin.
