I am happy that so far (knock on wood) none of my clients have been caught in these failures.
I just came across an article which may be of interest-in many cases, when there are problems in developments, the buyers are locked in but here is a situation where a buyer could have an out (article sent to realtors by BC Real Estate Board)
Consumer alert: purchaser's right to cancel contract of purchase and sale
On October 28, the Financial Institutions Commission posted
this alert to its website (www.fic.gov.bc.ca):
Recent difficulties in global financial markets have led to delays in obtaining
financing commitments and building permits for some development properties
marketed in British Columbia under the Real Estate Development Marketing Act.
Developers who have not obtained a building permit or satisfactory financing to
build a development are permitted to market a development under the
Superintendent of Real Estate's Policy Statements 5 and 6 for a period of nine
months on certain conditions. Those conditions allow marketing if the estimated
date for the issuance of a building permit and for obtaining a satisfactory
financing commitment, as disclosed in the disclosure statement, is nine months
or less from the date the developer filed the disclosure statement with the
Superintendent.
At the end of that nine-month period, if a building permit or satisfactory
financing commitment has not been obtained and disclosed by the developer, the
developer must immediately cease marketing the development until an amendment
has been filed which discloses that the necessary building permit or financing
commitment, as the case may be, has been obtained.
Additionally, if an amendment to the disclosure statement is not received
within 12 months after the initial disclosure statement was filed, the Policy
Statements require provisions in the purchase agreement to allow the purchaser,
at his or her option, to cancel the purchase agreement at any time after the
end of that 12-month period until the required amendment is received by the
purchaser. The purchase agreement must also contain a provision that all
deposits paid by a purchaser, including interest earned, if applicable, be
returned promptly to the purchaser upon notice of cancellation from the
purchaser.
Purchasers who wish to consider cancelling their contract should immediately
contact their real estate broker or lawyer if they have any questions about the
cancellation of their agreement or how to cancel the agreement.
Earlier this year, BCREA created the Presale Cross Reference List to draw
attention to important information unique to multifamily residential units
under development, also known as presales.
An understanding of the issues specific to presales provides buyers with a
starting point to determine whether further enquiries, professional advice or
clarification are needed. Buyers unfamiliar with such transactions may need
extensive consultation with knowledgeable REALTORS® or other professionals
experienced with presale investments.
The Presale Cross Reference List is available online at: www.bcrea.bc.ca/buyers/PreSaleCrossRefList.pdf.
REALTORS® are encouraged to link to this resource.
Hope this helps someone out there!
Patricia
