August 13th, 2024

As noted in previous newsletters, in April/May 2024, the BCFSA conducted a public consultation on a proposed Summary of Pre-sale Risks and Buyer Rights Form. They have now released a Summary of Consultation Feedback Report, and expect that the new Form (as well as applicable amendments to Policy Statement 14) will come into effect this Fall.     

The Summary Form would need to be attached to the front of the initial Disclosure Statement – but not amendments to the Disclosure Statement – unless there is a misrepresentation on the Summary Form. For projects that are phased, “Developers are required to attach this form to their initial disclosure statement filing, including each initial phase disclosure statement for a phased strata development. If developers are introducing a phase to market by filing a disclosure statement amendment, they do not need to attach a new form to the disclosure statement or the disclosure statement amendment.”  

The purpose of the new form is to:   

• “Highlight critical provisions of the disclosure statement and purchase agreement; 
• Direct purchasers to relevant sections of the disclosure statement for further review; and 
• Enhance consumer understanding, while also encouraging purchasers to seek professional advice and to thoroughly read the disclosure statement in its entirety.” 

Mark Lewis, the Chair of UDI’s Legal Issues Committee, participated on the Technical Working Group that the BCFSA utilized to develop the Summary Form.  

It should be noted that some respondents to consultation recommended the removal of “… the exemption that allows an employee of a developer to provide trading services without a licence.” The BCFSA states in the Summary of Consultation Feedback Report that this issue is out of scope, but they will be sharing the Report with the Ministry of Finance.  

Concerns were also raised “… that many unrepresented consumers are unaware that the developer’s employees working in the sales centre, or licensees in an agency relationship with the developer, do not represent their interests.” In response, the BCFSA indicates that they “… may investigate potential enhancements to other consumer education materials to inform consumers about seeking independent representation …”.  

For more information, please visit the BCFSA webpage on the Summary Form.  

June 4th, 2024

As noted in previous newsletters, the Province has been updating the Strata Property Act (SPA) through Bill 14, the Municipal Affairs and Housing Statutes Amendment Act (No. 2), 2020, and the Strata Property Regulation “… to mitigate the costs of strata insurance.”  

On April 22, 2024, the Ministry of Housing announced new regulations under the SPA that restrict the ability of “strata corporations to indefinitely defer depreciation reports.” The new regulations (Order in Council No. 204) take effect on July 1, 2024, “… and require existing strata corporations with five or more strata lots to obtain depreciation reports on a five-year cycle, instead of a three-year cycle.” Effective July 1st of next year, stratas will also need to “… obtain their depreciation reports from a list of qualified professions, including engineers, certified reserve planners, architects, appraisers, applied science technologists and quantity surveyors.” In addition, “Strata corporations without depreciation reports or depreciation reports received prior to Dec. 31, 2020, will have time to obtain them: 

• Until July 1, 2026, if located in Metro Vancouver, Fraser Valley areas or the Capital Regional District (excluding the Gulf Islands and all other islands); and 
• Until July 1, 2027, if located in other areas of the province.” 

The new rules will also apply to new strata corporations as follows: 

• “Strata corporations formed between July 1, 2024, and June 30, 2027, must obtain depreciation reports within two years of the first annual general meeting and every five years thereafter. 
• Strata corporations formed on or after July 1, 2027, must obtain depreciation reports within 18 months of the first annual general meeting and every five years thereafter.” 
   

For the latter group of stratas, builders will be required, as of July 1, 2027, “… to contribute funds toward the cost of obtaining a first depreciation report: a minimum of $5,000, plus $200 per strata lot, up to a maximum of $30,000.”  

In addition, builders may have to update their disclosure statements to reflect the above changes. On May 21st, the BCFSA updated its Advisory on the issue “… to clarify disclosure requirements for real estate developers regarding strata depreciation reports.”  

May 7th, 2024

On April 17th, the BCFSA began a public consultation on a Proposed Consumer Disclosure Form for Pre-sales. The Authority is concerned that “… the complexity and length of disclosure statements poses challenges for consumers to fully understand their rights and obligations.”  

They developed a Summary of Pre-sale Risks and Buyer Rights Form with a Technical Working that included Mark Lewis, the Chair of UDI’s Legal Issues Committee. The new form would have to be attached to the front of the initial disclosure statement. It is intended to:  

• “Highlight critical provisions of the disclosure statement and purchase agreement; 
• Direct purchasers to relevant sections of the disclosure statement for further review; and 
• Enhance consumer understanding, while also encouraging purchasers to seek professional advice and to thoroughly read the disclosure statement in its entirety.” 

The new form would not need to be attached to amendments to disclosure statements. However, if there is a misrepresentation on the new summary form, builders would need to correct the information on the form via an amendment.  

For projects that are phased, “Developers are required to attach this form to their initial disclosure statement filing, including each initial phase disclosure statement for a phased strata development. If developers are introducing a phase to market by filing a disclosure statement amendment, they do not need to attach a new form to the disclosure statement or the disclosure statement amendment.” 

The consultation process ends on May 17th, and the BCFSA is requesting comments through their Consultation Feedback Form. They will release a consultation summary report and use the feedback to inform their “… decision on whether to enact the changes;”. During a May 2nd, 2024, BCFSA webinar, staff from the Authority indicated that the policy will likely come into effect this fall. 

If they do proceed, there will be some instream protection so that if a developer has filed a disclosure statement for a project before the effective date, they will not be required to provide the summary form to buyers – even if there are amendments to their disclosure statement.  

For more information, please see: 

• FAQs for the Proposed Consumer Disclosure Form for Pre-sales; and  
• Amendments (redlined) to Policy Statement 14 regarding the new form.