A presale condo lawyer in Surrey reads the contract while you can still cancel it

Can I cancel a presale contract in BC?

Yes, within the rescission period the Real Estate Development Marketing Act gives most presale buyers. It runs for a short, fixed time from the later of signing and receiving the disclosure statement, and you exercise it by written notice to the developer. Your deposit is then returned in full. After the period ends, the contract binds you.

Serve the notice in writing on the developer, or on its brokerage, in the way the disclosure statement describes, and keep proof of when it went. The deposit can come back because the Act requires it to be held in trust, or protected by deposit insurance, rather than spent by the developer.

If the developer later files an amendment to the disclosure statement that changes something material, the buyer may get a fresh right to cancel tied to that amendment.

The home buyer rescission period under the Property Law Act, which covers most resale homes, generally does not apply to presales covered by the Real Estate Development Marketing Act. A presale buyer relies on the development Act's right.

What should a lawyer check in a presale contract and disclosure statement?

A lawyer reads for the terms that move money or risk onto you: the outside date and the developer's rights to extend or terminate, the deposit schedule and who holds deposits, how much the unit can change, parking and storage, the budget and bylaws, the assignment clause, whether GST is included, and the adjustments the developer may add.

The disclosure statement is filed with the Superintendent of Real Estate at the BC Financial Services Authority, and BCFSA's policy statements govern what developers must put in it. The budget and bylaws start as the developer's proposals; the owners take control of the strata corporation from the first annual general meeting, which the Strata Property Act requires the developer to call.

• Outside date and extensions: the latest date by which the developer must complete, and whether it can push that date back, by how much and for what reasons.
• Termination rights: the conditions on which the developer can end the contract, such as failing to obtain financing or enough sales, and what you get back if it does.
• Deposits: the schedule and amounts, and whether they stay in trust with a brokerage, lawyer or notary or are released to the developer under deposit protection insurance.
• Changes to the unit: how far the size, layout, finishes and floor plan may change without your consent, and whether any change lets you cancel.
• Parking and storage: whether a stall and a locker come with the unit, how they are allocated, and whether they can be taken away or sold separately.
• Budget and bylaws: the proposed strata budget and the bylaws on rentals, pets and age, read against your plans; the Strata Property Act now limits how far rental restrictions can go.
• Assignment clause: whether you can assign at all, the developer's consent and fee, and any limits on advertising the contract.
• GST and adjustments: whether the price includes GST, who receives any new housing rebate, and the extra charges the developer may add at completion.

Whose names should go on a presale contract?

Put on the contract everyone who intends to be on title at completion. Adding or swapping a name later may count as an assignment, which needs the developer's consent, may carry a fee, and may have to be reported. Who the named buyer is also decides whether a property transfer tax exemption or GST rebate is available at completion.

Some contracts let the buyer add a spouse or close relative, or name a nominee, without treating it as an assignment. Others do not. The wording decides, and so do the rules of BCFSA's Condo and Strata Assignment Integrity Register, which collects information about assignments and the people behind them.

Exemptions and rebates follow the people. The newly built home exemption and the first-time buyer exemption depend on who takes title and whether they move in, and the GST new housing rebate generally depends on the buyer, or a relative, living in the home as a primary residence. A parent named alongside a child to help with financing can reduce what the child is able to claim.

Anyone buying with a parent, or with a partner they are not married to, should settle how title will be held, and in what shares, before signing; our guide to buying a home together unmarried sets out what to put in writing.

What should I check before buying a presale assignment?

Ask for the original contract, the disclosure statement and every amendment, and confirm the developer's written consent and its conditions. Then check how the original buyer's deposits are reimbursed and the premium paid, who pays the remaining deposits, and your own GST and property transfer tax position at completion. The original buyer usually stays liable to the developer.

You are taking over a contract you did not negotiate, on terms already fixed, often after amendments the original buyer accepted. Read it as if you were signing it new, because in effect you are. A developer's consent may carry conditions of its own, such as a fee, a restriction on advertising, or a limit on any further assignment.

Money should move through lawyers' trust accounts, not directly between buyers. The assignee usually reimburses the deposits already paid and pays the premium, the amount above the original price, with any developer fee paid as the contract says. GST can apply to an assignment as well as to the home itself, and property transfer tax is paid at completion on the home's fair market value then, so both need checking before you commit.

For the original buyer, the premium may be taxable, and the federal residential property flipping rule and BC's Home Flipping Tax Act can apply; that side needs an accountant.

What happens if my presale appraises for less than the purchase price?

Your lender lends on the lower of the appraised value and the price, so a low appraisal leaves a gap you have to fund in cash at completion. Refusing to complete is a breach of contract: the developer may keep your deposit and sue for its losses on resale. Raise it early, while there are still options.

The options, roughly from simplest to hardest: add to the down payment from savings or family; ask for a second appraisal or try another lender; assign the contract, if it allows assignment and the market supports it; or ask the developer for a later completion, a price adjustment or a credit. Developers do not have to agree, though some will rather than resell.

The earlier the conversation, the more of these stay open. A buyer who tells their lender and lawyer months ahead can arrange money or an assignment; one who learns of the gap in the last days before completion often cannot.

What if the developer delays or cancels the project?

The contract and disclosure statement decide. Most presale contracts set an outside date by which the developer must complete, and give the developer limited rights to extend it or terminate if conditions such as financing or permits are not met. If the contract ends that way, the deposit is returned, with interest only if the contract provides for it.

Extension rights are usually tied to events outside the developer's control, and some disclosure statements describe those events broadly. Read that clause before you sign, because it decides how long your deposit, and your mortgage plans, may be tied up. If the outside date passes without completion and without a valid extension, the buyer can usually end the contract and recover the deposit.

Completion itself follows the deposit of the strata plan, and the home warranty under the Homeowner Protection Act, administered through BC Housing, starts then; the buying page covers the documents you sign at that stage.