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What is REDMA, and How Does it Affect Me?
Buying a pre-sale condominium unit can undoubtedly feel like a high-risk undertaking in today’s volatile real estate market. Pre-sales typically come with attractive incentives that entice you into entering into a contract for the right to receive (and an obligation to pay for) a finished condo at a set point in the future.
There are certainly advantages to purchasing a pre-sale unit. For example, you can pay your deposit in increments during the building process and thereby get ahead on payments. Alternatively, you can pay a small deposit upfront and save money as its being built, and later pay the balance of the deposit when you move in.
One of the most exciting advantages is the home buyer’s chance to choose layouts, finishes, and other design details customized to his or her individual tastes. And since it’s brand new, one doesn’t have to worry about expensive renovations or repairs for quite some time.
But along with the rewards falls the dreaded risks and obligations many may not be aware of. Therefore, it’s important to understand your rights and responsibilities under the Real Estate Development Marketing Act (REDMA).
For instance, by the time the sale is complete, the real estate market could have dimished, leaving you at a financial loss and scrambling to raise more money for the difference in market value. Mortgage rates can also change like the weather.
In addition, what if there are unexpected construction delays or, in the worst-case scenario, the complex doesn’t get built at all? How do you moderate the potential risks?
To begin with, prior to signing or purchasing anything, do your due diligence and research the builder. Find out if they have a good reputation of completing projects on time and under budget. Next, review a ‘Disclosure Statement’ prepared by the developer. The statement should disclose everything you would be buying into, from common property to design descriptions. Viewing this statement is your right, according to REDMA. It should also include an estimated construction start and end date.
The British Columbia Real Estate Development Marketing Act (REDMA) came into existence in 2005 chiefly to safeguard consumers of pre-sale condominium projects from modifications made by developers prior to completion of a project.
Additionally, it doesn’t matter if the property for sale is located in BC or not. REDMA applies to developments marketed within the province and compels developers to disclose specified information about their projects to purchasers. They must make purchasers aware of changes that occur after they’ve entered into a purchase agreement prior to construction completion.
Furthermore, the act initiates distinct rights for purchasers in real estate transactions. This is of particular importance in the situation of condo pre-sales because the buyer is unable to physically look over the property or perform other important assessments at the time of purchase.
Certainly, if you are in the real estate market, you should be aware of all the ins and outs of REDMA. Undeniably, it’s wise to enlist the assistance of an experienced lawyer who can safely guide you through the pre-sale home process because as we all know, buying big ticket items is never simple. Our team of professionals here at Stevens and Company are ready to assist you in your home purchase.