Developers can pre-sell condos and townhouses to be built within 2 years for a fixed price requiring deposits to be paid by buyers. If completion does not happen within 2 years the purchase contract is terminated and pre-sale buyers are entitled to get their deposit back.
The DISCLOSURE STATEMENT is available to the buyer prior to entering into a contract and explains what is being sold, background of the developer, and the cooling-off period, that provides a buyer the right to cancel the contract within 7 days of signing as per the Real Estate Development Marketing Act.
A pre-sale contract may allow a developer to substitute equivalent materials or make adjustments to the unit layout or the development in general.
Can I make money? If the developer suffers delays resulting in completion going beyond two years (and if the market is increasing particularly in a rising market) the developer may extend the contract but at a higher purchase price.
Will I lose money? If the project completes within the two years and market prices drop, you are locked into the original purchase price of the contract.
Can I assign the contract? Probably with permission from the developer and most commonly with a fee. The risk associated with pre-sales are then applied to the new buyer. However the original buyer is likely on the hook for all the obligations of the contract should the new buyer fail to comply with the contract obligations.
Bottom line, pre-sales are complicated transactions and before entering into one a buyer should consult with an experienced real estate agent and obtain legal advice. The foregoing is a few of the risks associated with pre-sales. For more info on this topic check online at BC Financial Institutions Commission website: www.fic.gov.bc.ca Risks Associated with Purchasing Pre-Sale Residential Units.
Call Marylou or Ken at 604-590-2444 any time before you put pen to paper to make sure you are aware of what you are entering into.