When Does REDMA Apply?

The Real Estate Development Marketing Act (“REDMA”) was introduced to enforce consistent disclosure and transactional obligations for developers involved in marketing development projects. It applies to developers selling interests in various types of development properties, such as strata lots, subdivisions, leasehold properties, and timeshares. REDMA governs residential and mixed use properties marketed in British Columbia, from initial marketing through to the final sale and transfer.

In this post, we’ll explore three key examples of when REDMA applies—some of which are commonly understood, while others are often overlooked. These examples include presale units and property conversions, the sale of existing strata lots, and properties located outside of BC.

REDMA and the Marketing of Presale Units and Property Conversions

The most common example of when REDMA applies, is the marketing of presale or newly constructed units. Under REDMA, developers must provide a disclosure statement to prospective buyers before marketing or selling any units in a development property, such as condominiums or subdivisions. The disclosure must include material facts about the development, including details about the project and units, construction timelines, and other relevant information. This document must be filed with the Superintendent of Real Estate and delivered to buyers, so they are informed of their rights and the details of the property when buying presale or newly constructed units.

It’s important to understand that REDMA applies not only to new developments but also to projects involving existing properties. For instance, if a developer redevelops or renovates an existing building and converts it into five or more strata lots, REDMA still applies. Whether it’s a commercial building turned into condominiums or a heritage property converted into multiple units, the development will fall under REDMA if it meets the Act’s criteria for development property, which includes any of the following:

1. five or more subdivision lots in a subdivision, unless each lot is 64.7 hectares or more in size;
2. five or more bare land strata lots in a bare land strata plan;
3. five or more strata lots in a stratified building;
4. two or more cooperative interests in a cooperative association;
5. five or more timeshare interests in a timeshare plan;
6. two or more shared interests in land in the same parcel or parcels of land; and
7. five or more leasehold units in a residential leasehold complex. (collectively, the “Development Property”).

Developers must stay vigilant and ensure compliance with REDMA, whether they are working on new constructions or redeveloping existing buildings. Understanding the definition of Development Property is key to staying within the legal framework and avoiding complications during the marketing process.

How REDMA Applies to Other Strata Lots

While much of the focus around REDMA tends to be on new developments, many people may not realize that REDMA also applies when marketing existing strata lots where the owner owns five or more strata lots within the same strata plan. For example, if an owner owns 5 strata lots within the same strata plan, and goes to market just one of the strata lots, they fall under the requirements of REDMA, including filing a disclosure statement with the Superintendent of Real Estate. Anyone selling an entire strata titled building, even one that is fully constructed or containing older, previously occupied units, must comply with REDMA when they start marketing or selling those units. This often comes as a surprise, as most people associate REDMA only with newly built or presale projects, but the Act governs a wider range of real estate transactions that fall under the definition of Development Property.

Owners that purchased with five or more strata lots within existing strata titled buildings are subject to the same legal obligations as developers when marketing or selling previously built properties. This is particularly important when planning to sell any of the units, as REDMA applies. Owners need to be mindful of these requirements when structuring their sales or marketing strategies to ensure they operate within REDMA’s framework. Understanding these obligations helps maintain compliance and facilitates a smoother transaction process when selling units within a strata titled building.

REDMA’s Reach: Marketing Properties Located Outside of BC

The marketing to BC residents of developments outside of BC, are also required to comply with REDMA.

In the case of Mazarei v. Icon Omega Developments Ltd., 2012 BCSC 673 (“Icon”), an Alberta-based developer marketed Alberta properties to BC residents without filing the required disclosure statement under REDMA. Although the developer did not engage in formal marketing, BC residents were introduced to the project through informal discussions with a BC-based realtor. The realtor, engaged by the developer in Alberta, shared the project details with purchasers in BC, resulting in sales agreements.

The purchasers later sued, claiming that the contracts were unenforceable due to the lack of a REDMA compliant disclosure statement. The court had to determine if the informal discussions between the developer and the realtor constituted “marketing” under REDMA. REDMA focuses on whether any activity, direct or indirect, is likely to lead to a sale, and does not limit marketing to traditional methods like advertisements or formal presentations. The court concluded that the developer’s actions did fall within the definition of “marketing” under REDMA.

As a result, the court ruled that the developer’s informal marketing efforts were subject to REDMA, even though no formal advertising took place in BC. Since the developer did not file a disclosure statement, under section 23 of REDMA, the contracts were deemed unenforceable at the election of the purchasers, allowing them to rescind the agreements and recover their deposits.

Please note, the foregoing is provided for general informational purposes only and does not, and is not intended to, constitute legal or professional advice. It should not be relied upon as such. For specific legal advice regarding particular matters, please contact the commercial real estate team at Bell Alliance LLP.