BC Realtor Pre-Sale & New Construction Guide: REDMA Disclosure, Assignment Clauses & Completion Risk (2026)
Pre-sale and new construction transactions are among the most complex in BC real estate — with unique disclosure rules, multi-year completion timelines, GST obligations, and assignment restrictions that differ entirely from resale. This guide makes you the expert your clients need when buying or selling new.
The Pre-Sale Market in BC: Scope and Complexity
Pre-sale real estate — purchasing a property before it is built or substantially complete — is a defining feature of BC's housing market. In Metro Vancouver and the Fraser Valley, pre-sale condos and townhouses represent a significant share of new inventory, driven by developer financing models that require a sold-out project before construction lenders will fund.
For realtors, pre-sale transactions involve an entirely different legal framework from resale: the Real Estate Development Marketing Act (REDMA), BC Housing oversight, mandatory disclosure statements, multi-year completion timelines, and assignment markets with their own tax and legal complexity. Mastering this framework is a competitive advantage — most realtors avoid it; the few who understand it build specialist practices.
REDMA: The Framework That Governs Every Pre-Sale in BC
The Real Estate Development Marketing Act requires any developer selling 5 or more pre-sale units in a development to register a Disclosure Statement with BC Housing before marketing begins. The Disclosure Statement is the foundation document of every pre-sale transaction.
What the Disclosure Statement Must Include
| Section | What It Must Disclose | Why It Matters to Buyers |
|---|---|---|
| Developer information | Developer identity, principals, prior projects, bankruptcy history | Due diligence on developer track record |
| Project description | Unit count, floor plans, amenities, common areas, parking | What buyer is actually purchasing |
| Estimated completion date | Expected occupancy date (with right to amend) | Buyer's timeline for financing and moving |
| Purchase price breakdown | Total price, deposit schedule, adjustments at completion | True cost of purchase including levies |
| Deposit protection | How deposits are protected (trust/bond/letter of credit) | Confirms buyer's deposit is safe if project fails |
| Amendment history | All prior amendments to the Disclosure Statement | Changes to what was originally promised |
| Rental restrictions | If strata will have rental bylaws at registration | Investment buyers: limits on future rental |
| Lease or ownership of land | Whether developer owns land or is leasing | Leasehold vs. freehold at completion |
The 7-Day Rescission Period
One of REDMA's most powerful buyer protections: once a buyer receives the Disclosure Statement (or an amendment to it), they have 7 days to rescind the contract without penalty and receive a full deposit refund. This applies to the initial purchase and to any material amendment.
Practitioner note: The 7-day clock starts when the buyer receives the Disclosure Statement — not when they sign. Delivery method matters. If you email it Friday evening, confirm receipt and when the clock started. A developer who fails to provide the Disclosure Statement before a buyer signs has given the buyer an indefinite right to rescind.
Deposit Structure and Protection
Pre-sale deposit schedules differ significantly from resale. Developers typically structure deposits in tranches over 12–24 months to maximize their sales proceeds while keeping buyers committed:
Typical BC Pre-Sale Deposit Schedule
| Tranche | Timing | Typical Amount | Notes |
|---|---|---|---|
| Initial deposit | On signing (after rescission period) | 5% of purchase price | Held in trust — developer cannot access |
| Second deposit | 90–180 days after signing | 5% of purchase price | Often tied to construction milestones |
| Third deposit | 12 months after signing | 5% of purchase price | Some developers go to 20–25% total |
| Completion balance | On title transfer at completion | Balance of purchase price minus deposits | Requires mortgage funding and GST payment |
Under REDMA, all deposits must be held in trust and cannot be released to the developer until project completion or contract rescission. This is a critical protection that distinguishes BC from other jurisdictions — but buyers should still confirm the trust arrangement is in place and understand that the protection does not cover a developer who completes the project and then goes bankrupt post-completion.
GST on New Construction: The Cost Buyers Forget
GST (5%) applies to all new residential construction in BC. This is one of the most commonly overlooked costs in pre-sale transactions — and a serious compliance issue for realtors who fail to disclose it.
GST on New Homes: The Full Picture
| Scenario | GST Treatment | Federal Rebate Available? | Net GST Cost |
|---|---|---|---|
| New condo — purchase price $350K or less | 5% GST on purchase price ($17,500 on $350K) | Yes — full rebate (max $6,300) | $11,200 net |
| New condo — price $350K–$450K | 5% GST on purchase price | Yes — partial rebate (phases out) | Varies |
| New condo — price above $450K | 5% GST on purchase price | No federal rebate | Full 5% applies |
| New detached home — principal residence | 5% GST | Rebate if price ≤ $450K | Same as above |
| New home — used as rental (investment) | 5% GST applies | New residential rental rebate (NRRR) if rented long-term | Up to 36% of GST refunded |
| Substantially renovated home (90%+ gutted) | 5% GST — treated as new | Same rebate rules apply | Depends on price |
Critical practitioner point: Many pre-sale contracts state that the listed price is exclusive of GST. If your buyer sees a $799,000 condo and assumes that is the all-in price, they will face a $39,950 surprise at completion. Always clarify whether GST is included or additional, and calculate the true total cost for your client before they sign.
BC New Housing Rebate
In addition to the federal GST rebate, BC offers a provincial new housing rebate of 71.43% of the 2% provincial portion of the HST (now back to PST in BC — this rebate predates the HST reversion and applies differently). Confirm current BC rebate rules with a tax accountant, as this is an area that changes and nuance matters.
Assignment Clauses: The Market Within the Market
An assignment is the transfer of a purchaser's interest in a pre-sale contract to a new buyer before the building completes. The assignor (original buyer) sells their contractual position; the assignee takes over the purchase obligations including completing the transaction.
Assignment Landscape in BC (Post-2022)
The assignment market changed significantly after 2022 federal tax rule changes:
- Taxable supply: Since May 7, 2022, assignments of residential real estate purchase agreements are a taxable supply under the Excise Tax Act — meaning GST/HST must be charged on the assignment fee (the profit above the original purchase price). This is the buyer's GST, not the seller's.
- Income tax treatment: CRA treats assignment income as business income (not capital gains) for individuals who flip pre-sales — subject to full marginal tax rates.
- Principal residence exemption: Does not apply to assignment gains — the property was never completed, so there was no principal residence.
Assignment Contract Review Checklist
| Item to Check | Where to Find It | Red Flag |
|---|---|---|
| Assignment permission | Developer's pre-sale contract (Schedule A / Special Conditions) | Outright prohibition — assignor may have no legal exit |
| Developer consent requirement | Assignment clause language | 'Consent required, may be withheld in developer's sole discretion' = practical prohibition |
| Developer assignment fee | Assignment clause | Fees of $5,000–$15,000 or 1–2% of purchase price are common — erodes assignor profit |
| GST registration of assignor | CRA — check if assignor is a GST registrant | Non-registrant may owe GST on assignment fee personally |
| Disclosure to new buyer | REDMA — assignee gets same rescission rights as original buyer | Failing to provide Disclosure Statement to assignee = indefinite rescission right |
| Deposit transfer | Assignment agreement terms | Assignee typically pays assignor the deposit amount + premium; original deposit stays with developer |
| Completion obligation | Assignment agreement + original contract | Assignee is on the hook for completion — full amount, including GST |
Completion Risk: The Multi-Year Problem
The longest and least-discussed risk in pre-sale transactions is completion risk — the danger that when the building finally completes (often 3–5 years after signing), the buyer cannot close.
The Three Completion Risk Scenarios
1. Valuation gap: The property appraises below the purchase price at completion. If the market declined since signing, a $750,000 contract on a condo that now appraises for $680,000 means the buyer needs $70,000 in additional cash (or a second mortgage) to bridge the gap — their lender will only lend against the appraised value.
2. Qualification gap:The buyer's financial situation changed — income dropped, debt increased, new OSFI stress test rules, or lender guidelines shifted. A buyer who qualified comfortably in 2022 may not qualify for the same mortgage in 2027 when they need to complete.
3. Rate shock: The buyer locked in mentally at 2022 rates but is completing in 2027 at significantly higher rates. The monthly payment may no longer be affordable even if they technically qualify.
Completion Risk Management Strategies
| Strategy | How It Works | Limitation |
|---|---|---|
| Pre-approval with rate hold | Lock in mortgage rate at time of purchase | Most lenders hold 90–120 days only — useless for 3-year completions |
| Save additional equity buffer | Target 25–30% down payment vs. minimum 5% | More cash at risk if market drops, but reduces lender exposure |
| Income verification planning | Avoid self-employment or job changes near completion | Life circumstances can't always be planned |
| Assignment exit planning | Negotiate clear assignment rights before signing | Market may not support assignment gains at completion time |
| Developer completion extension protection | Negotiate developer's right to extend completion is capped (e.g. 12 months max) | Most developers won't negotiate this |
| Title insurance with new construction endorsement | Covers certain completion risks and builder defects | Does not cover financial inability to complete |
Warranty Protection on New BC Homes
All new homes in BC sold by a licensed residential builder must be enrolled in a home warranty insurance program under the Homeowner Protection Act. This mandatory warranty provides:
- 2 years: Materials and labour (defects in workmanship)
- 5 years: Building envelope (water ingress — the most common BC new construction defect)
- 10 years: Structural defects
The warranty follows the home, not the owner — so a buyer who resells within the warranty period transfers these protections to the next buyer. Confirm the warranty enrollment and the name of the warranty provider (BC Housing approves providers — currently Travelers Canada, Pacific Home Warranty, National Home Warranty, and others) before your buyer completes.
Warranty Exclusions to Know
- Damage caused by the owner or their renovations after possession
- Normal wear and tear (paint, grout, minor settling)
- Defects the buyer knew about before purchasing (inspection reports)
- Damage from floods, earthquakes, or acts of nature
- Owner-built homes (owner-builder permit exemptions)
Developer-Side Risks: How to Assess a Developer
Not all developers are equal. The Disclosure Statement includes developer information — use it and do your own research before advising clients to sign a pre-sale contract.
Developer Due Diligence Checklist
| Check | Where to Look | Red Flag |
|---|---|---|
| Prior completed projects | Developer website, BCCA building permits | First project — unproven execution |
| Completion history | BC Housing new home registry, media searches | Prior projects completed late or with major deficiencies |
| BCCA / HPO complaints | BC Housing Homeowner Protection Office records | Multiple warranty claims or enforcement actions |
| Corporate structure | BC Corporate Registry | Numbered company with no assets — single-project SPV |
| Lender / construction financing | Ask the developer's sales team | No construction lender confirmed — project may not proceed |
| Pre-sale sell-through rate | Ask: what percentage of units are sold? | Below 60–70% sold — construction lenders may not fund |
| Litigation history | BC Supreme Court civil registry (court search) | Ongoing or resolved deficiency litigation from prior projects |
Representing Buyers in Pre-Sale: Your Disclosure Obligations
As a buyer's realtor in a pre-sale transaction, your disclosure obligations extend beyond the resale standard because of the complexity and risk profile involved.
Mandatory Disclosures for Pre-Sale Buyer Representation
- GST obligation: Disclose in writing that GST applies and whether it is included in the stated purchase price.
- Completion risk: Document that you explained the buyer cannot lock in a mortgage rate for 3+ years and that their qualification may change by completion.
- Rescission period: Confirm the buyer received the Disclosure Statement and understands their 7-day rescission right — in writing.
- Assignment restrictions: Document whether the buyer was informed of any assignment restrictions before they signed.
- Developer track record: Note in your file that you provided the buyer with information on the developer's prior project history.
- Deposit protection: Confirm in writing how the deposits are protected and the trust arrangement.
All of these disclosures should appear in your deal notes, in written communications, or in a separate written disclosure document signed by the buyer. BCFSA enforcement in pre-sale cases frequently hinges on whether the realtor documented their disclosures.
New Construction: Representing Buyers in Completed New Builds
Completed new construction (built but never occupied) differs from pre-sale in key ways: the property is inspectable, the strata plan may be registered, and completion happens within the normal resale timeline. However, unique issues remain:
New Build vs. Pre-Sale: Key Differences
| Issue | Pre-Sale | Completed New Build |
|---|---|---|
| Can buyer inspect? | No — not built yet | Yes — full home inspection recommended |
| GST | Applies — included or additional | Applies — included or additional |
| REDMA disclosure statement | Required — 7-day rescission | May apply if 5+ units still being sold by developer |
| Mortgage timing | Completion 2–5 years away | Normal 30–90 day closing — mortgage as usual |
| Warranty | Same 2/5/10 HPO warranty applies | Same 2/5/10 HPO warranty — clock started at occupancy |
| Strata documents | May not be available (strata not yet formed) | Strata plan registered — documents available |
| PTT (Property Transfer Tax) | Same rules as resale unless new home exemption applies | PTT exemptions available for qualifying new homes |
PTT Exemptions for New Homes
BC's Property Transfer Tax has a newly built home exemption for qualifying buyers:
- Property must be a new home (never occupied as a principal residence)
- Fair market value must be $1,100,000 or less for a full exemption
- Partial exemption for homes between $1,100,000 and $1,150,000 (phases out)
- Buyer must be a Canadian citizen or permanent resident
- Buyer must occupy the home as their principal residence within 92 days of registration
- Buyer must continue to occupy for at least one year
The exemption saves $8,000–$20,000+on qualifying new homes. Missing it by failing to properly advise clients is a compliance failure. Confirm eligibility with the buyer's notary or lawyer before completion.
Client Scripts for Pre-Sale Conversations
Script 1: Explaining the 7-Day Rescission Period
"Before you sign this pre-sale contract, you need to receive the developer's Disclosure Statement — and once you receive it, you have 7 days to change your mind and get your deposit back, no questions asked. After those 7 days, you're committed. I'll make sure we document when you received the Disclosure Statement so the rescission period is clear. If anything in it gives you pause, we talk before the 7 days expire."
Script 2: GST Disclosure
"I want to flag something that surprises a lot of pre-sale buyers: GST. This purchase price is $875,000 plus GST — that's an additional $43,750 due at completion. There is no federal rebate at this price point. So your true all-in purchase is $918,750. That's money your mortgage won't cover unless you've budgeted for it. Let's make sure your financial plan accounts for the full number."
Script 3: Explaining Completion Risk
"Here's something I want you to think through carefully: this building completes in 2028 — about three years from now. A lot can change in three years. Your lender can't hold a rate for three years. The property will need to appraise at $799,000 when you go to get your mortgage — if the market shifts and it appraises at $730,000, you'll need to come up with $69,000 in cash beyond your deposit. I'm not saying that will happen, but you need a contingency plan. Do you have access to that kind of liquidity if the market moves against you?"
FAQ
What is REDMA and how does it protect BC pre-sale buyers?
REDMA requires developers to register a Disclosure Statement with BC Housing before selling units. Buyers receive a 7-day rescission period after getting the Disclosure Statement to cancel without penalty. Deposits must be held in trust and cannot be used by developers before completion.
How are pre-sale deposits protected in BC?
REDMA requires all deposits to be held in trust by a brokerage or lawyer. Developers cannot access deposits to fund construction. Developers must also have deposit protection through BC Housing-approved mechanisms — confirm details in the Disclosure Statement.
Is GST payable on pre-sale condos and new construction homes in BC?
Yes — 5% GST applies to all new residential construction. A federal rebate (max $6,300) applies for homes priced at or below $450,000. Above $450,000, no federal rebate. Always confirm whether the listed price includes or excludes GST before your buyer commits.
Can pre-sale buyers assign their contracts in BC?
Only if the developer's contract permits it. Many developers restrict or prohibit assignments. Post-2022, GST applies to the assignment fee and the gain is treated as business income by CRA — not capital gains. Confirm tax treatment with an accountant before any assignment transaction.
What is completion risk in pre-sale and how should realtors advise buyers?
Completion risk is the danger that a buyer cannot complete years after signing due to financing changes, valuation gaps, or rate increases. Advise buyers to maintain a 25%+ down payment buffer, understand they cannot rate-lock for 3+ years, and have a contingency plan including potential assignment rights as a fallback exit.
Pre-sale clients need expert guidance from contract to keys.
Magnate360 tracks pre-sale timelines, completion milestones, and client follow-up automatically — so you stay on top of every deal, no matter how long it takes to complete.