Canada: British Columbia To Introduce Condo And Strata Assignment Integrity Register:
A. Implementation and Overview of the Presale Contract Assignment Register
British Columbia’s NDP government (the “Government“) has introduced measures geared towards cracking down on real estate tax evasion as part of the housing strategy set out in its Homes for BC: a 30-point Plan for Housing Affordability in British Columbia released on February 20, 2018. The Real Estate Development Marketing Amendment Act, 2018 received royal assent on May 31, 2018 and the Government subsequently introduced Order in Council No. 586 on November 5, 2018.
NOW Effective and enforced January 1, 2019, these measures will amend the Real Estate Development Marketing Act (S.B.C. 2004, c. 41) to create a framework for the mandatory disclosure of presale condo and strata assignment information and will create a mechanism for the collection and storage of such information by establishing the Condo and Strata Assignment Integrity Register (“CSAIR“).
CSAIR will be a database for tracking assignments of purchase agreements for presale condos and strata lots. It will be administered by the Land Title and Survey Authority of British Columbia through an online platform. Developers who enter into purchase agreements for the sale or lease of residential strata lots in development properties located in British Columbia will be required to collect and file a broad array of information – including personal information for assignors and assignees – for all assignments of presale purchase agreements made on or after January 1, 2019. The information collected by CSAIR will be shared with other governmental agencies, both provincially and federally, including the Office of the Superintendent of Real Estate and the Canada Revenue Agency (the “CRA“), to ensure reporting compliance as well as proper assessment and remittance of taxes.
B. Purchase Agreement Requirements Imposed on Developers and Purchasers
Developers are now required to include the following specific terms and notice in their presale contracts:
- Prohibition on Assignment: Without the developer’s prior consent, any assignment of the purchase agreement is prohibited;
- Definition of Assignment under REDMA: An assignment under the Real Estate Development Marketing Act (“REDMA“) is a transfer of some or all of the rights, obligations and benefits under a purchase agreement made in respect of a strata lot in a development property, whether the transfer is made by the purchaser under the purchase agreement to another person or is a subsequent transfer;
- Obligations of Parties to Assignment: Each proposed party to an assignment agreement must provide the developer with the information and records required under REDMA; and
- Notice of Information Collection Prior to Consent to Assignment: Purchase agreements must include the following notice, in substantially the following form:
“Before the developer consents to the assignment of this purchase agreement, the developer will be required to collect information and records under REDMA from each proposed party to an assignment agreement, including personal information, respecting the following:
(a) the party’s identity;
(b) the party’s contact and business information;
(c) the terms of the assignment agreement.
Information and records collected by the developer must be reported by the developer to the administrator designated under the Property Transfer Tax Act. The information and records may only be used or disclosed for tax purposes and other purposes authorized by section 20.5 of the Real Estate Development Marketing Act, which includes disclosure to the Canada Revenue Agency.”
The foregoing requirements will not be required to be incorporated into a purchase agreement if the developer does not permit the assignment of the purchase agreement.
The Government is trying to prevent the purported real estate speculators and people committing tax fraud from taking advantage of loopholes in British Columbia’s condo market by implementing a new source of information collection and additional measures for presale assignments. They don’t want anyone to be able to skip town or leave the country if they take a loss on their assignment sale.