Is My Presale Deposit Protected in British Columbia?

Presale deposits can be large, and you usually pay them years before you can move in. Before you hand over the money, it makes sense to ask who will hold it, what rules apply, and when someone else can touch it.

British Columbia's Real Estate Development Marketing Act (REDMA) sets rules for how developers handle deposits and what they must tell you first. It applies to a developer who markets a development unit in the province.

This article covers the law of British Columbia.

Does the law apply to your purchase?

REDMA applies to a developer who markets a development unit in British Columbia. Development property generally means land with 5 or more subdivision, bare land strata, strata, time share or leasehold units, or 2 or more cooperative interests or shared interests in land.

There are exceptions. The superintendent may exempt a person, land or transaction from all or part of Part 2, with or without conditions, and the Regulation exempts classes such as developer-to-developer sales, leases of three years or less, and low-cost cooperative interests of $5,000 or less. If your purchase looks unusual, ask a lawyer whether an exemption applies.

Who holds the money

A developer who receives a deposit must promptly place it with a brokerage, lawyer, notary public or prescribed person, who holds it in trust in a B.C. savings institution. Before you pay, ask who the trustee is and get the details in writing.

The trustee may release a deposit only in these cases:

• written consent of the purchaser and the developer
• a court order
• developer certification that the purchaser has no rescission right and that required plans, occupancy approvals and registration are in place
• a purchaser default where the developer elects to cancel and the deposit is forfeited under the agreement

If you and the developer agree that the contract has ended, you may jointly certify that fact and how the deposit is to be split, and the trustee must then pay accordingly.

When a developer can use your deposit

A developer may use a deposit for its own purposes, for example construction, only if it enters a deposit protection contract (insurance) for that deposit and gives you the notice required by regulation. When there is a deposit protection contract, the disclosure statement must give the insurer's name and business address, the developer and the date the insurance takes effect.

So a deposit may be fully held in trust, or it may be released to the developer with insurance behind it. These are different situations. Read the disclosure statement to see which one applies to you. What the insurance pays, and when, depends on the policy wording, which is worth having a lawyer read.

Protections that come before and after you pay

Before a purchase agreement is signed, the developer must give you the disclosure statement, allow a reasonable opportunity to read it, and obtain your written acknowledgment of receipt. The statement must plainly disclose all material facts and not contain a misrepresentation. A material fact includes a fact that affects, or could reasonably be expected to affect, the value, price or use of a unit.

Filing is not approval. The superintendent has no duty to assess the merits of a disclosure statement or check it for misrepresentations, so filing with BCFSA is not an endorsement. Since April 1, 2025, a Summary of Pre-sale Risks and Buyer Rights form must be attached to the front of a pre-sale disclosure statement filed under REDMA Policy Statement 14; it is not required for statements filed earlier or for later amendments of them.

Rescission notice must be a signed copy delivered in person or by registered mail to the developer or its brokerage at the address in the disclosure statement or purchase agreement.

What to do next

Take your time before you pay. BCFSA investigates complaints and can act against developers, but it does not enforce a purchaser's contract rights. Administrative penalties can reach $500,000 for a corporation and $250,000 for an individual, yet that does not replace checking the paperwork yourself.

• Ask who the deposit trustee is and in what kind of account the money will sit.
• Check whether the developer intends to use deposits for construction and, if so, read the insurer details in the disclosure statement.
• Keep the signed acknowledgment of receipt and note the date.
• Diary the 7-day rescission deadline the day you sign.
• Have a lawyer review the contract and disclosure statement before you sign.

Frequently asked questions