Legally Speaking - August 2012 (456)
News and Publications » Publications » Legally Speaking » Legally Speaking - August 2012 (456)
Share on Facebook
Share on Twitter
Search Legally Speaking:
Legally Speaking (456, August 2012)

 

Number 456, August 2012

REDMA'S REACH

The Real Estate Development Marketing Act (REDMA) regulates the marketing within British Columbia of development properties located inside and outside of BC. A recent BC Supreme Court decision considered the extent of the concept of "marketing" a development property in BC.1

A developer constructed a multi-unit high rise condominium project in Edmonton, Alberta. The units were advertised through print advertisements placed in Edmonton publications as well as on the developer's website and at its on-site sales office in Edmonton. An Edmonton brokerage acted as the listing brokerage and all sales were conducted from Edmonton.

One of the developer's two directors discussed the project with a REALTOR® in Vancouver known to him. That REALTOR® in turn provided information to her close friends and family, a number of whom eventually bought units in the project.

The director provided the REALTOR® with brochures, price lists and contracts and arranged for the REALTOR® to receive a referral fee for the units purchased by her family and friends.

Prior to closing, the friends and family commenced an action for the rescission of their contracts and a return of their deposits on the grounds that the disclosure requirements of REDMA had not been met.

While the developer did not dispute that the disclosure requirements of REDMA (which were more rigorous than those found in the corresponding Alberta legislation) had not been met, it argued that REDMA did not apply to these transactions as the developer had not "marketed" the properties in BC or alternatively that REDMA was beyond the jurisdiction of the BC legislature insofar as it applied to property located outside of BC.

The court found that the definition of "marketing" in REDMA is very broad and includes activities that will, or are likely to, lead to a sale. The court concluded that the director's activities in providing pricing lists, brochures and pre-signed contracts to the Vancouver REALTOR®, as well as arranging for that REALTOR® to receive remuneration for arranging the sales and the fact that such activities were the sole cause of the sales, amounted to the marketing of the project in BC as defined in REDMA.

The court concluded that the friends and family would not have known of, or purchased, the units but for the urging of the REALTOR® who had an incentive from the developer.

The court also concluded that there was a sufficient connection between British Columbia and the conduct at issue to make REDMA constitutionally applicable in the circumstances.

While the court's decision that REDMA applied to these transactions had an obvious impact on the developer, REALTORS® in BC should be mindful of the decision as well.

In a rebuke of the REALTOR® (who was not a party to the rescission actions), the court found that the REALTOR® should have known of the requirements of REDMA and therefor was "at best negligent and at worst dishonest" in not ensuring that the developer complied with REDMA when she acted at the developer's behest in selling the properties in BC.

Brian Taylor
Bull Housser LLP

  1. Mazarei v. Icon Omega Developments Ltd. 2012 BCSC 673.
Back issues of Legally Speaking are available to REALTORS® on BCREA's REALTOR Link® homepage. Subscribers who are not REALTORS®, and who wish to see back issues, should contact BCREA by email at [email protected], or by phone at 604.742.2784.
Legally Speaking is published eight times a year by email and quarterly in print by the British Columbia Real Estate Association, and funded in part by The Real Estate Foundation of British Columbia. Real estate boards, real estate associations and REALTORS® may reprint this content, provided that credit is given to BCREA by including the following statement: "Copyright British Columbia Real Estate Association. Reprinted with permission." BCREA makes no guarantees as to the accuracy or completeness of this information.
Copyright © British Columbia Real Estate Association
1420 – 701 Georgia Street West
PO Box 10123, Pacific Centre
Vancouver, BC  V7Y 1C6
Phone 604.683.7702
Fax 604.683.8601
www.bcrea.bc.ca
[email protected]
To change your email address or subscribe to more BCREA publications, click here.