What is a Pre-Sale?
A pre-sale is when a Developer sells a Buyer a property before that property is built or completed. The Buyer purchasing the pre-sales is buying the right to a completed property that will be built in future. In the UK and elsewhere Pre-Sales are referred to as Off Plan Investments.
Why do people buy Pre-Sales?
Pre-sales are popular with investors and other Buyers because it allows these Buyers to have the benefit of increasing prices without having to pay a mortgage, property taxes, maintenance fees, or deal with troublesome tenants. Pre-Sales also allow owner occupiers the ability to customize the property they buy.
Are Pre-Sales Safe?
In the Province of British Columbia, Pre-Sales are regulated by the Real Estate Development Marketing Act and are generally safe when you are buying from a reputable Developer. If you have concerns or questions about the Developer, contact the Home Owner Protection Office.
3 Important Facts about Pre-Sales
1.The Purchaser of a Pre-Sale has the right to walk away from the contract to purchase the property for any reason for 7 days after there is an accepted offer. This a BC Provincial Law and its called the “7 Day Rescission Period” If you can’t get financing, if your mother says its a bad idea, if you have a nightmare about Real Estate – YOU CAN KILL THE DEAL FOR ANY REASON!
2.All deposits paid by the Buyer of a Pre-Sale are held in a lawyers trust account. This money stays in the account until the building is either built or the Developer fails to meet the time deadline to have the building built. The Developer cannot use this money and does not have access to this money until the building is complete. If the Developer goes under, the money in the trust account is not part of the bankruptcy and has to be returned to the Buyer.
3.The Disclosure Statement will have all of the important info about the property you are buying such as the size of your suite, what will be included in the suite, and what the building will look like. Make sure you read it!