Real Estate Board clamping down on unregistered developers
The Real Estate Board (REB)/Commission of Strata Corporations (CSC) is clamping down on the number of unregistered real estate developers who are selling properties illegally.
“For the second time in 2019 we have had a conviction for an unregistered developer, and both cases are now at the sentencing process. We want to remind persons that the Real Estate Board/Commission of Strata Corporation is committed to ensuring that if developers fail to register, they will answer to the law,” Chief Executive Officer of the REB/CSC, Sandra Garrick, told JIS News.
She said in one of the cases, the unregistered developer was marketing and selling units in an unregistered scheme for which the developer had not yet acquired land.
“Part of the REB’s responsibility is to oversee that purchasers receive what they have contracted, and that monies paid over to developers are used as the Real Estate Act prescribes, meaning the funds are put in a trust account and not used as the developer’s personal money,” she emphasised.
Garrick is also encouraging purchasers to do their due diligence when buying a property.
“As a purchaser, the first thing you should do is ensure that the real estate developer is registered with the REB, and is allowed to contract business, sell units and advertise. A list of registered developers can be found on the REB’s website, and persons may call the board to do checks,” she said.
Garrick said there are times when the REB may give a developer tentative approval, but (in such cases) will not grant the developer approval to market the units.
“If modification needs to be made to the covenant on a title, we never allow units to be pre-marketed or pre-sold,” she said.
She explained that a covenant is a contractual agreement enforceable by a court, and the agreement can be phrased to prohibit certain actions on a property or safeguard the benefits derived from the leasing or sale of the property.
Garrick said purchasers may share copies of their contracts with the REB, along with a note stating the amount that has been deposited for the purchasing of the property. This, she said, will alert the board that the developer is selling.
“You run the risk of not being completely protected by the law when you do business with unregistered developers and losing your money. It is all well and good if everything goes okay, but if it doesn’t, it is the REB’s charge that protects you. The board can position itself to sell the development and refund you your money or hold the developer to completing the unit so that you can have it,” she indicated.
Garrick said it is in the developer’s best interest to register with the board, as it provides credibility and allows the board to act as a third party in staking claims on their behalf.