The Superintendent of Real Estate (“SRE”) under the Real Estate Development Marketing Act (“REDMA”) is amending Policy Statements 5 and 6 to permanently extend the early marketing period from 9 to 12 months, which was previously temporarily extended under Policy Statement 17.
In accordance with REDMA, developers must make certain disclosure to purchasers of development units and are restricted from marketing those development units unless in accordance with specific provisions mandated by the SRE. Policy Statements 5 and 6 generally allow developers to engage in early marketing before obtaining: 1.) a building permit in accordance with the requirements of Policy Statement 5, and/or 2.) a satisfactory financing commitment in accordance with the requirements of Policy Statement 6.
Last year, the early marketing periods under Policy Statements 5 and 6 were temporarily extended from 9 to 12 months pursuant to Policy Statement 17 to support developers throughout the course of the COVID-19 pandemic [for further details, please see our previous blog post on this topic]. The permanent amendments to Policy Statements 5 and 6 are effective May 1, 2021, on the heels of the expiration of Policy Statement 17 on April 30, 2021.
In its statement regarding the amendments to Policy Statements 5 and 6, the SRE recognizes that developments and approval requirements are becoming more complex, resulting in lengthier timelines to obtain building permits and construction financing. The intent of these amendments is to support the development community in completing developments and in turn, consumers that are interested in acquiring homes.
Of note and in line with the previous Policy Statement 17, the amendments extend the early marketing period from 9 to 12 months while all of the other provisions in Policy Statements 5 and 6 remain unchanged. This means, among other things, that purchasers are still entitled to cancel their purchase agreements under specified conditions outlined in Policy Statements 5 and 6 if a building permit and/or a satisfactory financing commitment is not received within the 12 month timeline.