Understanding Contract & Construction Terminology
The world of presales has its own specific language. This glossary provides explanations of common contract and construction terminology to help you better understand the process from start to finish.
2-5-10 Home Warranty: A mandatory third-party warranty in B.C. that covers labour and materials (2 years), the building envelope (5 years), and major structural defects (10 years).
Amendment: A formal change to the Purchase Agreement or Disclosure Statement. Amendments must be provided to the buyer and may, in some cases, trigger a new rescission period.
Assignment: The transfer of a buyer’s rights and obligations under a Purchase Agreement to a new buyer before the building is completed.
Completion Date: The date when the title of the property is officially transferred to the buyer and the purchase funds are paid to the developer.
Deficiency Walkthrough: An inspection conducted by the buyer just before taking possession to identify any incomplete or deficient items in the new home.
Deposit: The portion of the purchase price a buyer pays to the developer in installments during the construction period. These funds are held in a trust account.
Disclosure Statement: A legal document provided by the developer that contains all material facts about the project, including building plans, budgets, and strata information.
Firm Agreement: A Purchase Agreement becomes “firm” after the seven-day rescission period has expired and all conditions have been met.
Goods and Services Tax (GST): A federal tax applicable to the purchase of new homes. A partial rebate may be available for qualifying buyers and properties.
Occupancy Date: The date when the buyer is permitted to move into the home. This may be slightly before or on the official Completion Date.
Presentation Centre: A sales office created by the developer to showcase the project, often featuring model suites, floorplans, and finishings.
Property Transfer Tax (PTT): A provincial tax paid by the buyer upon the completion and transfer of the property title. Exemptions may be available for first-time homebuyers.
Real Estate Development Marketing Act (REDMA): The key legislation in British Columbia that governs the marketing and sale of new developments. REDMA is designed to protect consumers by requiring developers to provide a comprehensive Disclosure Statement and guaranteeing buyers a seven-day rescission period after signing a purchase agreement.
Rescission Period: The mandatory seven-day “cooling-off” period in B.C., during which a presale buyer can cancel their Purchase Agreement without penalty.
Strata Corporation: The legal entity created to manage the shared property and assets of a multi-unit development. All owners are members.
Strata Fees: Monthly fees paid by owners to the strata corporation to cover the costs of managing and maintaining the common property (e.g., insurance, landscaping, amenities).
