• Important Reminder: PST/HST Transition: Developers/Builders/Vendors of New Housing
  • December 19, 2012 | Authors: Alana Dale-Johnson; Mark S. Thompson
  • Law Firm: Singleton Urquhart LLP - Vancouver Office
  • Important Reminder: PST/HST Transition: Developers/Builders/Vendors of New Housing
    Bill 56, the New Housing Transition Tax and Rebate Act and the New Housing Transition Tax and Rebate Regulations (“the Regulations”) impose time sensitive requirements on all Developers, Builders and Vendors of new housing:

    1. For Purchase and Sale agreements relating to new housing entered into from February 17, 2012 to November 30, 2012 where ownership is to be transferred after December 31, 2012, builders must provide an addendum to the purchaser which sets out the notice prescribed in the Regulations. This addendum must be provided to the purchaser on or before January 2, 2013.

    2. All agreements entered into from December 1, 2012 to March 31, 2015 must include the notice prescribed in the Regulations, (or if the agreement has been signed without the required notice, builders must provide an addendum to the purchaser to correct that deficiency).

    3. The contents of the addendum to be provided to purchasers vary and are particular to the facts and circumstances of the purchase agreement; builders are advised to review the Regulations to ensure that the appropriate information is conveyed in the addendum.

    4. There is no requirement that the purchaser signs the addendum, and the addendum does not, per se, add anything further to the agreement.

    5. Failure to comply with the above can result in significant penalties ranging from 1% of the purchase price (to a maximum of $10,000 per sale) to 4% of the purchase price (to a maximum of $40,000 per sale).

    6. The position of the Superintendent of Real Estate is that this requirement constitutes a change of a “material fact” as defined in the Real Estate Development Marketing Act (“REDMA”), and thus requires an Amendment to any issued Disclosure Statement to be filed and delivered to purchasers under the terms of REDMA. Because the Disclosure Statement often sets out GST/HST issues only in the proposed form of Purchase and Sale Agreement, this proposed form of agreement will require revision as part of the Amendment to an issued Disclosure Statement.

    Given the potential for significant penalties, we remind all Developers, Builders and Vendors of new housing to ensure that they have complied with the Act and the Regulations, as well as REDMA.