The Instruments | Pre-Sale Deposits
Pre-Sale Multiplex Deposits in BC
Everything most people know about BC pre-sale protections, the deposit held in trust, the disclosure statement, the 7-day cooling-off period, comes from condo towers. Those rules live in REDMA, and REDMA switches on at 5 strata lots. A fourplex pre-sale sits below the line, and the rules that actually govern it are thinner than buyers assume and looser than developers admit.
The Short Version
- 01REDMA defines a development property as 5 or more strata lots. At 4 lots, its deposit and disclosure regime simply does not apply.
- 02On a 5-plus-lot project, deposits sit in trust with a brokerage, lawyer, or notary, and the buyer gets 7 days to rescind without a fee.
- 03On a fourplex, the buyer's statutory exit is the general 3-business-day rescission, and it costs 0.25% of the purchase price to use.
- 04Below 5 lots, who holds the deposit and when the developer can spend it are contract terms. Nothing standardizes them.
- 05Deposit staging (initial deposit, then more on milestones) is set by the agreement on every project size.
- 06For the developer, pre-sale contracts are financing evidence: construction lenders read them as proof the exit prices are real.
The Same 5-Lot Line, Again
BC law keeps drawing the same line through small multiplexes. Strata law exempts plans under 5 lots from depreciation reports. Financing switches from homeowner lending to CMHC MLI Select at 5 units. And REDMA's definition section makes a stratified building a development property at 5 or more strata lots. Build a sixplex and you market units under the full pre-sale regime. Build a fourplex and you do not.
| Protection | 5+ strata lots (REDMA applies) | 4 or fewer (REDMA does not) |
|---|---|---|
| Statutory rescission (cooling-off) | 7 calendar days, no fee (REDMA s. 21) | 3 business days, and walking away costs 0.25% of the price (Property Law Act s. 42) |
| Deposit must sit in trust | Yes, with a brokerage, lawyer, or notary (REDMA s. 18) | No REDMA requirement. Whoever the contract names holds it, on the contract's terms |
| Developer can spend the deposit | Only with a deposit protection contract in place (REDMA s. 19) | Whatever the contract allows |
| Mandatory disclosure statement | Yes, filed before marketing (REDMA s. 14, 15) | No REDMA disclosure obligation |
Sources: REDMA on BC Laws, Property Law Act s. 42, and the Home Buyer Rescission Period Regulation. This page describes the statutes; it is not legal advice, and a pre-sale contract should be reviewed by a BC real estate lawyer either way.
What REDMA Requires When It Does Apply
Deposits go to a trustee, not the developer
Section 18 requires the developer to promptly place each deposit with a brokerage, lawyer, or notary public, held in a trust account at a BC savings institution. The trustee holds the money for both parties, not as the developer's agent.
Spending deposits requires insurance
A developer who wants to use deposit money for the project must first put a deposit protection contract in place under section 19, a form of insurance that protects the buyer if the project fails, and must notify the buyer it exists.
Seven days to walk away, no fee
Section 21 gives the buyer 7 days to rescind, counted from the later of signing the agreement or acknowledging the disclosure statement. Rescind in time and the trustee must promptly return the deposit in full.
A filed disclosure statement before marketing
Sections 14 and 15 require the developer to file a disclosure statement with the regulator before marketing, plainly disclosing all material facts without misrepresentation, and to get the buyer's written acknowledgement of it before any agreement binds.
Buying Into a Fourplex: What Replaces REDMA
Since January 3, 2023, BC buyers of most residential property get a rescission right under section 42 of the Property Law Act: 3 business days after acceptance to walk away, for a fee of 0.25% of the purchase price. The same section says the right does not exist where REDMA's 7-day rescission applies, so the two regimes never stack. One or the other applies, decided by lot count.
Everything else on a sub-5-lot pre-sale is contract. Who holds the deposit: a term. Whether it sits in a lawyer's trust account or the developer's operating account: a term. Whether the developer can spend it on construction: a term. What happens if completion slips a year: a term. A buyer who would be protected automatically on a condo tower has to negotiate each of these on a fourplex, which is why the practical advice is short: insist the deposit be held in a lawyer's or brokerage's trust account, and have the contract reviewed before signing, not after.
For developers, the same looseness cuts the other way. Selling four strata homes without REDMA filings is administratively lighter, but buyers' lawyers know the gap, and a contract that treats deposits casually reads as a red flag that costs sales. Matching REDMA-style trust handling voluntarily is cheap credibility.
Best For
- ✓ Buyers entering a multiplex pre-sale who need to know which protection regime they are actually in
- ✓ Developers choosing between 4 and 5-plus strata lots, since the pre-sale obligations change at the line
- ✓ Builders using pre-sale contracts as evidence to unlock construction financing
Usually Fails When
- ✕ A fourplex buyer assumes tower-style protections apply and skips the contract review
- ✕ A developer treats sub-5-lot looseness as licence to hold deposits personally, and loses buyers over it
- ✕ Anyone relies on this page instead of a BC real estate lawyer for an actual transaction
What To Verify Before Spending Money
- → The strata lot count on the filed or proposed plan, because it decides the whole regime
- → Who the contract names as deposit holder, and what kind of account the money sits in
- → Whether a deposit protection contract exists before a developer touches deposit funds on a REDMA project
- → The rescission clock dates in writing: acceptance date, disclosure acknowledgement date, or both
Common Questions
Does REDMA protect my deposit on a fourplex pre-sale? +
Generally not. REDMA defines a development property as 5 or more strata lots in a stratified building, so a 4-unit strata plan falls below the threshold and the Act's deposit trust, disclosure, and 7-day rescission provisions do not apply to it. Your protections come from the contract you sign and from the general 3-business-day home buyer rescission period. This surprises almost everyone, and it is worth a lawyer's review before you sign anything.
What protections do apply below 5 units? +
The Home Buyer Rescission Period under section 42 of the Property Law Act: 3 business days to rescind after acceptance, for a fee of 0.25% of the purchase price, in force since January 3, 2023. Beyond that, the purchase contract governs: who holds the deposit, in what kind of account, when the developer can touch it, and what happens if completion is late. None of those terms are standardized by statute at this size, which makes the contract review the whole game.
How are deposits staged on a BC pre-sale? +
In steps set by the purchase agreement: an initial deposit when the contract firms up, and one or more later deposits on dates or milestones the contract names. The staging itself is a negotiated term, not a statutory schedule. REDMA acknowledges the practice for 5-plus-unit projects, since its section 19 deals with a purchaser who fails to pay a subsequent deposit required by the agreement.
Can the developer use my deposit to build the project? +
On a REDMA project (5 or more lots), only if a deposit protection contract, a form of deposit insurance, is in place under section 19, and you have been given notice of it. Otherwise the deposit stays in trust. On a sub-5-unit project REDMA does not apply, so the answer is whatever the contract says, which is exactly why that clause deserves attention before signing.
Why do deposits matter to the developer's lender? +
Pre-sales are evidence the units will sell at the prices in the proforma, and construction lenders read deposit-backed contracts as commitment. Even when the deposit money itself stays locked in trust until completion, the signed contracts behind it can be a condition of the construction loan advancing at all.
Related Reading
Official Sources Referenced
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