Real Estate Development

Real Estate Development can take many forms, from the simple stratification of a existing duplex property to a multi-tower mixed use high rise building. During the real estate development process, the developer, the bankers, the neighbours, the local government, and ultimately the new home purchasers will want assurances that the planned development proceeds in the best interests of all stakeholders. Early engagement of your lawyer is often of great assistance to help a development project complete in a timely manner.

One of the most basic type of development is RU6 infill housing. For more information about this process in the City of Kelowna, click here.

Generally the steps in a development project are as follows (click on the links below to get more information):

  1. Know the area. Obtain the Official Community Plan (“OCP”), this will assist is determining whether your proposal shares the same vision as the community’s officials.
  2. Form a Development Company or Joint Venture. Discuss your plans with both your accountant and lawyer (preferably at the same time) as structuring of a real estate development company or joint venture must consider both the inherent legal risks of the development business and tax consequences which will result from a successful venture.
  3. Acquire rights to the lands.  Although a standard cash or financed purchase can be done, often the business requirements of Development requires that: Options to Purchase or Vendor Take Back Financing or other legal mechanisms be used.
  4. Investigate Title. Prior to removal of all subject conditions, a consolidated survey plan should be obtained along with a legal title review to determine the local and obligations associated with all charges on title to ensure a feasible project.
  5. File Applications with Provincial and Local Government and Agencies. These may include OCP Amendments, Applications for Subdivision, Agricultural Land Reserve Applications, Bylaw and Zoning Amendment Applications, and Development Permit Applications.
  6. Review of Preliminary Layout Review Letter.
  7. Payment of Development Cost Charges and Off-Site Contributions levied by local municipalities.
  8. Filing of a Disclosure Statement to allow Pre-Sales. This is a requirement of the Real Estate Development and Marketing Act (“REDMA”) which is consumer protection legislation administered by the Superintendent of Real Estate, a division of the Financial Institutions Commission of BC.  A disclosure statement, which is prepared by your lawyer, is required for most sales of real estate where a land title has not yet been raised by the BC Land Title Office.
  9. Institutional Financing. Generally a certain level of pre-sales are required for the institutional lenders (banks) to lend money to a project. The percentage of sales required will be dependant on the type of project and the financial strength of the Developer. It is important that any development financing allows for the partial discharges upon completion of sales to new home Buyers.
  10. Sales to Home Buyers. Following the raising of titles to the property in the Land Title Office, the Buyers under pre-sale contracts will notified and complete on their Purchase. Most often funds are first allocated to the paying down of institutional financing and therefore it is not until the financing is fully paid out that proceeds are available to the Developer.