A few years ago the Bambu development on Vancouver Island was cancelled.

When the plug was pulled on Riverbend last year, you might have thought that it would be big enough to get some real legislative changes made, especially after making national news:
http://www.ctv.ca/servlet/ArticleNews/story/CTVNews/20070507/BC_homeowners_070507.

Well now the Eden Group of Companies has cancelled 3 projects; big enough again for national news coverage: http://www.cbc.ca/canada/british-columbia/story/2008/02/27/bc-condosintrouble.html.

"If a proposed development does not proceed and the purchase contract is terminated, pre-sale purchasers are entitled to have their deposit money repaid. However, unless the pre-sale contract requires interest to be paid, the purchaser may not receive interest on that deposit." http://www.hpo.bc.ca/PDF/Bulletins/Pre-Sale.pdf.

If a termination clause is necessary at all, and it shouldn't be, there needs to be a rigourous funding qualification process and standard for the developer to meet, just as is forced on the buyer with a low down-payment.  

A first time home buyer (FTHB) in Canada with less than 20% down is put through a rigorous means test to qualify for a mortgage.  The FTHB is then required to pay mortgage loan insurance premiums to protect the big banks (lender).

Isn't that big of government to provide such a safety net through the Canadian Bank Act to protect the big banks!  Why is there no safety net to protect the general public?

If banks can get mortgage insurance protection, why can't the consumer get insurance protection for high-risk developers? Surely the interests and protection of the consumer should be first?

Do you think that builders dealing with multi-million dollar developments should also be required to:
a)       prove their ability to qualify for development financing through a rigorous means test?
b)       pay an insurance premium to protect consumers who invest in a pre-sale property?

If the banks do their due diligence surely the likelihood of builders going belly-up should be remote.

John in Port Moody, BC

Real Estate Evolved