New Disclosure Statement Rules

We have recently received a notice from the Superintendent of Real Estate advising of the issuance of two new Policy Statements which require developers to include further information in disclosure statements or amendments filed on or after November 1, 2007.  We wish to draw these to your attention at this time in order to allow you to gather any information needed prior to filing your disclosure or amendment.  We will be pleased to explain these requirements and provide advice to you as necessary. 

Policy Statement 14 applies where the subdivision plan creating the [development units] being marketed has not been deposited, and/or the buildings, utilities and/or other services for the development have not yet been completed.  There must be a prescribed disclosure of this fact on the front page of the Disclosure Statement, the purchaser must initial this page confirming they are aware of this fact, and the text must describe, in relation to the Purchase Contract whether there are:
-Provisions for termination;
-Provisions allowing for extension of time for completion, whether developer or purchaser may require or refuse extension and if developer may seek fee or increased purchase price in order to agree to an extension and any other extension provisions; 
-Provisions for assigning to new purchaser, and whether developer may refuse assignment or seek fee for agreeing to an assignment; 
-Provisions for purchaser or developer to receive deposit monies interest.  
-In addition this Policy Statement requires that we exhibit to the Disclosure Statement any purchase agreement or addendum containing such provisions.

Policy Statement 15 provides that the following information must now be provided  regarding the directors, officers and Principle Holders (being any person holding directly or indirectly more than 10% of any class of voting securities of a developer if it is a corporation, including each corporation in a joint venture or partnership).  The Developer must:

1. Disclose, to the best of the developer’s knowledge, the nature and extent of the experience that the developer and its officers and directors have in the development industry.  This disclosure should include the number of years of experience of the developer and its officers and directors, and the types of previous development properties. 
2. Disclose, to the best of the developer’s knowledge, whether the developer, any principal holder of the developer, or any director or officer of the developer or principal holder, within the ten years before the date of the developer’s declaration attached to the disclosure statement, has been subject to any penalties or sanctions imposed by a court or regulatory authority, relating to the sale, lease, promotion, or management of real estate or securities, or to lending money secured by a mortgage of land, or to arranging, administering or dealing in mortgages of land, or to theft or fraud, and describe any penalties or sanctions imposed. 
3. Disclose  to the best of the developer’s knowledge, whether the developer, any principal holder of the developer, or any director or officer of the developer or principal holder, within the five years before the date of the developer’s declaration attached to the disclosure statement, was declared bankrupt or made a voluntary assignment in bankruptcy, made a proposal under any legislation relating to bankruptcy or insolvency or has been subject to or instituted any proceedings, arrangement, or compromise with creditors or had a receiver, receiver manager or trustee appointed to hold the assets of that person. 
4. Disclose to the best of the developer’s knowledge, whether any director, officer, or principal holder of the developer, or any director or officer of the principal holder, within the five years prior to the date of the developer’s declaration attached to the disclosure statement, has been a director, officer or principal holder of any other developer that, while that person was acting in that capacity, that other developer
a) was subject to any penalties or sanctions imposed by a court or regulatory authority relating to the sale, lease, promotion or management of real estate or securities, or to lending money secured by a mortgage of land, or to arranging, administering or dealing in mortgages of land, or to theft or fraud, and describe any penalties or sanctions imposed, or 
b) was declared bankrupt or made a voluntary assignment in bankruptcy, made a proposal under any legislation relating to bankruptcy or insolvency or been subject to or instituted any proceedings, arrangement or compromise with creditors or had a receiver, receiver manager or trustee appointed to hold its assets. 

In addition the Disclosure Statement must include a description of any existing or potential conflicts of interest among the developer, manager, any directors officers and principal holders of the developer and manager, any directors and officers of the principal holders and any person providing goods or services to the developer, manager or holders of the development units in connection with the development which could reasonably be expected to affect the purchaser’s purchase decision.

For more information on this topic contact Pushor Mitchell