The Ontario Securities Commission (OSC) has ruled that trades by BMR GP Inc. and its licensed real estate agents in condohotel units included in a rental program are exempt from sections 25 and 53 of the Securities Act (Ontario), provided certain disclosures are made to purchasers before they enter into an agreement of purchase and sale. This decision is based on the following key points:
1. **Background**: BMR GP Inc., a subsidiary of Freed Corp., is developing condohotels on land adjacent to Blue Mountain Ski Resort. These units will be sold with the option to participate in a rental program managed by BMR or its affiliates.
2. **Disclosure Requirements**: Before entering into a purchase agreement, initial purchasers must receive a comprehensive disclosure document, including details about the project, rental management agreements, risk factors, and financial obligations. Purchasers also have a 10-day rescission period under the Condominium Act.
3. **Rental Program**: Owners of condohotel units must enter into rental management or pooling agreements, which mandate the rental of units for a specified period each year. The agreements outline the responsibilities of the property manager and the financial arrangements for revenue and expense sharing.
4. **Financial Reporting**: The rental management agreements require regular financial reporting to unit owners, including audited annual financial statements and interim unaudited financial statements.
5. **Subsequent Sales**: For subsequent sales of condohotel units, sellers must notify the property manager and provide prospective buyers with updated financial information and a summary of the initial disclosure document.
6. **Exemptions**: The OSC granted exemptions from sections 25 and 53 of the Securities Act, provided the above conditions are met. Additionally, the ruling includes confidentiality provisions to protect sensitive information until marketing begins or 90 days after the decision.
The ruling ensures that purchasers are well-informed and protected, aligning with the requirements of the Securities Act, Condominium Act, and Real Estate and Business Brokers Act.