UPDATE: What You Need to Know About the NEW BAN on Residential Purchases for NON-Residents
March 6th, 2024 by Simon Reimer
In June 2022, the Canadian Prohibition on the Purchase of Residential Property by Non-Canadians Act received royal assent. The Act effectively bans the purchase of residential real estate for non-Canadians and imposes a fine to anyone who breaches it as a non-Canadian purchaser or as a person who assists a non-Canadian in purchasing residential real estate. This ban is set to take effect on January 1, 2023, and run for four years. (January 1, 2027)
The Act applies to everyone working in the real estate industry (including realtors and lawyers) and to people defined as non-Canadians in the Act. Lenders should also be cautious. Non-Canadians are non-citizens, individuals who do not hold permanent residency, or do not hold status as an Indian under the Indian Act. Non-Canadians include corporations that are not incorporated in Canada or corporations that are incorporated in Canada but are controlled by non-Canadian individuals. The Act bans these entities from purchasing residential real estate in Canada after January 1, 2023. If a contract is concluded prior to then, the Act does not appear to affect it.
Entities listed above cannot purchase residential real estate in Canada (with limited exceptions) and can be fined $10,000 if they do. Courts may also order the sale of affected property. Creating a Canadian corporation in an attempt to sidestep the restrictions is not allowed under the Act.
In addition, there are fines for assisting a non-Canadian in the purchase of residential real estate after January 1. The Act is very broad, and any attempt to circumvent the new rules will also be considered an offence. For example, lawyers and realtors can be fined $10,000 if they assist a non-Canadian to either directly or indirectly purchase or acquire a beneficial interest in residential real estate. Note that the ban does not extend to recreational properties (cottages) outside metropolitan areas, but the ban does appear to apply to residential vacant lots.
We understand that you may have questions about finer details of this legislation. The regulations have not yet been released, and once released may clarify some of the ambiguities in this legislation. For now, the Act remains vague or silent on many questions. Anyone uncertain about the Act’s effect on any particular transaction is urged to consult with a lawyer.
Notice: The articles on our website are provided for general information purposes only and should not be relied upon as legal advice or opinion. They reflect the current state of the law as at the date of posting on the website, and are subject to change without notice. If you require legal advice or opinion, we would be pleased to provide you with our assistance on any of the issues raised in these articles.
