**UPDATE** 2-Year Ban On Non-Canadian Home Buyers purchasing Residential Real Estate in Canada

home buyer, seller, non-canadian home buyer, foreign home ownership

2-Year Ban On Foreign Home Buyers purchasing Residential Real Estate in Canada

Starting January 1, 2023, the Canadian government is prohibiting non-Canadian home buyers from purchasing residential real estate property in Canada. The legislation was enacted by the government in an attempt to rein in constantly increasing home prices which have been significantly impacted by foreign home ownership. As a result, this ban will last till 2025 2027 under Prohibition on the Purchase of Residential Property by Non-Canadians Act (the Act).

Individuals buying or assisting people buying will need to keep certain things in mind in relation to this new legislation:

  1. Who Is Considered A Non-Canadian Home Buyer?

  • Individuals who are NOT Canadian citizens or permanent residents of Canada.
  • Corporations that are NOT incorporated in Canada.
  • Corporations that are incorporated under the laws of Canada or a province whose shares are not listed on a stock exchange in Canada for which a designation under section 262 of the Income Tax Act is in effect and is controlled by a person referred to in the previous points
    • NOTE: there is no definition of what control means at this time and we are waiting on legislation to provide us with more clarity on this matter.
  • Other persons and entities.
  1. Who Is NOT Considered A Non-Canadian Home Buyer and Is Able to Buy Property? 

    • Temporary Residents as defined in the Immigration and Refugee Protection Act
      • They hold the visa or other document required under the regulations and will leave Canada by the end of the period authorized for their stay; OR
      • a foreign national who is permitted to enter or remain in Canada as a student, worker, or a temporary resident permit holder
    • A protected person as defined in the Immigration and Refugee Protection Act
      • They are able to become a resident of Canada (permanent or temporary) as a result of needing protection
    • Someone who is a non-Canadian and purchases residential property in Canada with their spouse or common-law partner, who falls under one of the following:
      • A Canadian citizen;
      • A person registered as an Indian under the Indian Act;
      • A permanent resident;
      • Or a person mentioned in the previous 2 bullet points.
    • You are also able to continue buying property if you fall under one of the following:
      • Individuals who are Canadian citizens;
      • Individuals who are permanent residents of Canada; and
      • Corporations that are incorporated in Canada.
  1. What Is A Residential Property?

    • a detached house or similar building, containing not more than three dwelling units
      • NOTE: a dwelling unit is a residential unit that contains private kitchen facilities a private bath and a private living area
    • a part of a building that is a semi-detached house, rowhouse unit, residential condominium unit or other similar premises that are intended to be owned, apart from any other unit in the building
    • any other specified real property or immovable property that is in Canada.
  1. Will Existing Agreements Be Impacted?

    • Contracts that are closing prior to January 1, 2023, will likely not be impacted by this change.
  1. What Happens If You Do Not Follow The Act?

    • Assisting a non-Canadian home buyers in avoiding the prohibition could result in a guilty conviction of an offence and being liable for a fine of up to $10,000.
    • The non-Canadian home buyers convicted of contravening the Act may be forced to sell their property through an order by the superior court, Alberta Court of King’s Bench, and they would receive no more than the purchase price that they paid

What Happens Next?

There are still a lot of unknowns with this legislation. The federal government should likely provide more answers in the upcoming months. Until then there are a few things you can do to ensure that you do not unintentionally violate the Act:

  • Include more representations and warranties in the Offer to Purchase contracts regarding the non-Canadian status of buyers
  • Incorporate restrictions on assignments of contracts to non-Canadians as defined under the Act
  • Ensure that there are certain remedies in place if the Purchaser is a non-Canadian, such as the rights to terminate the contract
  • there are ways to protect yourself!

Help With Your Real Estate Transaction

If you are thinking of buying a home but are unsure whether the Act applies to you, please contact us. You should hire credible professionals to give you peace of mind that you are not going against the new legislation. Knowing the terms of the Prohibition on the Purchase of Residential Property by Non-Canadians Act can help. The experienced real estate lawyers at Kahane Law Office are happy to assist you with your real estate transaction. You can reach us at 403-225-8810 or email us directly here.