Prohibition on the Purchase of Residential Property by Non-Canadians Act

Beware:  Prohibition on the Purchase of Residential Property by Non-Canadian will take effect soon!

Due to the skyrocketing housing prices, the Government of Canada has passed the “Prohibition on the Purchase of Residential Property by Non-Canadians Act” (“the Act”).  This Act will come into force on January 1, 2023 and would be valid for a two-year period or until December 31, 2024.   Purchasers, developers and real estate agents must be aware of the restrictions in order to ensure compliance with the Act.  Some of the key points of the Act are as follows:

Exceptions

The Act does not apply to the following:

  1. Canadian Citizens and Permanent Residents;
  2. A Temporary resident within the meaning of the Immigration and Refugee Protection Act who satisfies prescribed conditions;
  3. A protected person within the meaning of subsection 95(2) of that Act;
  4. An individual who is a non-Canadian and who purchases residential property in Canada with their spouse or common-law partner if the spouse or common law-partner is a Canadian citizen, person registered as an Indian under the Indian Act, permanent resident or person referred to in paragraph (b) or (c); or
  5. A person of a prescribed class of persons.

There are other exceptions in prescribed circumstances and foreign states for purchases of diplomatic or consular purposes.

The Act is not clear as to the prescribed class of persons or prescribed circumstances.  The full extent of the Act, scope, restrictions and exceptions will be clearer once the Regulation has been released.

Residential Property Types

The properties included are the following:

  1. A detached house or similar building, containing not more than three dwelling units (residential unit with private kitchen facilities, bath and living area);
  2. Part of a building that is intended to be a separate parcel or other division of real property or immovable including a semi-detached house, rowhouse unit, residential condominium unit or other similar premises;
  3. Any prescribed real property or immovable.

Violations

Violation of the prohibition of the Act, counseling, inducing, aiding or abetting or attempting to do the same makes one guilty of an offence and liable on summary conviction, to a fine of not more than $10,000. A non-Canadian who is convicted of violating this prohibition, in addition, may be forced to sell the property for no more than the purchase price as it was obtained.

Beware:

If you are involved with a purchase of a residential property (be as a developer, realtor, lawyer, mortgage broker, etc.), it is incumbent upon you to familiarize yourself with the prohibitions under the Act, as well as the upcoming Regulations.  Reasonable inquiries with your clients is highly advised.

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