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Limitations on Acquisition of Canadian Real Estate

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Limitations on Acquisition of Canadian Real Estate Aquilina Law November 29, 2022

Limitations on Acquisition of Canadian Real Estate

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In the face of ever-greater demand for housing and skyrocketing house prices, the federal government decided earlier this year to impose a moratorium on the purchase of certain immoveable assets by foreign buyers.  The Prohibition on the Purchase of Residential Property by Non-Canadians Act (the “Act”) will be in force for a two-year period starting on January 1, 2023.[1] As of this date, non-Canadian persons are prohibited from purchasing residential property in Canada. The Act is a rather concise piece of legislation since much of the details are projected to be included in the accompanying regulation(s).  A few of its key points are:

Private corporations incorporated under Canadian laws are considered “non-Canadian” if the ultimate beneficial owner(s) is(are) non-Canadian.

“Residential properties” is partially defined to seemingly exclude larger real estate projects.  The Regulations are meant to expand on what sort of dwellings will be regulated.

The purchase prohibition does not apply if the non-Canadian becomes liable or assumes liability under an agreement of purchase and sale of the residential property before January 1, 2023.   There is therefore one month left for non-Canadian purchasers to secure the purchase of residential real estate though the closing can occur next year and beyond. 

Every non-Canadian that engages in a prohibited purchase and every person that counsels or induces such pperson, such as a lawyer, notary or real estate agent, is guilty of an offence and liable to pay a fine of not more than CAD $10,000.  Also, the Superior Court of the province in which the residential property to which the contravention relates is situated may, on application of the Minister of Housing and Diversity and Inclusion, order the residential property to be sold.

[1] Prohibition on the Purchase of Residential Property by Non-Canadians Act, SC 2022, c 10, s 235.

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