The Prohibition on the Purchase of Residential Property by Non-Canadians Act (the "Act"), which came in force on January 1, 2023, regulates the acquisition of residential properties by foreign individuals. This law aims to ensure that residential properties primarily benefit Canadian citizens and residents. The Act does not apply to multi-residential and commercial properties. Let's dive deeper into the key provisions of this Act and its implications.
Prohibition on Purchase
Section 4(1) of the Act explicitly states that non-Canadians are prohibited from directly or indirectly purchasing any residential property in Canada. This means that individuals or entities who do not fall within the specified categories cannot buy residential properties within the country.
Exceptions to the Prohibition
While the Act establishes a general prohibition, it also recognizes certain exceptions in Section 4(2). These exceptions include:
(a) Temporary residents: Non-Canadians who hold temporary resident status as defined by the Immigration and Refugee Protection Act and meet certain prescribed conditions.
(b) Protected persons: Individuals recognized as protected persons under the Immigration and Refugee Protection Act.
(c) Spouses or common-law partners: Non-Canadian individuals who purchase residential property jointly with their spouse or common-law partner, provided that the spouse or partner falls into one of the exempt categories—Canadian citizen, registered Indian, permanent resident, or qualifying under the other exceptions.
(d) Prescribed classes of individuals: Individuals belonging to a class prescribed by regulation may also be exempt from the prohibition.
Further Exceptions and Validity
Section 4(3) allows for additional exceptions to be specified through regulations. It is important to stay updated with any prescribed exceptions that may apply.
Additionally, Section 4(5) clarifies that the prohibition does not apply if a non-Canadian assumes or becomes liable under an agreement of purchase and sale for the residential property before the Act comes into force. This provision aims to protect agreements made prior to the implementation of the Act.
Offences and Penalties
Section 6(1) outlines the consequences for non-Canadians who violate the prohibition on purchasing residential property. It is an offence for non-Canadians to contravene Section 4 or for individuals or entities to counsel, induce, aid, or abet a non-Canadian in purchasing property while being aware of the prohibition. Those found guilty of such offences can face fines of up to $10,000 upon summary conviction.
Corporate Liability
Section 6(2) establishes that if a corporation or entity commits an offence, individuals in positions of authority within that organization, such as officers, directors, agents, or senior officials, can also be held liable for the offence. This provision ensures accountability for those who directed, authorized, assented to, acquiesced in, or participated in the prohibited purchase of residential property.
Corporations who are incorporated in Canada and controlled by a Canadian resident or citizen (i.e. at least 51% ownership) are not considered foreign entities under the Act.
Court Order for Sale
Section 7(1) empowers the superior court of the province in which the residential property is situated to order the sale of the property under prescribed conditions and in a prescribed manner if a non-Canadian is convicted of contravening Section 4. This court order can be sought by the Minister responsible for the Act upon application. The purpose of this provision is to remedy the violation by ensuring the sale of the property.
For any questions regarding foreign purchasers of real estate, please contact our office.
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