Prohibition on the Purchase of Residential Property by Non-Canadians Act S.C. 2022, c. 10, s. 235 came into effect on January 1, 2023. This ban is meant to address housing affordability and property speculation concerns. This article provides an overview of this legislative enactment, its key provisions, and its potential impact on non-Canadian individuals and entities.

What is the Act, and why is the ban in Effect?

The “Prohibition on the Purchase of Residential Property by Non-Canadians Act,” or simply the Non-Canadian Buyers Act, is a new law in Canada designed to regulate who can buy residential properties. Its primary goal is to ensure that residential properties are primarily accessible to Canadian citizens and permanent residents.

Who is Prohibited Under the Act?

A non-Canadian is prohibited from purchasing, directly or indirectly, any residential property. Non-Canadian means:

(a) an individual who does not fall under the following categories:

• Canadian Citizen
• a person registered as an Indian under the Indian Act
• a permanent resident

(b) a corporation that is incorporated otherwise than under the laws of Canada or a province;

(c) a corporation 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 that is controlled by a person referred to in paragraph (a) or (b); and

(d) a prescribed person or entity. (non-Canadien)

Who is Exempt from the Ban?

The following individuals are exempt from the ban:

(a) a temporary resident within the meaning of the Immigration and Refugee Protection Act who satisfies prescribed conditions;

(b) a protected person within the meaning of subsection 95(2) of that Act;

(c) 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 (a) or (b); or

(d) a person of a prescribed class of persons.

Residential property is defined as any real property or immovable, other than a prescribed real property or immovable, that is situated in Canada and that is:

• (a) a detached house or similar building, containing not more than three dwelling units, together with that proportion of the appurtenances to the building and the land subjacent or immediately contiguous to the building that is reasonably necessary for its use and enjoyment as a place of residence for individuals;
• (b) a part of a building that is a semi-detached house, rowhouse unit, residential condominium unit or other similar premises that is, or is intended to be, a separate parcel or other division of real property or immovable owned, or intended to be owned, apart from any other unit in the building, together with that proportion of any common areas and other appurtenances to the building and the land subjacent or immediately contiguous to the building that is attributable to the house, unit or premises and that is reasonably necessary for its use and enjoyment as a place of residence for individuals; or
• (c) any prescribed real property or immovable. (immeuble résidentiel)

What are the Penalties?

Every non-Canadian that contravenes section 4 and every person or entity that counsels, induces, aids or abets or attempts to counsel, induce, aid or abet a non-Canadian to purchase, directly or indirectly, any residential property knowing that the non-Canadian is prohibited under this Act from purchasing the residential property is guilty of an offence and liable on summary conviction to a fine of not more than $10,000.

 If a corporation or entity commits an offence, any of the following persons that directed, authorized, assented to, acquiesced in or participated in the commission of the offence is a party to and liable for the offence whether or not the corporation or entity has been prosecuted or convicted:

• (a) an officer, director or agent or mandatary of the corporation or entity;
• (b) a senior official of the corporation or entity;
• (c) any individual authorized to exercise managerial or supervisory functions on behalf of the corporation or entity.

Implications

This Act has significant implications for non-Canadians purchasing residential properties in Canada. They need to understand the Act’s provisions, exceptions, and potential penalties for non-compliance.

Summary

Canada’s “Prohibition on the Purchase of Residential Property by Non-Canadians Act” represents a significant step in addressing housing affordability concerns and property speculation. While it restricts non-Canadian buyers, it also acknowledges specific circumstances where such purchases may be permitted.

For non-Canadian individuals and entities looking to invest in Canadian residential properties, seeking legal counsel to navigate this complex legal landscape is crucial. Additionally, understanding the Act’s exceptions and compliance requirements is essential to avoid potential penalties.

This legislation underscores Canada’s commitment to maintaining a stable and inclusive real estate market while safeguarding housing access for its citizens and permanent residents. As with any legal matter, staying informed and seeking professional advice is key to making informed decisions in this evolving landscape.

If you plan to buy a property in Toronto, seeking legal advice is essential to ensure you know all the current rules and regulations. A Toronto real estate lawyer can guide and advise you before you make a purchase decision and help you understand the legal implications of Canada’s ban on certain non-resident homebuyers.

The information provided above is of a general nature and should not be considered legal advice. Every transaction or circumstance is unique, and obtaining specific legal advice is necessary to address your particular requirements. Therefore, if you have any legal questions, it is recommended that you consult with a lawyer.