23 November 2022
Prohibition on the Purchase of Residential Property by Non-Canadians Act
By: Diana Lyrintzis
As of January 1, 2023, the Prohibition on the Purchase of Residential Property by Non-Canadians Act comes into force and foreign persons and entities will be prohibited from purchasing residential property in Canada. This measure is part of the federal government’s fight against unproductive ownership of real property and against the appropriation of residential property by non-Canadians, in order to facilitate access to residential property for Canadians.
It is intended that this ban be temporary, expiring on its own after two years.
Specifically, the prohibition will apply to the purchase, direct or indirect, either of residential units in a building or of entire buildings counting 3 or fewer residential units, by individuals who are not Canadian citizens, permanent residents or indigenous persons considered to be “Indians” within the meaning of the Indian Act, as well as by foreign companies or foreign-controlled Canadian companies.
The Prohibition on the Purchase of Residential Property by Non-Canadians Act does, however, provide for exceptions and exemptions, including for temporary residents, refugees and otherwise protected persons, purchases by foreign governments for diplomatic or consular purposes, and any purchase for which a non-Canadian has become liable in virtue of a purchase agreement executed prior to January 1, 2023.
Violating the ban will not affect the validity of an illegal sale, but will subject the non-Canadian purchaser, and any person having assisted while knowing the purchaser to be restricted, to a fine of up to $10,000. In addition, the contravening purchaser may be subjected to a court order to resell the residential property, in which case the purchaser will be prohibited from making any profit and receiving, from the proceeds of the resale, any amount in excess of the initial purchase’s price.
Since the Prohibition on the Purchase of Residential Property by Non-Canadians Act provides for several definitions, exemptions, conditions and circumstances are to be prescribed by regulations, multiple unknowns will persist until such regulations are published by the federal government.