There is a new Act, the “Prohibition on the Purchase of Residential Property by Non-Canadians Act” which will have an impact upon real estate transactions.
Starting 1 January 2023 and for a period of two years (at this moment), non-Canadians cannot buy residential real estate in Canada, anywhere, at any time, for themselves, directly or indirectly or through a corporation.
If they do, then, there’s a $10,000.00 fine and the Court will order the property to be sold at the price the non-Canadian paid for it. So, no possibility of making a profit.
The legislation is designed to prevent non-Canadians from participating in the housing market and bidding up prices. This is seen by the Federal Government to help keep prices in-check and make housing more affordable.
Obviously, the Federal Government is unaware of the 20% plus decline in the market since February 2022 due to rising interest rates.
Let’s have a look at the section that covers real estate agents:
Offence
6 (1) 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.
So, it says quite clearly:
“every person or entity
that counsels, induces, aids or abets or attempts to counsel, induce, aid or abet”
Remember that this Act only applies to residential properties. So, a non-Canadian can still purchase anything else. Encourage them to buy a commercial property. That will still be fine, and hopefully, two years hence, in January 2025, they can buy a residential property.
While there is a risk of exposure to a $10,000.00 fine under this Act, there is also the risk of discipline under the Real Estate and Business Brokers Act, 2002 with a $50,000.00 fine and possible suspension or termination of an agent’s registration under the Act.
And, don’t forget that a husband and wife count as two non-Canadians, so double all the fines etc.
Brian Madigan LL.B., Broker
Comments 2
Will this Act and ruling be applicable to Lawyers who process the closing or are they still protected by Client Confidentiality?
Author
Lawyers provide “counsel”, so it certainly looks like they would be caught.