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:
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