Prohibition of non-Canadians

On January 1, 2023, the Prohibition on the Purchase of Residential Property by Non-Canadians Act came into force. Anyone dealing in residential real estate must be aware that the act prohibits non-Canadians from purchasing, directly or indirectly, any residential property. It is also an offense to counsel, induce, aid, abet, or attempts to counsel, induce, aid, or abet a non-Canadian to purchase residential property. The penalty is a maximum fine of $10,000.00.

Some situations will be obvious; however, others will not be. For instance, it is prohibited for a corporation to purchase residential real estate if 3% or more of its shares are owned either directly or indirectly by a non-Canadian or actual control of the corporation is with a non-Canadian through ownership, agreement, or otherwise.

Whether a corporation is prohibited from purchasing residential real estate will not be clear, so it is important to know who you are dealing with, whether partners, investors, or parties you might assign agreements to, before doing so. Putting any fines aside, if a transaction is discovered to be prohibited under the act, the contract is still valid, however no one would be able to assist you in closing the deal, meaning a lawyer could not be retained to close the deal. This could open you to significant liability and damages.

It is equally important to evaluate your own corporations to make sure that you are not prohibited from purchasing residential real estate to avoid any fines and closing issues.

When in doubt, reach out to your lawyer, their bill will be far less than $10,000.00.  

-Lange Khokhar Law, Chris Lange