Beginning January 1, 2023, non-Canadians will be subject to a two-year ban on the purchase of

Certain residential real estate in Canada – and anyone who knowingly helps a non-Canadian buy a house could find themselves in hot water.

 

In an effort to make housing more affordable, the federal government introduced the Prohibition on

the Purchase of Residential Property by Non-Canadians Act in its 2022 Budget. The act received

Royal Assent as part of Bill C-19 on June 23, 2022, and is expected to come into force on January

1, 2023, prohibiting non- Canadians from directly or indirectly buying residential property in

Canada for a period of two years. (the “Ban”)

 

Broadly speaking, the Ban prohibits foreign corporations and individuals who are not permanent

residents of Canada or Canadian citizens from purchasing residential real estate in Canada between

January 1, 2023, and December 31, 2024. Any contractual obligations arising or assumed prior to

January 1, 2023, will not be subject to the Ban.

 

Certain key components of the Ban have yet to be determined and will be subject to additional

regulations (the “Anticipated Regulations”) expected later this year. For example, the classes of

persons exempt from the Ban and whether the Ban will apply to vacant land that could be subject to

residential real estate development in the future have yet to be determined, among other items.

 

Who Is Impacted by the Ban?

 

Beginning January 1, 2023, persons who meet the definition of “non-Canadian” under the Act will be

subject to the Ban, including:

 

•  corporations incorporated outside of Canada;

 

•  corporations “controlled” by foreign corporations or individuals who are not permanent

residents

•  of Canada or Canadian citizens (with “control” to be defined in the Anticipated Regulations);

 

• individuals who are neither a Canadian citizen nor a permanent resident of Canada; and

 

•  such other individuals and entities to be listed in the Anticipated Regulations.

 

Types of Property Affected

 

The Ban will apply to certain property located in Canada that meets the definition of “residential

property” under the Act, including:

 

• detached houses or similar buildings containing three dwelling units or less;

 

• a part of any building that is a rowhouse, semi-detached house, residential condominium or other

similar premises intended to be owned apart from other units in the building; and

 

• such other residential properties to be listed in the Anticipated Regulations.

 

Available Exemptions

 

Notwithstanding the Definition of “non-Canadian” set out in the Act, the Ban will not apply to the

Following persons:

 

• refugees;

 

• non-Canadian individuals who purchase residential real estate with a spouse or common

law-partner provided that their spouse or common law-partner is a Canadian citizen, a permanent resident of Canada, a person registered as an Indian under the Indian Act, or a refugee;

 

• temporary residents who meet certain criteria to be prescribed in the Anticipated Regulations;

and,

 

• such other classes or persons to be set out in the Anticipated Regulations.

 

Penalties and Enforcement

 

Notably, every person or entity who contravenes the Ban and every person or entity who knowingly

helps someone who is subject to the Ban buy a residential property will be guilty of an offense and

liable to be fined up to $10,000. Furthermore, any directors, officers, agents, mandataries, senior

officials or managers of a corporation or entity that contravenes the Ban may be held personally

liable if they direct, authorize, assent, or otherwise participate in contravening the Ban.

 

If a person or entity is found guilty of an offense under the Act, the Minister will have the

authority to apply to the local superior court to seek an order that the residential property be

sold in accordance with the Anticipated Regulations.

 

Because the offense provisions under the Act are not limited solely to the purchaser’s trial

properties, liability may arise for a plethora of persons involved in Canada’s residential real

estate industry, including sellers, real estate agents, developers, assignors, assignees, lawyers

and other professionals involved in any alleged contravention of the Act.

 

Moving Forward

 

Looking to the future, a variety of important details of the Ban have yet to be determined. We will

know more once the Anticipated Regulations are published by the Government of Canada. However, what

is clear based on the language of the Act is that those involved in the residential real estate

industry will need to be cautious and make reasonable efforts ts to identify non-Canadian buyers and

sellers who cannot utilize an available exemption under the Act.