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December 14, 2023

A non-Canadian who enters into a contract for the purchase of residential property and becomes liable to complete the purchase before January 1 is also exempted from the ban, whether the sale actually completes before or after January 1.

Purchase of Residential Real Estate Restricted on January 1, 2023

The Prohibition on the Purchase of Residential Property by Non-Canadians Act (the “Act”) comes into effect on January 1, 2023. The Act, which will remain in force for two years, bans most non-Canadians from purchasing residential property in Canada while it is in force.

To understand the scope of the Act, it is important to understand the term “non-Canadian” as the Act defines it. A non-Canadian is a person who is neither a Canadian citizen, a permanent resident of Canada, nor a person registered as an Indian under the Indian Act. Foreign corporations, as well as Canadian (and provincial) corporations controlled by non-Canadians, are also defined as non-Canadian. Residential property includes detached homes, condos, townhouses, and all other structures constructed for the purpose of residential housing. A non-Canadian who purchases residential property while the Act is in force will be subject to penalties, which include a fine of up to $10,000 on conviction, and a forced sale of the property. Lawyers and real estate professionals who aid in the purchase of property in contravention of the Act are also subject to a fine of up to $10,000 on conviction.

The Act does contain some exemptions. The ban will not apply to a person who purchases residential property with their spouse or common-law partner who is a Canadian citizen, permanent resident, or who is otherwise not prohibited from purchasing residentialproperty under the Act. The ban will also not apply to refugees or to certain temporary residents. A non-Canadian who enters into a contract for the purchase of residential property and becomes liable to complete the purchase before January 1 is also exempted from the ban, whether the sale actually completes before or after January 1.

The Government of Canada has not yet published the regulations to the Act as of November 8, 2022. The regulations, when published, will specify the types of temporary residents who are exempted from the ban. The regulations may also limit the ban to certain geographical areas, such as the metropolitan areas of major cities. Notably, the Act does not affect the validity of contracts or purchases made by non-Canadians. A non-Canadian may therefore be able to enter into and complete a sale while the ban is in force, only to be convicted after completion. If you are considering a purchase of residential property and you are caught within the definition of non-Canadian, it is vital that you be aware of the Act and the ways in which it will impact you.