The Prohibition on the Purchase of Residential Property by Non-Canadians Act: What You Need to Know

Have you heard about the new Prohibition on the Purchase of Residential Property by Non-Canadians Act that's set to take effect on January 1, 2023? This new law is going to have a big impact on who can buy residential property in Canada, and it's important for everyone to know the details.

The Act prohibits individuals who are not Canadian citizens or permanent residents from purchasing residential property in Canada for a period of two years. This prohibition also applies to corporations that are not incorporated in Canada or are controlled by non-Canadians. While this law doesn't directly impact the provision of real estate services or mortgage lending, it does introduce some restrictions on future agreements of purchase and sale of residential property that regulated entities should be aware of.

So, if you're a non-Canadian looking to buy a home in Canada, you'll want to read on to find out how this new law could affect you. And if you're a regulated entity, this is definitely something you'll want to know about to ensure you're providing the right advice to your clients. Let's take a closer look at the details of this new law.

The law defines residential property as detached homes or similar buildings of one to three dwelling units, as well as parts of buildings such as semi-detached houses, strata units, or other similar premises. If you're found to be in violation of this law, you could be subject to penalties and, in some cases, even a court-ordered sale of the property you purchased.

There are some exemptions to this law, though. For example, refugees, individuals who purchase residential property with their spouse or common-law partner (provided the spouse or common-law partner is eligible to purchase residential property), and temporary residents in Canada who satisfy certain conditions are exempt from the prohibition.

If you're a regulated entity, it's important to review this law and make sure you understand how it applies to you and your clients. You should also be aware that if you "counsel, induce, aid or abet" a non-Canadian to purchase residential property, you could be found guilty of an offense and liable for a fine of up to $10,000. So, make sure to do your due diligence and advise your clients to seek legal advice if they're unsure of how this law applies to them.

Once the regulations supporting this law are released, be sure to review them to understand the exemptions and the full scope of the prohibition.

We will be sure to keep you updated as more information becomes available. In the meantime, if you have any questions, don't hesitate to reach out.