The Prohibition on the Purchase of Residential Property by Non-Canadians Act, effective since Jan. 1, 2023, was extended until the start of 2027 on Feb. 4, 2024. This legislation restricts foreign corporations and non-Canadian citizens from buying residential property in Canada.

Jeff Kahane recently updated our members on the Foreign Buyer Prohibition changes where he shared valuable insights about the Act. Given this latest extension stretching the ban to 2027, it's crucial that CREB^® members be aware of the Act's implications for dealing with non-Canadian clients.

What is a “non-Canadian” according to the Act?

Foreign buyers include:

1. Non-Canadian citizens or non-permanent residents.
2. Corporations that are not incorporated in Canada.
3. Have Canadian ownership less than 50% and any Canadian corporation or an entity with 10% or more direct or indirect ownership of shares or ownership interests by non-Canadians.

The Federal Government has also laid out exemptions to the Act.

These exemptions include:

1. Temporary Residents (including Student & Work Permits) as defined in the Immigration and Refugee Protection Act
2. Foreign nationals who hold a passport with a valid diplomatic/consular/ official/special representative.
3. Temporary resident status was granted based on public policy considerations to provide safety to those fleeing conflict.
4. Persons that have made a claim for refugee protection and that claim has been found eligible.

What are the Penalties for not following the Act?

If a member assists a non-Canadian in the purchase of a residential property, the penalty could result in:

1. Guilty conviction of a summary conviction offence
2. Liable for a fine of up to $10,000.00
3. RECA licensing penalties
4. Prohibited from entering the United States

The convicted non-Canadian may be forced to sell the property as ordered by the courts (ex. Alberta Court of King’s Bench), and they shall receive no more than the purchase price that was paid.

How can CREB® members protect themselves?

For members to protect themselves from possible penalties, it is recommended that members input more representations and warranties in the offer to purchase when dealing with a non-Canadian buyer. Member can look to include terms such as:

1. Confirmation that the buyer will remain in Canada at the time of possession of the property.
2. Confirmation that has the legal right to buy the property.
3. Confirmation that the buyer is not a non-Canadian under the Prohibition on the Purchase of Residential Property by Non-Canadians Act.

Furthermore, members should be vetting the identification of non-Canadian buyers more extensively. Assessing current Canadian passports, permanent resident cards and details pertaining to their visa or temporary resident card will be vital in determining the status of your client. Suppose there are ever any unanswered questions or red flags that may come up in this step. In that case, it is strongly recommended that you refer your client to an immigration lawyer to confirm if they are excluded from the prohibition.

For further reading relating to the Prohibition on the Purchase of Residential Property by Non-Canadians Act, please visit Prohibition on the Purchase of Residential Property by Non-Canadians Act | CMHC (cmhc-schl.gc.ca) or What must I know about the Foreign Buyer Ban? (albertarealtor.ca).