Prohibition on the Purchase of Residential Property by Non-Canadians Act

February 3, 2023

From Law Society of Saskatchewan and Saskatchewan Lawyers’ Insurance Association

On January 1, 2023, the Prohibition on the Purchase of Residential Property by Non-Canadians Act, S.C. 2022, c. 10, s. 235 came into force. Subsection 4(1) prohibits non-Canadians from purchasing, directly or indirectly, any residential property situated in Canada.

Further, and importantly for lawyers and other professionals involved in real estate transactions, the Act makes it an offence for any person or entity to counsel, induce, aid, or abet or to attempt counsel, induce, aid, or abet a non-Canadian in a prohibited purchase. Subsection 6(1) provides that anyone who assists in such a purchase is liable on summary conviction to a fine of not more than $10,000.

Who is a non-Canadian?

The definition of non-Canadian is important. For the purposes of the Act, “non-Canadian” includes individuals who are not Canadian citizens, nor persons registered as Indian under the Indian Act, nor permanent residents are non-Canadian. Corporations incorporated outside of Canada are non-Canadian.

The legislation sets out exceptions that allow for purchase of residential property by non-Canadians who are:

• temporary residents who are enrolled in designated learning institutions or hold a work permit and who satisfy prescribed conditions;
• protected persons within the meaning of the Immigration and Refugee Protection Act;
• non-Canadians who are purchasing residential property with their Canadian spouse; or
• prescribed persons such as diplomats.

Lawyers and other professionals involved in real estate transactions should review the Act and its Regulations and understand these definitions and exceptions.

How do I protect myself against an allegation that I aided a non-Canadian in acquiring residential real property?

Do your due diligence. In the usual case, the client identification and verification process is likely to bring to light any concerns about non-Canadian involvement in a transaction. When identifying and verifying your client:

• Pay close attention to the address and the type of identification that your client provides.
• If your client produces an immigration status document, review it carefully.
  • Check the expiration date.
  • Be aware that there are websites that sell counterfeit Canadian temporary resident visas, which look very realistic. Watch for inconsistent fonts, errors in French words, and watermarks that are superimposed over your client’s surname rather than underlying it. You can find descriptions and view examples of immigrant status documents on the Government of Canada website.

Consider adopting additional steps in your identification and verification process.  For example, some firms require clients to sign a simple form, which sets out the definition of non-Canadian, and states that the client is not a non-Canadian as defined. If a client is unable or unwilling to sign such a declaration, then further investigation is merited. The Canadian Real Estate Association and Saskatchewan Realtors^® Association have prepared a similar certification for purchasers.

What about our insurance?

The mandatory policy does not provide coverage for defending a charge, or for a fine imposed, against a lawyer pursuant to the legislation.  Part A of the mandatory policy provides coverage for the payment of Damages, and for the defence of a claim for damages, arising out of the provision of professional services.  The definition of “Damages” specifically states it does not include “fines or penalties”.