• My Account
  • Contact
  • Statistics
  • Consumers
  • Shopping Cart
Login
Alberta Real Estate Association
  • Advocacy
    • Image Link
    • Policy Positions
    • Member Advocacy
  • Learning
    • Image Link
    • Mandatory Course
    • Licensing Education
    • Course Catalogue
    • Resources
  • Practice
    • Image Link
    • Forms
    • Practice Advice
    • Admin Justice
    • MLS® Listing
    • Pillar 9™
    • FINTRAC + Anti Money Laundering
    • Data Co-op
    • Crown Lands
    • Occupational Health & Safety Tool Kit
  • Services
    • Image Link
    • Health & Property
      • Health & Wellness
      • REALTOR® & Family Assistance Program
      • Property & Auto Insurance
    • Savings
      • AREA Fuel
      • Area WIRELESS
      • AREA Advance
      • Annual Scholarships
    • Support
      • REALTOR® Safety App
      • Commission Protection Program
      • Member Statistics
  • Engage
    • Image Link
    • Blog
    • Events
    • News
    • Podcasts
    • Webinars
  • About
    • Image Link
    • Board of Directors
      • AREA Services Corp
      • Committees & Appointees
    • Bylaws & Minutes
    • Dues & Fees
      • Join AREA
    • Alberta Boards
    • Careers

What must I know about the Foreign Buyer Ban?

Posted on March 02, 2023 by AREA Communications in Blog

By now, you have heard of the new federal legislation called The Prohibition on the Purchase of Residential Property by Non-Canadians Act, known as the Foreign Buyer Ban. This legislation was approved in June 2022, received regulations in December 2022, and became enforceable in law as of January 1, 2023. Because this law affects some consumers’ ability to purchase property, there are implications for any REALTOR® helping buyers over the next two years. This article will highlight some key points to understand the legislation and regulations, so REALTORS® know enough to direct consumers to a lawyer.

Who is NOT affected?

It is probably best to start with the largest group of the population that most REALTORS® will be dealing with in purchasing residential property, namely NOT Non-Canadians. I have placed that term in the negative because the legislation consistently uses the term Non-Canadian to refer to those for whom the legislation does apply. Hence, the group considered NOT Non-Canadians are those to whom the legislation does not apply. These include Canadian citizens, registered permanent residents, or Indians under the Indian Act. If a buyer falls into one of these categories, the act does not apply to them.

What is prohibited by the legislation for everyone else?

As mentioned, the remaining group is everybody else, and the legislation does apply. There is hope, though, because the Foreign Buyer Ban only prohibits purchasing residential property within a Census Agglomeration (CA) or a Census Metropolitan Area (CMA). For this reason, a Non-Canadian is not banned from buying residential property outside of the specified areas. With no small effort, I have located some of the best available maps for Alberta North (https://bit.ly/3YdPwyP) and Alberta South (http://bit.ly/3Xbigaq) so members can quickly identify CA’s and CMA’s in their region of Alberta. These maps show CA’s and CMA’s either shaded or outlined in grey and containing an 800 series number. These areas are prohibited for Non-Canadians to purchase residential property in, but by implication, everywhere outside the grey areas is permitted for foreign buyers.

What is a residential property according to this legislation?

The legislation and regulations make clear that a residential property is any property containing a dwelling unit anywhere with a CA or CMA. This means any residential, rural, recreational, rural residential, or even commercial mixed-use property within a CA or CMA that has a dwelling unit is prohibited. This, of course, prompts the question of what constitutes a dwelling unit under the act. Specific to this act, a dwelling unit is extensive, bearing the definition of any residential unit that contains private kitchen facilities, a private bath, and a private living area. All property styles are included, including condominium properties, but the ban does clarify an exception for multi-family properties with four or more units (i.e. Four-plex or bigger).

What about residential lots?

I’m glad you asked! The regulations make a special note to include vacant land or lots that are zoned residential or commercial mixed-use, even where that lot contains an uninhabitable dwelling and is sold for lot value. As a note of warning, neither the act nor regulations provide an explicit exemption for development land, so if a foreign buyer is interested in buying a vacant lot in a new subdivision located in a CA or CMA, they should consult a lawyer about their legal ability to do so.

Are there any exceptions for specific people groups?

The short answer is yes, but the regulations narrow the exceptions by a list of required conditions designed to ensure those excepted in this legislation have been participating in the Canadian community actively and legally for years before the start of the legislation. For example, an international student who has temporary resident status may have an exception if they have filed tax returns for the last five years, they were physically present for a minimum of 244 days of each of those five years, their purchase does not exceed $500,000, and they have not purchased more than one property. As you can see, the exceptions are only simple to meet if the buyer has already been in Canada and participated in the community of Canadians for some years before the legislation. There are other potential exceptions for those with a work permit, refugees, some persons excepted by the minister as fleeing conflict, and even diplomatic exceptions. Still, all exceptions should be sought only with proper legal counsel before proceeding.

Does the legislation allow corporations to purchase?

If a corporation is incorporated under the laws of Canada or Alberta, then the answer is maybe. A Canadian Corporation controlled by a Non-Canadian or a Non-Canadian corporation or other entity, even though it is a corporation in Canada, becomes a Non-Canadian. The regulations define what control concerning a corporation or entity means by stating that any Non-Canadian who controls 3% or more of the equity or voting rights makes the whole corporation or entity a Non-Canadian.

What are the consequences of violation?

Any Non-Canadian who contravenes the act or any person who aids, abets, counsels, or induces a Non-Canadian to contravene the act is subject to a summary fine of $10,000. But that is not all. Suppose the Non-Canadian is successful in purchasing a prohibited property. In that case, the minister can order the property sold by the courts and all costs paid by the Non-Canadian for the sale. Suppose there are any remaining proceeds from the sale after all expenses are covered. In that case, the remaining proceeds will be paid directly to the Government of Canada, so the Non-Canadian will not profit in any way by their contravention of the act.

How can REALTORS® best verify the status of a buyer?

This is the critical question of the whole article! Brokerages must ensure the best practices of their REALTORS® representing buyers by adding guidelines and policies to their Brokerage policy manuals. Every brokerage can set its own policies for accomplishing the task. Still, at a minimum, this should include the requirement to ask buyers if they are Canadian Citizens or permanent residents and seek verification of the same by way of identification. If they are not, then a conversation with their broker needs to happen, and the broker should advise the client to seek counsel from a lawyer before proceeding.

As a final reminder regarding this legislation, according to the government, the prohibition on the Purchase of Residential Property by Non-Canadians Act was designed with a built-in expiry date of 2 years. That means this is not intended to permanently prohibit foreign buyers from buying in Canada, but only for the next two years. Canadians would still love for foreigners to come to Canada and experience the true north strong and free for themselves, but for now, they may need to rent.


Bryan Statt

Provincial Practice Advisor

Bryan has many years of experience in the real estate industry including over 10 years as a former broker in the Edmonton Region.

Email: bryan.statt@albertarealtor.ca
Phone: 403-209-3619

Alberta Real Estate Association Suite 217, 3332 20 Street SW Calgary, Alberta T2T 6T9
Toll Free: 1.800.661.0231 In Calgary: 1.403.228.6845
  • Advocacy
    • Policy Positions
    • Member Advocacy
  • Learning
    • Mandatory Course
    • Licensing Education
    • Course Catalogue
    • Resources
  • Practice
    • Forms
    • Practice Advice
    • Admin Justice
    • MLS Listing
    • Pillar 9™
    • FINTRAC + Anti Money Laundering
    • Data Co-op
    • Crown Lands
  • Services
    • Health
    • Savings
  • Engage
    • Blog
    • Events
    • News
    • Podcasts
    • Webinars
  • About
    • Board of Directors
    • Bylaws & Minutes
    • Dues & Fees
    • Alberta Boards
    • Careers
Our membership work and live in Alberta, which we acknowledge as the traditional and ancestral lands of many peoples presently subject to Treaties 6, 7, and 8 – namely the Blackfoot Confederacy (Kainai, Piikani, and Siksika), the Cree, Dene, Saulteaux, Nakota Sioux, Stoney Nakoda and the Tsuu T’ina Nation, and the Métis People of Alberta. We recognize the many First Nations, Métis and Inuit who have cared for these lands for generations. We are grateful for the traditional Knowledge Keepers and Elders who are still with us today, and those who have gone before. We make this acknowledgement as an act of reconciliation and gratitude to those on whose territory we reside.
© 2023 AREA. All rights reserved.
Terms and Conditions Privacy Policy
Powered by Configio a Community Brands owned company