On January 1, 2023, new federal legislation came into force that will have a significant impact on non-Canadians purchasing property in Canada.

Otherwise known as the “Foreign Buyer Ban”, the Prohibition on the Purchase of Residential Property by Non-Canadians Act (the “Act”) will, by and large, prohibit persons who are neither citizens nor permanent residents from purchasing residential property in Canada for two years.[1] The prohibition applies to property purchased directly or indirectly. It also applies despite Section 34 of the Citizenship Act, which states that real and personal property of every description may be acquired by a person who is not a citizen.[2]

On December 21, 2022, Regulations to the Act (the “Regulations”) were announced. These helped clarify certain questions that the Act previously left unanswered.[3]


The Act is one of many steps taken in line with the Department of Finance Canada’s Budget 2022, which sought to make housing more affordable across the country. Foreign buyers purchasing residential real estate has raised concerns about Canadians being “priced out” of the housing market in many cities and towns. The purported goal of the legislation is therefore to ensure housing is owned by Canadians instead of foreign investors.[4] To further this objective, the legislation will also operate in tandem with the Underused Housing Tax Act.


As the name suggests, the Act applies to residential property. This is described as any real or immovable property situated in Canada and that is:

  • A detached house or similar building, containing not more than three dwelling units;

  • A part of a building that is a semi-detached house, rowhouse, condominium unit or other similar types of property that are owned, or intended to be owned, as a separate property; and

  • Any prescribed real property or immovable under the Regulations.[5] According to the Regulations, a prescribed real or immovable property is “land that does not contain any habitable dwelling, that is zoned for residential or mixed use, and that is located within a census agglomeration (“CA”) or census metropolitan area (“CMA”)”.[6]

    • A CA is most basically defined by Statistics Canada as an area consisting of one or more neighbouring municipalities around a core with a population of at least 10,000 people who live in the core.

    • A CMA is, similarly, defined by Statistics Canada as an area consisting of one or more neighbouring municipalities around a core with a population of at least 100,000 of which 50,000 or more live in the core.[7] 

The Regulations appear to confirm the CMHC Consultation Paper released earlier in 2022 (“Consultation Paper”), which stated that multi-unit properties with four or more units are not subject to the prohibition. The Regulationsfurther indicate that all properties located outside of a CA or CMA are exempt from the ban. However, vacant land will be subject to the Act if it is zoned for residential or mixed use or is located within a CA or CMA.


The Act applies to:

  • persons who are neither Canadian citizens, permanent residents, nor persons registered as Indian under the Indian Act

  • corporations not incorporated in Canada; and

  • corporations incorporated in Canada that are not controlled by a Canadian citizen, permanent resident, or a person registered as Indian under the Indian Act.[8]

    • “Control” is defined in the Regulations as direct or indirect ownership of shares or ownership interest of the corporation representing 3% or more of the value of the equity in the corporation or carrying 3% or more of its voting rights. It could also mean control in fact of the corporation through ownership, agreement, or otherwise.[9]


The Act does not apply in a blanket way to all non-Canadians. Rather, the Act and Regulations canvass a fairly robust list of foreign nationals that may be exempt from the legislation, provided they meet certain criteria. Below is a list of those individuals who are potentially exempt from the Act:  

  • Temporary Residents. These are temporary residents within the meaning of the Immigration and Refugee Protection Act (“IRPA”) who satisfy prescribed conditions. According to the Regulations, this class of exempted persons may include:

    • International Students

      • pursuing a program of authorized study at a designated learning institution as defined in section 211.1 of the Regulations to IRPA (“IRPR”);

      • who have filed a Canadian income tax return for each of the five taxation years preceding the year in which the purchase was made; and

      • who have been physically present in Canada for a minimum of 244 days in each of the five calendar years preceding the year in which the purchase is made;

      • who are purchasing a residential property whose purchase price does not exceed $500,000; and

      • who have not purchased more than one residential property.[10]

    • Foreign Nationals

      • who hold a work permit as defined in section 2 of IRPR (i.e., a written authorization to work in Canada issued by an officer to a foreign national), or are otherwise authorized to work in Canada in accordance with section 186 of IRPR;

      • who have worked in Canada for a minimum period of three years within the past four years, where the work is full-time (i.e., at least 30 hours of work over a period of one week);

      • who have filed a Canadian income tax return for a minimum of three of the past four taxation years before the year in which the purchase is made; and

      • who have not purchased more than one residential property.[11]

  • Protected persons (e.g., refugees) under subsection 95(2) of IRPA;

  • Non-Canadians who purchase property with spouses or common law-partners who are themselves Canadian citizens, permanent residents, or persons registered as Indian under the Indian Act;

  • Foreign states that purchase residential property in Canada for diplomatic or consular purposes;

The Regulations further prescribe a narrow list of possible exceptions for the following individuals:

  • foreign nationals who hold a passport that contains a valid diplomatic, consular, official or special representative acceptance issued by the Chief of Protocol for the Department of Foreign Affairs, Trade and Development;

  • foreign nationals, with valid temporary resident status, whose temporary resident visa was issued, or temporary resident status was granted, following an exemption provided under section 25.2 of IRPA, if they are fleeing conflict;

  • persons that have made a claim for refugee protection in accordance with subsection 99(3) of IRPA, if that claim has been found eligible and referred to the Refugee Protection Division under subsection 100(1) of IRPA.[12]


The Regulations offer a specific meaning of the term “purchase” as it is used in the Act: it is described as “the acquisition, with or without conditions, of a legal or equitable interest or a real right in a residential property”.[13]However, the Regulations detail certain methods of acquiring property that are not a “purchase” per se and are therefore not prohibited. These include:

  • The acquisition of an interest or a real right resulting from death, divorce, separation or a gift;

  • The rental of a dwelling unit to a tenant where that tenant occupies that dwelling unit;

  • The transfer through a trust that was created prior to January 1, 2023; and

  • The transfer resulting from the exercise of a security interest or secured right by a secured creditor.[14]


The offence provisions in the Act make it clear that the federal government is serious about enforcement. The Act will penalise non-Canadians who contravene the prohibition as well every person that assists a non-Canadian in any way to purchase residential property while knowing they are prohibited under the Act. In either case, those who contravene the Act are guilty of an offence and could be liable for a fine of up to $10,000.[15]

In the event of corporations violating the Act, any officers, directors, agents, mandataries, senior officials, or managers of the corporation could also be personally liable for the offence.[16]

If the Act is contravened, the Minister may apply to direct a superior Court in the province to order the sale of the property. Per the Regulations, this may occur where:

  • The non-Canadian is the owner of the residential property at the time the order is made;

  • Notice has been given to every person who may be entitled to receive proceeds from the sale; and

  • The superior court is satisfied that the impact of the order would not be disproportionate to the nature and gravity of the contravention, the circumstances surrounding the commission of the contravention, and the resulting conviction.[17]

The Regulations further provide a specific order in which the proceeds from the order of the sale must be distributed:

  • the payment of the costs of the sale, including the costs incurred by the Minister in bringing the application for the order and any unpaid fines by the non-Canadian under the Act;

  • the payment of those, other than the non-Canadian, who are entitled to receive the proceeds of the sale in amounts and according to priorities that the superior court may determine;

  • the repayment of the non-Canadian of an amount that is not greater than the purchase price they paid for the residential property; and

  • the payment of any amount remaining to the Receiver General for Canada.[18]

And, significantly, upon the order of sale, the foreign buyer cannot receive more money than they paid for the property.[19] This provision seeks to ensure that foreign buyers cannot profit off Canadian residential real estate.    


An important provision in the Act relates to the timing of contracts entered into for the purchase and sale of residential property. Specifically, the prohibition “does not apply if the non-Canadian becomes liable or assumes liability under an agreement of purchase and sale of the residential property before the day on which this Act comes into force”.[20] This means that if a foreign buyer entered into a contract to purchase a residential property before January 1, 2023, then that buyer is still entitled to follow through with that purchase, even if the purchase closes after January 1, 2023.


While the Act deems it an offence to assist non-Canadians in purchasing residential property who are barred from doing so, the CMHC aptly points out that the Act “does not impose information collection, processing or reporting requirements for lawyers, notaries, real estate agents or other professionals”.[21] With that said, for any third party involved in the purchase and sale of residential real estate, it would be wise to become familiar with the Act and Regulations and to confirm that contracts entered into prior to January 1, 2023 are valid.

Despite the onus lying primarily with non-Canadians to ensure they are not prohibited under the Act, third parties assisting in real estate transactions may also benefit from exercising diligence and making reasonable inquiries into the citizenship and residence status of potential buyers. And to further limit liability, when drafting new residential purchase and sale agreements, it may be wise to consider including representation and warranty clauses that confirm the buyer is not prohibited under the Act.

Corporations may also want to review their ownership structure when purchasing residential real estate as the 3% ownership bar is quite low and may go unnoticed.

As the legislation is still brand new, future practices and ways of successfully navigating the Act and Regulations may continue to emerge. It is important for those involved in the chain of real estate transactions to remain informed about the new legislation to fully understand their rights and obligations.

Jacob Honig

[1] Prohibition on the Purchase of Residential Property by Non-Canadians Act, SC 2022, c 10, s 235 [Act].

[2] Citizenship Act, RSC 1985, c 108 s 34.

[3] Prohibition on the Purchase of Residential Property by Non-Canadians Regulations, SOR/2022-250 [Regulations].

[4] Budget 2022 Chapter 1.4, Curbing Foreign Investment and Speculation. 

[5] Act, s 2.

[6] Regulations, s 3(2).

[7] Statistics Canada, CMA and CA: Detailed Definition (Archived Content).

[8] Ibid, supra note 4.

[9] Regulations, s 1.

[10] Regulations, s 5(a).

[11] Regulations, s 5(b).

[12] Regulations, s 6.

[13] Regulations, s 4(1).

[14] Regulations, s 4(2).

[15] Act, s 6(1).

[16] s 6(2).

[17] Regulations, s 7(1).

[18] Regulations, s 7(2).

[19] Act, 7(1).

[20] Act, 4(5).

[21] CMHC, Ensuring Housing Market Remains Available to Canadians.