One more way the ban on purchasing residential real estate by non-Canadians is affecting building contractors and developers

March 30, 2023 | Kyle Bertsch

In part one of our review of the Prohibition on the Purchase of Residential Property by Non-Canadians Act (the “Act”), we discussed two ways the Act affects builders and developers. The purpose of this article will be to discuss an additional key way the Act continues to affect builders and developers.


The Act and the accompanying regulations came into force on January 1, 2023. The purpose of the Act is to target soaring housing prices and curb foreign investor speculation by prohibiting non-Canadians from purchasing residential property in Canada for a period of two years, with some exceptions. While the Act places direct restrictions on non-Canadian builders and developers, further analysis indicates the Act may also restrict their access to lenders involved in facilitating the transaction.

Restricting financing

While the Act is clear in its intention to prohibit non-Canadians from purchasing residential property in Canada, unless an exception is met, the prohibition becomes unclear when considering the involvement of third parties, such as lenders.

Section 6 of the Act reads as follows:

“ … every person or entity that counsels, induces, aids or abets or attempts to counsel, induce, aid or abet a non-Canadian to purchase, directly or indirectly, any residential property knowing that the non-Canadian is prohibited under this Act from purchasing the residential property is guilty of an offence”.

With this in mind, lenders may also find themselves liable under the Act if they assist a non-Canadian in purchasing a residential property by providing financing to facilitate the transaction. While non-Canadian builders and developers may still attempt to contravene the Act, wary lenders may decline financing, therefore thwarting the transaction altogether.

Moving forward

Although lenders are in clear risk of contravening the Act, additional third parties, such as lawyers or real estate agents, may also find themselves as a party to an offence under the Act depending on their involvement. In any event, all parties involved in real estate transactions should conduct proper due diligence in order to identify all risks and ensure compliance under the Act.

We will continue to monitor changes under the Act and would encourage you to contact one of our Condominium & Strata and Municipal, Planning & Land Development practitioners in our Real Estate group if you have questions.


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