Can a foreign buyer enter into a purchase for a Pre-Construction Condo that closes after the 2-year ban?

The simple answer, is no.  Although not exactly clear, the language in the Prohibition on the Purchase of Residential Property by Non-Canadians Act (the “Act”), does not specify as a requirement that “ownership” be transferred, such as titled ownership by way of a deed, or “possession” be granted, such as the ability to occupy or lease the residential property to another.  One can therefore assume that ownership or possession may not be required to be in contravention of this prohibition.  Some guidance can be implied from Subsection 4(5) of the Act which reads:

Non-application (of subsection 4(1) the prohibition of the purchase)

4(5) Subsection (1) 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 (i.e. January 1, 2023).

The corollary would mean that if a non-Canadian becomes liable or assume liability under an agreement of purchase and sale of a residential property on or after January 1, 2023, then Subsection 4(1) would apply as follows (i.e. its prohibited):

4 (1) Despite section 34 of the Citizenship Act, it is prohibited for a non-Canadian to purchase, directly or indirectly, any residential property.

The regulations further go on to define “purchase” as:

Purchase

4 (1) For the purposes of the Act, the acquisition, with or without conditions, of a legal or equitable interest or a real right in a residential property constitutes a purchase.

Again, no mention of ownership or possession, but rather a purchase is the acquisition of a “legal” or “equitable” interest in or a “real” right to a residential property.  Although for most it may not appear obvious, the language here appears to include in the definition of a “purchase”, the rights acquired by entering into a contract to purchase a residential property (e.g. a pre-construction condo agreement of purchase and sale)? Contracts create legal rights as between the contracting parties.  The term “equitable” further expands the types of contracts that could be characterized as something other than an agreement of purchase and sale, but that would lead to the acquisition of an interest in or real right to the subject residential property.  A “real” right would narrow down the types of rights to those akin to an estate right, such as some kind of legal property estate right to acquire a freehold interest (e.g. as seen typically in the types of ownership interest when buying a residential property in Ontario).  Safe to say, a non-exempt, non-Canadian buyer should not be entering into agreements of purchase and sale for pre-construction residential properties, such as condominiums, over the next two years.

For any questions or help with your condominium developments, sales questions or if you are a foreign buyer and need some clarity or assistance, feel free to reach out to the lawyers at Levy Zavet PC.