Buying Property Abroad as a Canadian: A Legal Checklist

What makes real estate law in Canada unique?

Real estate law in Canada is unique because it is primarily governed by provincial and territorial law, with significant differences between each jurisdiction and between Quebec and the common law provinces. Canada also layers municipal bylaws and some federal rules (such as foreign buyer restrictions and bank regulations), creating a multi-level framework that affects every purchase, sale, lease, and mortgage.

To understand Canadian real estate, it helps to see how different legal levels interact:

• Federal level:
  • Bank Act regulates federally chartered banks that issue most residential mortgages.
  • Prohibition on the Purchase of Residential Property by Non-Canadians Act restricts certain residential purchases by some non-Canadians (with exceptions and evolving regulations).
  • Income Tax Act governs capital gains, principal residence exemptions, and certain withholding obligations for non-resident sellers.
  • CMHC and other mortgage insurers set rules for insured mortgages (down payment minimums, maximum amortization, etc.).
• Provincial/territorial level:
  • Land registration (Land Titles or Registry systems) and title transfer requirements.
  • Landlord-tenant rules (e.g., Residential Tenancies Act, 2006 in Ontario, Residential Tenancy Act in BC).
  • Condo/strata legislation (e.g., Condominium Act, 1998 in Ontario, Strata Property Act in BC).
  • Land transfer tax or property transfer tax frameworks.
• Municipal level:
  • Zoning bylaws and official plans (what you can build or use land for).
  • Building permits and occupancy permits.
  • Local property taxes, development charges, and sometimes vacancy/empty home taxes.

Quebec follows the Civil Code of Quebec rather than common law, and notaries play a central role in real estate transactions. In most other provinces, lawyers handle conveyancing, mortgage registration, and trust funds. Knowing which province or territory your property is in is usually the first and most important legal question.

How does buying residential real estate in Canada work?

Buying residential real estate in Canada usually involves getting pre-approved for financing, making an offer subject to key conditions, completing due diligence (inspection, financing, title search), and then closing the transaction through a lawyer or notary who registers the transfer and mortgage. Timelines typically range from 30 to 90 days from accepted offer to closing, though they can be shorter or longer depending on the market and your negotiation.

A typical purchase process looks like this:

1. Financing pre-approval
   • Obtain a mortgage pre-approval from a bank or broker to understand your budget.
   • Most lenders in Canada require stress-testing your income against a higher qualifying rate.
2. Working with a realtor (optional but common)
   • Licensed real estate agents are regulated at the provincial level (e.g., RECO in Ontario, BCFSA in BC).
   • Buyer agent commissions are usually paid out of the seller's listing commission but can be negotiated differently.
3. Making an offer
   • Offers are typically submitted using standard form agreements specific to each province.
   • Common conditions:
     • Financing condition (time to confirm your mortgage approval).
     • Home inspection condition.
     • Review of condo/strata documents if buying a condo.
     • Sale of buyer's existing property (in slower markets).
   • A deposit (often 3% to 5% of purchase price in competitive markets) is usually due within 24 hours of acceptance.
4. Due diligence period
   • Home inspection by a certified inspector.
   • Final mortgage approval from your lender.
   • Lawyer or notary review of the Agreement of Purchase and Sale and initial title search.
5. Firming up the deal
   • Once conditions are satisfied or waived in writing, the deal becomes firm.
   • Backing out after this stage usually leads to deposit loss and potentially being sued for damages.
6. Pre-closing legal work
   • Your lawyer/notary:
     • Completes a full title search in the provincial land registry.
     • Orders tax certificates and utility information from the municipality.
     • Prepares mortgage and transfer documents for signature.
     • Arranges for title insurance (common in most provinces) or an opinion on title.
7. Closing
   • On closing day, your lawyer/notary:
     • Receives mortgage funds from your lender and your remaining down payment.
     • Pays the seller's lawyer, land transfer tax, and other adjustments.
     • Registers the transfer of title and mortgage.
     • Authorizes release of keys (often via the realtor).

Across Canada, you should expect to sign legal documents in person or via secure remote signing. Quebec buyers usually sign their deed of sale before a notary, who reviews title and publishes the deed in the Quebec Land Register.

What legal issues arise when selling property in Canada?

Selling property in Canada raises legal issues around disclosure obligations, tax reporting (especially for non-residents), the handling of deposits, and the consequences of backing out of a signed agreement. The seller must also ensure clear title at closing, which means paying off mortgages and resolving liens, judgments, or building permit issues.

Key seller-side legal points include:

• Listing and representation agreements
  • Standard provincial listing agreements set out commission, duration, and marketing scope.
  • They are binding contracts; cancelation or early termination may trigger costs.
• Disclosure obligations
  • Misrepresentation of material defects (e.g., known structural issues, water ingress, mold) can lead to lawsuits after closing.
  • Some provinces use Seller Property Information Statements or similar forms; these should be completed accurately and with legal guidance.
• Non-resident sellers
  • Non-residents for tax purposes may face withholding under the Income Tax Act.
  • Buyers may require a Certificate of Compliance from CRA or hold back amounts until tax clearance is obtained.
• Clearing title
  • Existing mortgages, secured lines of credit, construction liens, and certain judgments must be paid out at closing.
  • Your lawyer will obtain payout statements and discharge documents from lenders and register discharges in the land registry.
• Failure to close
  • If the buyer fails to close, the seller may keep the deposit and sue for further damages (e.g., if the property later sells for less).
  • If the seller fails to close, the buyer may sue for specific performance (forcing completion) or damages.

Timing matters for sellers: aligning your sale closing date with your next purchase or move, and allowing time for legal pre-closing work, reduces risk and stress.

How are mortgages and financing structured in Canadian real estate?

Mortgages in Canada are typically structured as fixed or variable rate loans with terms of 1 to 5 years and amortization periods up to 25 or 30 years, often requiring mortgage default insurance if your down payment is under 20%. The mortgage is registered against the property title in the provincial land registry and ranks as a secured interest that must be paid out or assumed on sale.

Key features of Canadian mortgages include:

• High-ratio vs conventional
  • High-ratio mortgage: Down payment under 20%, requires mortgage insurance (CMHC, Sagen, or Canada Guaranty).
  • Conventional mortgage: Down payment 20% or more, no mandatory default insurance.
• Fixed vs variable rates
  • Fixed rate: Interest rate stays the same for the term.
  • Variable rate: Rate moves with the lender's prime rate; some have fixed payments, others adjust payments.
• Term vs amortization
  • Term: Length of current mortgage contract (often 5 years).
  • Amortization: Total period to pay off the mortgage (often 25 years for insured mortgages).
• Prepayment and penalties
  • Most mortgages permit limited annual prepayments (e.g., 10% to 20% of original principal) without penalty.
  • Breaking a mortgage early may trigger penalties calculated as three months interest or an interest rate differential, depending on the lender and product.
• Registration type
  • Some lenders use a standard charge; others use a collateral charge that can secure multiple debts and may complicate refinancing.
  • Your lawyer can explain what type of charge will be registered on title in your province.

Alternative lenders, private mortgages, and vendor take-back mortgages are also common in certain markets and carry higher risk, higher cost, and more complex documentation. Reviewing such arrangements with a real estate lawyer before signing helps prevent predatory terms or unexpected enforcement actions.

How do condo and strata properties work in Canada?

Condo and strata properties in Canada involve shared ownership of common areas, governed by provincial condo/strata legislation and the corporation's own bylaws and rules. Buyers acquire a unit plus a share of common property and must pay monthly fees and comply with restrictions that can significantly affect use and resale.

Important legal concepts for condos/strata include:

• Governing legislation
  • Ontario: Condominium Act, 1998
  • British Columbia: Strata Property Act
  • Alberta: Condominium Property Act
  • Quebec: divided co-ownership rules in the Civil Code of Quebec
• Condo/strata corporation
  • Manages common areas, collects monthly fees, and enforces bylaws.
  • Governed by a board of directors or strata council elected by owners.
• Documents you must review before buying (often a condition in your offer):
  • Declaration, bylaws, and rules.
  • Recent financial statements and budgets.
  • Reserve fund or contingency fund studies and reports.
  • Meeting minutes (to spot ongoing disputes or major upcoming projects).
  • Status certificate (Ontario) or Form B information certificate (BC), etc.
• Fees and special assessments
  • Monthly fees cover common expenses like maintenance, utilities for common areas, and sometimes heat or water.
  • Special assessments may be levied for large capital projects if reserves are insufficient.
• Use restrictions
  • Restrictions may apply to short-term rentals, pets, smoking, home businesses, and alterations.
  • Violations can lead to fines, legal proceedings, or forced reversal of renovations.

Disputes between owners and condo/strata corporations are common and are often handled by specialized tribunals or courts, depending on the province. Careful review of condo/strata documents by a lawyer can reveal red flags such as chronic deficits, litigation, or rules that conflict with your intended use.

How do residential tenancies and landlord-tenant rights work in Canada?

Residential tenancies in Canada are governed by provincial legislation that strongly regulates rent increases, eviction procedures, maintenance obligations, and security deposits. Both landlords and tenants must use formal processes, usually through specialized boards or tribunals, to resolve disputes or terminate tenancies lawfully.

Typical frameworks by province include:

• Ontario: Residential Tenancies Act, 2006, enforced by the Landlord and Tenant Board (LTB).
• British Columbia: Residential Tenancy Act, enforced by the Residential Tenancy Branch.
• Alberta: Residential Tenancies Act, with disputes heard at the Residential Tenancy Dispute Resolution Service or the courts.
• Quebec: Landlord-tenant rules in the Civil Code of Quebec, disputes at the Tribunal administratif du logement.

Core legal issues in residential tenancies include:

• Written leases
  • Many provinces require standard form leases for new tenancies.
  • Illegal clauses (e.g., waiving statutory rights) are usually void even if both parties sign.
• Rent control and increases
  • Some provinces set annual maximum rent increase guidelines for eligible units.
  • Notice periods and forms for rent increases are strictly prescribed.
• Deposits
  • Rules on security deposits or last month's rent vary by province.
  • Some jurisdictions regulate interest payable on deposits.
• Evictions
  • Eviction usually requires specific legal grounds and proper written notice.
  • Self-help evictions (changing locks, shutting off utilities) are generally illegal.

Because procedures and forms are technical and timelines are strict, both landlords and tenants frequently seek legal advice or paralegal assistance to navigate hearings, especially in larger provinces with high tenancy volumes.

What should businesses know about commercial real estate in Canada?

Businesses dealing with commercial real estate in Canada face heavily negotiated leases and purchase agreements that allocate significant risks around rent, maintenance, environmental liability, and zoning. Unlike residential tenancies, commercial leases enjoy far less statutory protection, so the written contract largely governs the relationship.

Key commercial real estate issues include:

• Lease structure
  • Gross lease: Tenant pays a fixed amount, landlord covers most operating costs.
  • Net or triple net lease: Tenant pays base rent plus some or all operating costs (taxes, insurance, maintenance).
• Use and exclusivity clauses
  • Define permitted use and restrictions within the property or shopping center.
  • Exclusivity rights can prevent competitors from operating nearby within the same complex.
• Fit-out and leasehold improvements
  • Leases allocate responsibility for initial improvements and ongoing capital repairs.
  • Incentives like tenant improvement allowances may be available but often come with conditions.
• Assignment and subletting
  • Commercial tenants often want flexibility to assign or sublet if the business is sold or relocates.
  • Landlords typically retain approval rights, which should be negotiated up front.
• Environmental and zoning considerations
  • Phase I and Phase II environmental site assessments may be necessary, especially for industrial or former industrial sites.
  • Zoning bylaws must permit the intended business use; non-compliance can lead to fines or forced closure.
• Remedies and default
  • Commercial landlords may have stronger rights to seize property or re-enter premises compared to residential contexts.
  • Personal guarantees by business owners are common and increase personal exposure.

Commercial transactions can also involve complex financing, development agreements, and joint ventures. Early legal review is crucial before signing letters of intent that may unintentionally create binding obligations.

How are taxes, fees, and closing costs calculated for Canadian real estate?

Real estate closing costs in Canada include land transfer taxes or property transfer taxes, legal or notary fees, title insurance, and various adjustments for property taxes and utilities. Exact amounts vary by province, property type, and purchase price, but buyers should plan for several thousand dollars in additional cash costs beyond their down payment.

The table below provides rough ranges for common buyer closing costs on a standard resale home purchase (estimates only, in CAD):

Some provinces offer first-time home buyer rebates for land transfer taxes (e.g., Ontario, BC), which can save thousands of dollars. Sellers also face closing costs, including real estate commissions (often around 4% to 5% of sale price, split between listing and buyer agents, plus HST/GST) and legal fees for discharge and conveyancing.

What restrictions apply to foreign buyers and investors in Canadian real estate?

Foreign buyers in Canada face a mix of federal restrictions on certain residential purchases and provincial or municipal taxes that increase acquisition and holding costs. These rules aim to address housing affordability and speculative investment and have changed rapidly in recent years.

Key elements include:

• Federal foreign buyer restrictions
  • Prohibition on the Purchase of Residential Property by Non-Canadians Act (in force with time-limited effect and subject to regulatory amendments).
  • Limits certain non-Canadians from buying specified residential properties in designated areas, with exceptions for some work permit holders, students, and others.
  • Violations can lead to fines and potential forced sale or court-ordered remedies.
• Provincial foreign buyer taxes (examples, subject to change):
  • British Columbia: Additional Property Transfer Tax for foreign entities and taxable trustees (a percentage of the fair market value in certain areas).
  • Ontario: formerly the Non-Resident Speculation Tax (NRST), which has been expanded and adjusted over time.
• Municipal vacancy/empty home taxes
  • Cities like Vancouver and Toronto have adopted vacancy or empty homes taxes for underused residential properties.
  • Owners must file annual declarations to avoid penalties.
• Underused Housing Tax (federal)
  • Applies to certain underused or vacant residential properties owned by non-resident, non-Canadian owners, with annual filing requirements.

Because policies change frequently and can apply differently depending on immigration status, property type, and location, foreign buyers should obtain up-to-date legal and tax advice before signing an agreement of purchase and sale.

When should you hire a real estate lawyer or other expert in Canada?

You should hire a real estate lawyer (or notary in Quebec and parts of BC) as soon as you are serious about buying, selling, or leasing property, ideally before you sign a binding agreement. Legal advice is especially important for non-standard transactions, disputes, and any situation involving significant financial risk or complex parties (such as corporations, trusts, or non-residents).

Specific scenarios where professional help is critical include:

• Before signing an offer or lease
  • To review unusual clauses, conditions, or schedules.
  • To ensure the agreement reflects your intent and covers key contingencies (financing, inspection, zoning).
• Dealing with title or boundary issues
  • Unregistered easements, shared driveways, right-of-way disputes, or survey discrepancies.
  • Rural properties with private roads, wells, or septic systems.
• Condo/strata and multi-unit properties
  • Review of status certificates, bylaws, financial health, and ongoing litigation.
  • Assessment of rent-control or tenancy issues in multi-unit residential buildings.
• Commercial transactions
  • Long-term commercial leases, purchases with environmental risk, or development lands.
  • Joint ventures, shareholder agreements related to property, or complex financings.
• Disputes and enforcement
  • Failed closings, misrepresentation claims, or latent defects discovered after purchase.
  • Evictions, rent arrears, and tribunal or court hearings.
• Non-residents and foreign buyers
  • Compliance with foreign buyer restrictions, extra taxes, and federal tax filings.
  • Structuring ownership through corporations, partnerships, or trusts.

Other experts such as property inspectors, appraisers, surveyors, planners, and accountants often work alongside your lawyer to give you a full picture of the risks and costs before you commit.

What are the next steps if you are dealing with a real estate issue in Canada?

The next steps depend on whether you are planning a transaction or facing a dispute, but generally you should gather documents, clarify your objectives, and consult a real estate professional early. Acting quickly helps preserve your options, especially where offers, financing commitments, or tribunal deadlines are involved.

For a planned purchase or sale:

1. Define your goals and constraints
   • Clarify budget, timelines, and property type (detached, condo/strata, commercial, mixed-use).
2. Engage core professionals
   • Select a real estate lawyer or notary in the province where the property is located.
   • Consider engaging a realtor and mortgage broker if appropriate.
3. Obtain pre-approval and estimate closing costs
   • Get written mortgage pre-approval.
   • Ask your lawyer for a personalized closing cost estimate based on price range and location.
4. Review agreements before signing
   • Have your lawyer review offers, leases, or listing agreements as early as feasible.

For a dispute or unexpected legal problem:

1. Collect all relevant documents
   • Agreements, emails, notices, tribunal forms, inspection reports, and photos.
2. Check deadlines
   • Identify any closing dates, notice periods, or limitation periods that may affect your rights.
3. Get legal advice promptly
   • Consult a real estate lawyer or, for landlord-tenant issues, a lawyer or licensed paralegal where permitted.
   • Ask about immediate steps to preserve your position, such as sending notice or filing a claim or response.
4. Strategize and document
   • Work with your advisor to map best-case and worst-case outcomes, costs, and settlement options.
   • Keep ongoing notes of communications and events.

Because Canadian real estate usually involves high values and tight timelines, early professional involvement is often the best way to reduce risk, control cost, and protect your rights, whether you are a homeowner, tenant, investor, or business.