CANADIAN BAN ON PROPERTY PURCHASES

A new Canadian law, the Prohibition on the Purchase of Residential Property by Non-Canadians Act, in force since January 1, 2023,  has imposed a restriction for foreigners who are willing to buy a residential property in Canada. Indeed, this newly introduced law prevents non-Canadians and foreign corporations from buying residential property in Canada for two years. The act defines non-Canadians as those who are not Canadian citizens, Permanent residents of Canada, and those registered under the Indian Act.

As per this recent Canadian ban, individuals or corporations defined as non-Canadian are prohibited from purchasing a property in Canada, either directly or through trusts, partnerships or similar entities. However, certain exceptions apply for non-permanent residents wishing to buy a property valued up to CAD $500,000. These exceptions include:

• Spouses of Canadian Citizens: Those married to Canadian citizens can still purchase property.
• Refugees: Recognized refugees are exempt from the restriction.
• Permanent Students: Students who have been continuously enrolled for at least five years at a designated learning institution in Canada are eligible to purchase.
• Diplomats and International Organizations: Diplomats and members of international organizations accredited to Canada are not subject to the restrictions.

The immediate consequence is that according to the international law principle of reciprocity, Italy is going to apply mirroring restrictions to Canadians wishing to purchase properties in Italy. Of course, this principle of reciprocity implies that the above exemptions would apply also for Canadians who are willing to purchase a property in Italy.

While assisting a number of Canadian clients, we have registered some different options which, depending on the specific circumstances of each client, could allow Canadian citizens to complete the purchase of an Italian property. In fact, there are specific cases which could increase your chances to avoid the ban, as follows:

• the purchase proposal or preliminary contract was signed prior to January 1, 2023, provided they prove that the agreement was in place before that date (i.e.: registration of the preliminary or purchase proposal, payment of a deposit, etc.);
• the property is not reported as a residential unit (Italian cadastral zoning different from A1, A2, A3, A4, A5, A6, A7, A8, A9) and it lacks of the certificate of “habitability”;
• the property is located in a Municipality with a population lower than 10,000 citizens; however, if it is close to a metropolitan city, the ban might apply anyway;
• the property is purchased with a spouse (or civil union partner) who is an Italian permanent resident or an EU citizen;
• the property has been received by a succession, separation, divorce, or gift;
• the purchaser has an Italian long term immigration status or they have dual citizenship also holding an EU passport;

Only the local Ministry of Foreign Affairs is competent to provide data on the verification of reciprocity. However, as of now, its website does not provide any information on the new Canadian ban.

This new regulation requires a detailed due diligence on your specific case to understand if it is possible to overcome the ban for the transaction you are aiming to complete.

Is the Canadian ban on foreign property purchases still in effect?

The Prohibition on the Purchase of Residential Property by Non-Canadians Act, which restricts non-Canadians from buying residential property in Canada for two years is due to expire on December 31, 2024. However there is no official confirmation yet on whether the Canadian government will implement similar restrictions in the future.

Does the Canadian ban affect Canadians buying property in Italy?

The Canadian ban directly applies to non-Canadians purchasing property in Canada. However, the principle of reciprocity in international law suggests Italy might implement similar restrictions on Canadians buying property in Italy. However we have had no official confirmation of such measures by the Italian government.

What are the benefits of using a lawyer for buying property in Italy as a Canadian?

Navigating the legalities of property purchases in a different country can be complex and dauting. An experienced Italian property lawyer can ensure a smooth transaction by:

• Understanding the legal implications: They can advise you on any potential issues arising from the Canadian ban and Italian regulations.
• Verifying reciprocity: They can stay updated on any reciprocal restrictions by the Italian government.
• Guiding you through the process: They can handle paperwork, liaise with local authorities, and ensure your rights are protected.

Where can I find reliable information on buying property in Italy?

Here are some resources to get started:

• The official website of the Italian Revenue Agency (Agenzia delle Entrate): https://www.agenziaentrate.gov.it/portale/web/english (Italian)
• The website of the Italian National Council of Notaries (Consiglio Nazionale del Notariato): https://notariato.it/it/ (Italian)
• Consulting with a reputable Italian property lawyer specialising in cross-border transactions.

It is highly advisable to appoint an International Property Lawyer to carry out the above checks before signing any purchase proposal which would bind the Promittente Compratore (the Italian legal term referring to the prospective buyer, or the party who promises to buy a property) to complete the transaction. This would avoid them to be exposed to contractual liabilities in case it is not possible to proceed to completion due to the Canadian ban.

Here at The Italian Lawyer offer legal assistance to potential buyers for:

• reviewing the documentation and details of each transaction with the cooperation of local notaries for the interpretation of the Canadian law and regulations and the application of the reciprocity condition;
• advising on the best solution for each specific case;
• drafting a tailored proposal and/or contract after assessing the feasibility of the transaction; assisting the prospective buyers with the conveyancing process up to completion the property purchase on your behalf also advising on the relative expenses (notarial fees, registration, transfer, pilings, etc.).

If you are interested in one of the above opportunities and wish to receive further information, please send an email at info@theitalianlawyer.com asking to book your initial FREE ASSESSMENT CALL with one of our property lawyers.

Additionally, you may also find useful some further reading at our guide on how to purchase a property in Italy.