Many people wish to do business in Canada. With a flourishing market, a steady GDP, and a great influx from people all over the globe, there are numerous reasons why you would want to invest in Canada. Among many markets, real estate and urban development are a huge focus for investors. Because hundreds of thousands of people move to Canada each year, it’s an industry that provides a lot of earning potential while having moderate competition.
But the major challenge comes from understanding the various legal requirements and regulations. These can get fairly complicated depending on the type of operation. Canada has fairly detailed laws, making it necessary for investors to work with real estate lawyers in Toronto. Here’s everything you need to be aware of:
Foreign Investment
As a foreign investor looking to purchase, lease, develop or finance the development of any property in Canada, it’s important to understand the issues that await you. This will help assess the viability of any investment you partake in.
Except for Quebec, all the provinces in Canada have primary responsibility for property law. Quebec follows the Civil Code of Québec in this regard. Each province has a registry of public land titles where land interests can be verified and registered, with each registration being fairly sophisticated about property ownership.
Investment vehicles
For investing in Canadian real estate, you have the following legal structures:
- Personal ownership
- Limited partnership
- Trust
- A corporation (federally or provincially)
- General partnership
- Trust
- Co-ownership or joint venture.
Various aspects determine which investment structure will be more appropriate. Commonly, business considerations, rules, and regulations applicable to your home country for foreign investments and liability problems are major factors to think about. As tax planning can vary significantly, it’s recommended that investors consult tax planning advice to minimize taxes while getting maximum benefits upon real estate investments in Canada.
Acquisitions and Dispositions
Acquisitions
Parties require a letter of intent, a binding agreement of purchase and sale for purchasing or selling commercial properties in Canada. Any agreements between the parties involved in the transaction should detail the different business terms used.
The purchase price, closing date, warranties, land description, diligence period, and any specific terms and conditions that the parties agree upon should be mentioned. Ensure that you have a real estate lawyer in Toronto to review documents such as purchase and sale agreements before signing them.
Dispositions
Certain Canadian cities have real estate boards providing standard form agreements of purchase and sale and other precedent agreements.
For residential purposes, these are preferable, but in case of sophisticated acquisitions and dispositions, it’s recommended that you work with longer-form agreements. These are suited for dealing with various problems like allocating the purchase price among the real property, building, and chattels, along with any conditions between the two parties, along with GST/HST exemption status, among other aspects.
Due Diligence
After signing the necessary agreements, the purchaser must perform due diligence about the acquired property. This process requires legal counsel, which means correspondence with a real estate lawyer in Toronto.
Apart from acquiring the real estate title along with other assets as per the agreement, other due diligence activities include looking into the following:
- Zoning compliance
- Off-title inquiries
- Municipal agreements
- Environmental investigations
- Survey and lease reviews
It’s also essential that you investigate the property for any structural, mechanical, electrical, and plumbing problems that could be an issue.
Planning and Development
While the provincial government mostly deals with land-use planning, various functions are delegated to regional and municipal governments. Instruments like the zoning bylaws, the official plan, or a region or municipality’s general plan are used to control land use.
Site plans need to be approved before any new development projects. Before construction starts, most municipalities require that you acquire building permits, pay different fees as applicable to your project, and ensure regulatory approvals.
Leasing
For leasing, it’s necessary that you work with commercial real estate lawyers in Toronto that have the necessary experience in the sector you’re leasing the property for. Ground leases are one form of the lease such that the tenant leases the land, develops some property on it, and then sublets it for various purposes.
Generally, commercial and retail spaces are available through commercial leases. These involve payments on a rental basis along with some share of the realty taxes, utilities, maintenance costs, or even a portion of annual gross sales in some cases.
Financing
Financing in the real estate industry is done through credit unions, pension funds, banks, and other financial lenders. Private lenders and other non-institutional entities also finance projects in Canada. All lenders will require you to provide primary and collateral security for loans. The primary security could be a mortgage, a fixed charge on the property, or a trust deed for mortgage bonds.
Collateral security requires lease or rent assignment, personal guarantees, insurance policies, and more.
Having the best estate lawyers in Toronto is essential for people interested in investing in Canada. It makes the whole process more streamlined, providing all the vital information from a legal perspective and ideas about various plans’ financial prospects.
If you’re looking to invest in Canada and require legal assistance, work with us at Nanda and Associate Lawyers. We provide corporate lawyers, civil lawyers, commercial real estate lawyers, and family lawyers in Toronto. Get in touch with us today or book an appointment with our professionals.
