Ontario’s new foreign buyers’ tax puts real estate lawyers in the crossfire
The Government of Ontario has passed a number of new housing and real estate regulations of late, including highly publicized rent control measures and a 15 per cent tax on foreign homebuyers that aims to make housing more affordable to young Ontarians. It may take years to reasonably assess the efficacy of these programs, but at least one facet of the Non-Resident Speculation Tax has come under immediate scrutiny: real estate lawyers’ new responsibility to hand over sensitive client information to the province.
The regulation will apply to lawyers serving clients seeking to purchase agricultural land or a residential property with up to six dwellings. Lawyers will have to answer a range of questions, including whether their clients intend to occupy the land as a principal residence; whether the new owner plans to rent the property; whether the new owner has been in Canada for at least half of the previous year; whether the new owner is a Canadian citizen of permanent resident; and whether the new owner is holding the land in trust for another party.
Real estate lawyers representing businesses must also disclose whether their client is a foreign corporation, how many of the corporation’s directors are foreign nationals, and whether their client is a trustee for another owner.
According to Toronto Star columnist and Toronto lawyer Bob Aaron, the new mandate effectively makes real estate lawyers “agents for the provincial government.” In submitting the information, they will be asked to sign disclosure statements and certify the documents’ veracity.
Worse still, lawyers may be held criminally liable for false information provided by their clients.
“I’m not sure how we can verify a statement made by a client about things like his or her citizenship, or presence in Canada during the last year,” writes Aaron. “But the law says that anyone who makes, or participates in making, a false or deceptive statement to the government in the deed registration process, including a lawyer, is guilty of an offence… So if, for instance, a buyer misleads their lawyers about the number of days he or she spent in Canada in the last year, both of them can be imprisoned.”
Action on housing affordability is necessary in Ontario, especially in the Greater Toronto Area where young people are finding it increasingly difficult to afford rentals, let alone home ownership. However, real estate lawyers are understandably skittish about the harsh measure the province is taking to enforce its new foreign speculator’s tax.
If you have questions or concerns about the Province of Ontario’s housing affordability regulations, don’t hesitate to contact Nanda & Associate today to discuss your path to home ownership.