The promoter of a 44-storey condo tower project in Montreal applies to the Court to be able to sell 20 units to foreign buyers, despite the entry into force on 1er January of the new law prohibiting the purchase of residences by non-Canadians.
The clients, mostly from China, but also from Taiwan, the United States and France, signed contracts between 2018 and 2020 to acquire condos in the Solstice tower. The construction of the project is coming to an end, next to the Bell Center, rue de la Montagne, but the twenty housing units mentioned in the appeal are still not finished.
However, the Chambre des notaires has just published an opinion that has reason to worry not only the builders of the Solstice, but also all the promoters in the process of completing projects in major Canadian cities, with immigrant clients. The notice specifies that a transaction signed after 1er January must respect the law, namely a two-year moratorium on purchases by foreigners. And this, even if a purchase contract was signed before the entry into force of the law.
The directive has serious consequences, according to Solstice lawyer Clément Lucas of De Grandpré Jolicœur. It places the notary in the situation where he cannot formalize such a transaction “without jeopardizing both his professional insurance coverage and his own criminal liability” as regards the possible sanctions against him.
Solstice’s lawyer thinks on the contrary that customers who have signed purchase contracts before the entry into force of the new measures have an “acquired right” and can conclude their transaction. He is therefore asking the Superior Court to pronounce a declaratory judgment to this effect.
Notaries could thus formalize without risk the transactions of foreigners concluded in contracts before the sanction of the law, in June 2022.
“They still don’t answer”
The Canada Mortgage and Housing Corporation has just passed regulations that will govern the Non-Canadian Purchases of Residential Real Property Act. “They still don’t answer the question,” said Clément Lucas, Solstice’s lawyer, in an interview with The Press. The text published by the federal body is silent as to the existence or not of any acquired rights.
In his request, Clément Lucas says he had “several communications” with the federal ministers of Finance and Housing and with the Minister of Justice of Quebec, responsible for applying the laws. “No level of government has provided a substantive response, leaving the Claimant in real hardship,” the document states.
The cancellation of the twenty or so sales concerned at the Solstice would carry “a heavy attack” on the rights of its promoter, 9357-4010 Québec inc., preventing it from “reimbursing its construction loan with the proceeds of the sales”, alleges the request. “It is the very longevity of the Claimant which is in question. »
The case is due back in court on January 26.
Blitz to finish condos
According to Clément Lucas, the downtown project is far from the only one affected by the lack of precision from the federal government on the issue. Many projects across the country would be in the same situation.
“I know there are a lot of projects rushing to close their sales before this January,” he says.
The new law provides that a non-Canadian who buys property in the country, as well as anyone who assists him, would be liable to a fine of up to $10,000. An offense could also trigger the forced sale of the residence concerned.
At Fuller Landau, non-resident tax accountant Julie Côté has also been seeking clarification from Ottawa for months for clients in the United States, Europe and the Middle East.
But the government has done nothing to help her understand the consequences of the law for them, she laments.
“My team has been making calls to Revenue Canada since August,” she says. We were told all the time: ‘We don’t know, it’s not official yet…’” The tax authorities finally directed her to the Ministry of Finance, which instead sent her to Housing.
Then… no news. A week before the new year and the entry into force of the law, Julie Côté is still waiting for clarification from Minister Ahmed Hussen.