The introduction of the Non-Resident Speculation Tax in April of this year has made it imperative that Real Estate Agents confirm the residency status/citizenship of their Buyers well in advance of the closing date. We have encountered issues days before closing wherein the Client, as it turns out, has not actually been granted Permanent Residency Status/Canadian Citizenship by the Government of Canada. If the closing date arrives and the Buyer is unable to provide our office with proof of either Permanent Residency or Canadian Citizenship (birth certificate, passport, permanent resident card, etc.) then two options become possible:
- The Buyer pays the NRST which equals 15% of the purchase price and may be eligible for a rebate after closing;
- Extend the closing date of the transaction until the Buyer can provide our office with proof of Permanent Residency/Citizenship.
Neither of these options will result in a happy Buyer. To avoid this potentially disastrous circumstance from arising, we recommend that all Real Estate Agents confirm the residency status/citizenship of their Buyers (with proof!) well in advance of the closing date. We have found that sometimes clients think that they are Permanent Residents/Canadian Citizens but have never actually been legally granted this status by the Government of Canada. Determining if this will be a problem in advance of the closing date will give the Buyer time to apply to the Government to receive the appropriate documentation before the closing date.
Addressing this potential problem immediately is crucial to avoiding potential issues on closing and, ultimately to cause your Buyer to close their transaction happily and hassle free.
Author: Bryan M. Mayes, Lawyer
Paquette & Travers Professional Corporation
519-744-2281 x 302