CANADA – QUÉBEC Law and Practice Contributed by: Eleonora Eusepi, Sabrina Guillot, Janie Chaloux and Nicolas Gosselin, BCF Business Law LLP
tation and warranty insurance is used mainly in share deals and is uncommon in mid‑market real estate. 2.6 Important Areas of Law for Investors When purchasing real estate in Québec, investors must consider several key areas of law. Tax structuring is essential to ensure the acquisition is completed in a fiscally efficient manner. Zoning and land‑use com - pliance must be verified to confirm that the intend - ed use is permitted, or that required changes are achievable. Financing terms also play a central role, as they directly affect the viability and profitability of the investment. Careful attention must be given to the seller’s representations and warranties, which influ - ence due diligence and available remedies. Finally, investors must ensure the property’s title is clear and free from irregularities. 2.7 Soil Pollution or Environmental Contamination A buyer can be responsible for soil pollution or envi - ronmental contamination of a property even if they were not the source of the contamination. In Québec, the Environment Quality Act can require the current owner of contaminated land to investigate, monitor, or carry out remediation work, regardless of when the pollution occurred or who caused it. These statutory obligations apply independently of any contractual risk‑allocation between the parties or civil liability principles under the Civil Code. That said, buyers can protect themselves contractually by negotiating provisions that give them recourse against the seller if the property fails to meet environmental requirements. 2.8 Permitted Uses of Real Estate Under Zoning or Planning Law A buyer can ascertain the permitted uses of a parcel of real estate by reviewing the applicable municipal zon - ing by‑laws and planning instruments adopted under the Act respecting land use planning and develop - ment. It is also possible to enter into project‑specific development agreements with municipal authorities. 2.9 Condemnation, Expropriation or Compulsory Purchase Public authorities may expropriate private property for public purposes under the Act respecting expropria - tion, provided that the owner is paid fair and full com -
pensation. The process typically begins with formal notice to the owner, followed by negotiations to deter - mine compensation. If no agreement is reached, the compensation amount is determined by the Adminis - trative Tribunal of Québec. 2.10 Taxes Applicable to a Transaction In Québec, the transfer of real property generally trig - gers transfer duties under the Act Respecting Duties on Transfers of Immovables (ARDT). Unless an exemp - tion applies, the purchaser must pay these duties to the municipality where the property is located. In an asset deal, each party typically covers its own pro - fessional fees, although the purchaser usually pays the notary’s publication fees. The seller is responsi - ble for any costs associated with discharging existing hypothecs. Share transactions involving a property‑owning company are not subject to transfer duties unless a previous exemption under the ARDT becomes void – eg, where beneficial ownership changes within the required 24‑month period. In such cases, duties may be retroactively triggered. Although the calculation of the cost of transfer duties varies slightly from municipality to municipality, the commonality is that the transfer duties are calculated based on the higher of: (i) the municipal evaluation of the property adjusted by a multiplying factor for the given year; and (ii) the consideration paid for the property. Numerous statutory exemptions exist under Chapter III of the ARDT. 2.11 Legal Restrictions on Foreign Investors The Prohibition on the Purchase of Residential Prop - erty by Non‑Canadians Act is a federal law that pro - hibits non‑Canadians from buying certain residential properties in Canada, namely buildings with three dwelling units or fewer located within Census Metro - politan Areas and Census Agglomerations. This Act is subject to exemptions, such as purchases by certain work‑permit holders, spouses of Canadian citizens, and buyers acquiring subjected residential property outside the restricted areas.
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