CANADA Law and Practice Contributed by: Rachel V Hutton, Michael L Dyck, Mario Paura and Patrick Morin, Stikeman Elliott LLP
1. General 1.1 Main Sources of Law
1.2 Main Market Trends and Deals Access to Capital Canada’s real estate market post-pandemic has experienced rising interest rates, which have slowed the exuberance in the post-pandemic deployment of capital to a degree. As interest rates have risen, the market has experienced a trend of tightened lending conditions and requirements in order to access more capital. Fluctuating market dynamics have created addi - tional market tension, and uncertainty around valuations is expected to remain a concern for real estate companies. Going forward, access to debt and equity capital will also continue to impact real estate companies and their invest - ment strategies. Institutional and private funds continue to domi - nate the market, with active participation from new private, pooled funds. Financings and re- financings remain active, although the spike in interest rates has had a cooling effect. ESG and Green Building Initiatives With federal government commitments to achieve net-zero emissions by 2050 and envi - ronmental, social and governance (ESG) report - ing and disclosure requirements becoming more prevalent, asset managers across several sectors, including the real estate industry, are focusing on ESG performance, strategic plan - ning, and environmental stewardship and man - agement. This trend is demonstrated by both the increased prevalence of green building initiatives in leases and the ongoing dialogue between owners and tenants regarding cost allocation for these initiatives. While the downtown office sector has seen tenants compressing operations and an active sublease market, rent payments have largely been kept current and many busi - nesses are planning on, or actualising, a hybrid or full return to the office.
Under Canada’s federal constitution, laws relat - ing to real estate fall within provincial jurisdiction. Each Canadian province enacts its own legisla - tion with respect to the ownership structures, use, acquisitions and dispositions, financing and development of real property. Such laws tend to be similar across most of Canada’s provinces, as well as in the three northern territories. The exception is the civil law jurisdiction of Quebec. In recent years and in response to surges in res - idential property prices and availability, many Canadian provinces have enacted legislation imposing increased transfer tax, owner trans - parency and foreign ownership restrictions and obligations; at the federal level, the Prohibition on the Purchase of Residential Property by Non- Canadians Act (see 2.11 Legal Restrictions on Foreign Investors ) was recently introduced. In Canada’s common-law jurisdictions – that is, all provinces and territories other than Quebec – common-law jurisprudence is a key component of real estate law. In addition, some real estate- related common-law principles have been codi - fied in legislation in Canada’s common-law juris - dictions. In Quebec, the Civil Code (similar to those in use in many European countries) serves as the primary source of law, although case law clarifies issues that remain after the application of the Civil Code of Quebec. International law is not a significant source of real estate law in Canada. Nevertheless, inter - national treaties are occasionally reflected in Canadian real estate legislation. Orders of for - eign courts are enforceable in Canada under certain conditions.
130 CHAMBERS.COM
Powered by FlippingBook