CANADA Law and Practice Contributed by: Rachel V Hutton, Michael L Dyck, Mario Paura and Miguel Manzano, Stikeman Elliott LLP
As mentioned in 2.10 Taxes Applicable to a Transaction , British Columbia and Ontario also impose additional taxes on foreign investors.
ner is permitted to acquire residential prop - erty under the Act; and • certain persons prescribed under the Regula - tions. A purchase does not include: • an acquisition of a right resulting from death, divorce, separation or a gift; • rental of a dwelling unit to a tenant for that tenant’s occupation; • transfer under a trust that existed prior to the Act coming into force; • transfers from the exercise of a security inter - est or secured right by a secured creditor; or • acquisition by a non-Canadian of residential property for the purposes of development. Also at the federal level, the Competition Act and the Investment Canada Act require notifi - cation to, or review by, the federal government in certain circumstances involving acquisitions by non-resident purchasers. The federal Citizenship Act also permits each province and territory to enact laws restricting ownership of real property by non-residents. At the provincial and territorial level, most juris - dictions have taken measures to restrict the ownership of interests in farmland, rural recrea - tional land or land in non-urban centres by non- Canadians, and certain jurisdictions limit the amount of farmland that can be owned by non- residents. Some provinces and territories also require that non-Canadian corporations obtain an extra-provincial licence or complete certain registrations to own real estate. For discussion of the Ontario and British Colum - bia foreign buyer taxes and underused housing taxes and the federal underused housing tax, see 1.3 Proposals for Reform .
3. Real Estate Finance 3.1 Financing Acquisitions of Commercial Real Estate
Acquisitions of commercial real estate are typi - cally financed through mortgage debt provided by financial institutions such as banks, insurers, trust companies, pension funds, credit unions and other entities that lend money in the ordinary course of business. Some companies may also be able to utilise equity financing or (in the case of larger compa - nies) corporate-level financing to fund acquisi - tions of real estate. 3.2 Typical Security Created by Commercial Investors Real estate financing is commonly secured by granting a mortgage and a general assignment of rents and leases (an immovable hypothec in Quebec), of the borrower’s interest in the sub - ject real estate, along with a general security agreement (a movable hypothec in Quebec), with respect to the borrower’s personal property. These security interests are created by the exe - cution of security documents and are perfected by registration in the applicable land title and personal property registries. Lenders may also require additional security, such as an assign - ment of contracts, or third-party indemnities or guarantees. 3.3 Restrictions on Granting Security Over Real Estate to Foreign Lenders Although any person may lend money and take a mortgage (hypothec in Quebec) to secure
229 CHAMBERS.COM
Powered by FlippingBook