Property in Canada - Guide to Buying Property in Canada

By: Les Calvert

In the 21st century, the property market in Canada -- the Great White North -- is dominated by people looking to purchase vacation properties and by investors looking to capitalize on the growth that is being experienced in some of the larger cities within the country. What is important to keep in mind is that the vast majority of the citizens of Canada actually live within one hundred miles of the Canadian and U.S. border. As a result, the hot markets for property -- with the exception of some holiday and vacation properties located further north -- tend to be along the one hundred mile band near the Canadian and U.S. borderline.

With all of this noted, there are some different opportunities available to a foreign national who is interested in making an investment in Canadian property -- either for personal, commercial or investment purposes.

Investment Property in Canada

As mentioned previously, the vast majority of the population of the nation of Canada is situated in a one hundred mile radius from the Canadian and U.S. border. Therefore, when it comes to real property investing, the marketplaces that a foreign national should serious consider is that band of property that lies in those cities and communities within that hundred mile band. By far, this represents the area in which the greatest amount of growth in both the real estate market and the development of other commercial enterprises is being seen in the 21st century.

Commercial properties remain a decent investment when it comes to real estate in Canada. As of yet, most of the major Canadian cities have not been overdeveloped. There remains a decent demand for commercial building space in most of the major Canadian points of commerce. As a result, a foreign national interested in investing in commercial property does have room to maneuver in this day and age.

People with a more limited amount of money to invest might want to consider investing in residential property that can be leased to travelers on holiday or vacation. Tourism remains a strong industry in Canada. As a result, there remains money to be made through the ownership of residential property that can be made available to tourists within the country.

Residential Property in Canada

Like its neighbor to the south, the Canadian residential real estate market significantly varies depending on which community is being considered. Not surprisingly, the costs associated with single family homes continues to rise in the larger and more major Canadian cities. At the present time, the more rural and outlying residential housing market in the country is a bit flat. In other words, if you are looking for bargains on residential property, a foreign national might want to consider one of the more rural or northward lying communities when looking to purchase such property.

Keeping in mind that a goodly share of the foreign nationals who are shopping for and purchasing residential property in Canada are doing so to set up a holiday retreat. Therefore, a more rural setting oftentimes is a welcome choice for such a property investor.

Residential Real Estate - Apartments in Canada

There is something of a boom when it comes to the residential property market as far as apartment units are concerned. With some growth being experienced in some of the more major Canadian cities, the demand for apartments and similar types of multi-family housing units is increasing.

Many foreign nationals who have a desire to experience Canadian life for holiday purposes are snatching up apartment units in different cities in the country. More often than not, these foreigners are making the purchases of such properties in the larger cities at the southern end of the country.

In some more rural areas, the number of apartment units also has been increasing in recent years. Some foreign nationals have taken to investing in these types of operations for investment purposes and have taken to buying shares in apartment complex enterprises.

Holiday Property in Canadian Holiday Resorts

As referenced previously, tourism and travel remains a top industry in Canada. Indeed, each and every year, an ever growing number of men and women are flocking to the Great White North for holiday or vacation purposes. Consequently, the demand for holiday real property has increased significantly, particularly over the course of the past twenty to twenty five years.

Quite like in the United States, investment in holiday property in Canada is taking two different forms. First of all, people -- both Canadians and foreign nationals -- are buying holiday property for their own, personal use. In addition (and as has been mentioned previously) a growing number of people are buying vacation properties to be utilized for more of an investment purpose. Foreign nationals, for example, can be found buying holiday property which they then in turn lease or rent to other individuals who happen to be on vacation of holiday. For some investors, this has proven to be a very lucrative avenue of real estate ownership.

Specific Steps to Buying a Property in Canada

In Canada, all matters pertaining to the buying and the selling of property is subject to governmental regulation. Once the parties to a potential sale of property have agreed on a price (after negotiating between themselves), a preliminary contract is entered into between the parties. This preliminary contract is known either as an Offer to Purchase or as an Agreement of Purchase and Sale. At the time the preliminary agreement is entered into between the parties, a deposit is made by the buyer.

The preliminary agreement can take one of two forms. On the one hand, the preliminary agreement can be conditional. By conditional, it is meant that certain events need to occur or certain milestones accomplished before a contract can become firm. An example of such a conditional provision would be one to obtain financing. If the condition or conditions within the agreement cannot be satisfied for some reason, the seller will receive most of his or her deposit back.

A firm preliminary contract is one in which there are no conditional provisions. If a firm preliminary agreement is not fulfilled, financial penalties can be imposed. For example, if the seller does not perform under the contract, he or she will lose the deposit paid. Likewise, some sort of financial penalty will be imposed on the seller if he or she does not perform under the terms of the firm preliminary agreement.

Within the provisions of the preliminary agreement will be established a completion date. The completion date is when all of the conditions in the preliminary agreement need to met. It is at this point that the remainder of the purchase price will be paid by the buyer to the seller. (Obviously, the buyer will need to have his or her financing in place by this point in time.) It is at this juncture that the transfer of ownership of the property from the buyer to the seller will occur.

The money associated with the sale is paid whether through a solicitor or a notary. At this juncture, the buyer and the seller will sign what is known as a Definitive Contract. In the French-speaking province of Quebec, this is called Acte de Vente. In Quebec, the final part of the sale is overseen by a notary (or notaire in Quebec) who is a governmental official. In other provinces within Canada, a solicitor can oversee and handle the final steps of the real estate sales transaction.

In that most people will require financing to purchase property in Canada, it is important to generally understand the lending process in that country. For the most part, mortgages in Canada are so-called full status arrangements. Full status means that the lender will make a thorough and complete investigation of a borrower's background and credit history.

In Canada, a purchaser of real estate will have to pay about 35% of the total purchase price out of his or her pocket. In many instances, this will be the size of the deposit associated with the preliminary contract to purchase property. The mortgage itself, in most cases, will be for a term of 25 years with the final payment needing to be made before the borrower reaches the age of 70.

Lenders in Canada pay very close attention to a borrower's available income. Indeed, in most instances, a lender will closely analyze what a borrower will be expected to earn over the lifetime of the loan.

The mortgage loan itself will be secured by the property that is being purchased within Canada. Oftentimes a foreign national will seek to have property in another country utilized to at least partial zed collateralize a loan in another country. In Canada, this is not an accepted practice.

By understanding the ins and outs of the real estate purchase transaction in Canada, an investor will be in a far better position to make appropriate decisions pertaining to the buying and selling of property in that country.

Property Abroad always recommends using a Solicitor or Lawyer.

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