Guide to Buying Property in Canada
Overview - The Canadan Property Market
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.
Buying 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 locations 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.
Buying Residential Real Estate in Canada - Single Family Properties
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.
Buying 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.
Buying 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 Real Estate 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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Further Reading on Canada