Therefore, a buyer’s realtor can protect themselves by:

• Generally taking extra precaution when purchasing from a non-resident

• Ascertaining legal residence status prior to closing

• Insisting the residency/non-residency section of the contract of purchase and sale is completed.

• Structuring contracts to include a holdback of 25% until the residency of the seller is verified. The holdback can be released upon verification of the seller being a Canadian resident. Should the seller be a non-resident or believed to be a non-resident then the holdback would remain with the buyer’s notary/seller until a compliance certificate is issued from the CRA. The compliance certificate would be adequate proof to the buyer that taxes have been paid, no taxes are owning or adequate security has been provided by the seller. Note, the Income Tax Act allows the buyer’s notary/lawyer to holdback 25% of the sale proceeds if the seller’s residency is unknown or is thought to be a non-resident. A Clause stipulating this is not required in a contract but it would be prudent to include it so all parties are aware.

• Documenting all conversations with the notary/lawyer and buyer regarding the potential tax liability should the seller be a non-resident.

• Removing themselves after they have done their due diligence to ascertain the residency of the seller and not get involved in any communication between the notary/lawyer and the buyer. Do not be the conduit for information to pass through on this topic and let the notary/lawyer speak directly to the buyer.

Foreclosure sale or Court Order Enforcement Sale
A foreclosure sale or court order enforcement sale complicate the issue as the registered owner is not the seller of the property according to BC case law. The bank or the judgement holder replaces the registered owner and signs the contract instead of the registered owner. However, CRA does not follow the same approach and considers the registered owner to be the seller of the property. Hence, the foreclosing party normally are not prepared to make any representations regarding the property or the registered owners and therefore will not confirm the residence status of the registered owner. This scenario arose is in the Mao v Liu (2017 BCSC 226), however, that sale was regarding a court order enforcement proceeding. Therefore, when the sale is due to a foreclosure or court order enforcement proceeding extra caution should be taken and seek legal advice before drafting the offer to purchase. You do not want to end up in a similar situation as the notary in Mao v Liu.