Building on Michael's post from last week, another issue
facing foreign investors in the Canadian real estate market are
restrictions on the acquisition and ownership of land in the
Alberta's Foreign Ownership of Land Regulations (the
"Regulations") restrict foreign
acquisition of interests in mainly rural land by the establishment
of a scheme of controlled and uncontrolled land. Controlled land
typically refers to farm land and ranches – the Regulations
provide that controlled land means land in Alberta, excluding Crown
land, land within the boundaries of a city, town, new town, village
or summer village, and all mines and minerals. The Regulations do
not apply to uncontrolled land, which mainly encompasses urban
centres in Alberta.
Under the Regulations, foreign citizens and foreign controlled
corporations are prohibited from acquiring, directly or indirectly,
an interest in controlled land; however, foreign citizens and
foreign controlled corporations may acquire an interest in
controlled land if, as a result of the acquisition, the foreign
entities' interests in controlled land do not exceed two
parcels containing, in total, not more than 20 acres.
The Regulations provide for a number of exceptions to this
general rule, and specifically do not prohibit the acquisition of
an interest in controlled land for pipelines, oil and gas
processing plants, refineries, power plants, electric distribution
systems, or extractions of coal and aggregates. Further, under
certain conditions, industrial processing, manufacturing,
commercial or transportation facilities and residential
subdivisions are exempt.
The restrictions apply to a broad range of interests in land
– including beneficial and leasehold interests – and
are not strictly limited to acquisitions of real estate. For
example, a foreign entity may lease controlled land for a maximum
term of 20 years; however, the lease cannot provide for renewals or
extensions which in effect extend the term beyond 20 years.
Transactions that do not appear to involve real estate may also
be impacted by the Regulations. For instance, an acquisition of the
majority of shares of a corporation owning controlled land by a
foreign citizen or foreign controlled corporation is considered an
acquisition of an interest in controlled land. In this situation,
the foreign controlled corporation has 3 years to divest itself of
the controlled land so acquired.
The Regulations require additional filing and disclosure when
acquiring an interest in controlled land. Failure to file the
prescribed statutory declaration either proving
residency/citizenship or applying for a prescribed exemption when
submitting documents for registration at the Alberta Land Titles
Office will result in a rejection of registration of interest.
Bottom line, the Regulations must be considered before entering
into a transaction with a foreign entity involving real estate
interests or a corporate change of control.
Russell v. Township of Georgian Bay provides a useful reminder of the fact that while municipal officials sometimes appear to hold all of the cards in disputes with home owners, that is not always the case.
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