Sale by non-resident seller pitfalls – New practicePRO flowchart and resources
LAWPRO is seeing claims against purchasers’ lawyers pertaining to transactions where the seller was a non-resident and there was no s.116 clearance certificate provided on closing. It appears that the Canada Revenue Agency is being more diligent in enforcing the collection of the withholding amount on closing. A recent case (Kau v. The Queen, 2018 TCC 156) sheds light on the purchaser’s obligations, which the lawyer often undertakes to satisfy.
There are two primary pitfalls for the purchaser’s lawyer who has given such undertakings:
(1) failing to hold back the full required amount (25% or 50%)
(2) failing to remit the holdback to the CRA within 30 days of the end of the month in which the transaction closed.
To assist lawyers with this complex area, practicePRO provides the following guidance:
- Clare Brunetta, a solicitor who has experience with many of these transactions, laid out the landscape at a CPD program and has provided us with his paper
- practicePRO has developed this flowchart
- Additionally, the Working Group on Lawyers and Real Estate has posted a draft Undertaking (Non-Residency) as its newest province-wide standard closing document.