Culture Shock - Purchasing Property in the United States

Buying property in the United States is often alluring, not least because of the relative strength of the Canadian dollar and some of the deals to be found south of our border. There is also the detail that for those of us living with significant winters, there’s not much that’s more enticing than the prospect of sunshine and golf instead of shoveling the driveway. While these features make investing in American real estate attractive, purchasing can come with a dose of culture shock.

Canada and America share a great many traits, but they operate on entirely different land ownership and land transfer systems. Even within Canada, each province is governed by a separate regime for recognizing land ownership and transferring land. If you’re looking to purchase real estate in America, don’t expect it to mirror your purchasing experience in Canada.

While the process itself will differ, knowing the key people to consult will demystify the experience.

Firstly, find a reputable realtor. Many larger real estate agencies will have agents on both sides of the border; your existing Canadian realtor may be able to connect you directly with someone in your desired American destination. Be sure you’re comfortable with the realtor you select before signing any contract for their services.

A good realtor will help familiarize you with the purchasing process in the State you’re interested in buying the property, and can help in advising you regarding any closing costs specific to that State.

Secondly, find a reliable lawyer. While this may seem like suggesting you go out and find a unicorn or an alien, I assure you that we do indeed exist. The lawyer should operate in the State where the property is located as the documents will need to be prepared in accordance with the laws of that State. Your realtor may be able to recommend such lawyers who are experienced in real estate transactions.

If you intend to return to Canada prior to the completion of the transaction and will not physically be in the State when it comes time to sign the documents, you will also need a lawyer in your home province to attend to your signature on all the documents.

Thirdly, chat with your Canadian banker and accountant before buying the property.

If you’re planning on financing Canadian real estate to buy property in America, your Canadian banker or mortgage specialist can help you determine whether this is viable and the time frame in which you need to achieve this.

Your accountant can advise you of any Canadian tax consequences of owning property outside Canada and may recommend that you consult an American accountant.

Once you have assembled your team, let the property shopping begin!

If you have questions or if there are topics you’d like addressed in future columns please contact Rose Shawlee at Baker Newby LLP at rshawlee@bakernewby.com

Important Note: The information contained in this column should not be treated by readers as legal advice and should not be relied on without detailed legal counsel being first sought.