Foreign investment in Canada has become a topic of many conversations since the federal government announced its two-year extension banning foreign nationals and commercial enterprises from buying residential property (see a previous article authored by our colleagues Saravan Veylan and Scott Bell).
However, there has been substantially less discussion regarding the related topic of foreign investments in rural properties. Although foreign investors are permitted to purchase rural properties in Canada, each province is unique in its regime governing the requirements and exemptions (if any) in respect of rural properties.
Foreign investors seeking to acquire Canadian rural properties should obtain legal advice before entering the market to ensure they are aware of any legislative and regulatory requirements of the applicable jurisdiction. Each province has different requirements and exemptions. As part of our four-part series on foreign ownership requirements relating to the acquisition of land, we are releasing summaries of the restrictions in place in each of Manitoba, Saskatchewan, Alberta and British Columbia. In this article, we will focus on the legislative and regulatory requirements in the Province of Manitoba. For a review of the applicable regulations in Alberta, see a recent article by our colleagues Scott Exner, Natasha Hepp and Reihan Ahmed.
Definition of “farm land” and “interest in farm land”
In Manitoba, rural properties subject to foreign ownership restrictions are defined as “farm land” pursuant to The Farm Lands Ownership Act (Manitoba). Farm land includes real property that is situated outside a city, town, village or hamlet and that is used or is reasonably capable of being used for farming. It excludes any real property used to extract, transport or process minerals except sand and gravel and any real property used by utility services provider (including telecommunications, pipelines and railways among others). The interests in farm lands that are subject to restrictions set forth in The Farm Lands Ownership Act (Manitoba) extend beyond the ownership of farm land itself directly to any “interest in farm land.” This is a broadly defined term to capture most conceivable rights to farm the land, specifically:
“Interest in farm land” includes any right, title or interest in farm land recognized at law to be an interest in real property, whether legal, equitable or beneficial, and whether direct or indirect, and without limiting the generality of the foregoing includes, in respect of farm land, an option to purchase, an agreement to purchase, a right of refusal, a mortgage, an encumbrance, a debenture or any other form of security interest, an option to acquire any form of security interest, a lease, an agreement to lease, an option to lease, a power of attorney and any other right, title or interest that would, or that may, in the event of any particular contingency occurring, vest in the holder of such right, title or interest, legal, equitable or beneficial title, possession or control, present or future, of farm land; but does not include a builder’s lien or a judgment of a Court registered against land.
Notwithstanding also that the interest definition above may be indirect (i.e. through any series of entities). However, there is an exemption at section 3(4) of The Farm Lands Ownership Act (Manitoba) that allows interests to be held by person pursuant to a bona fide debt obligation (a bond, debenture, note, mortgage or other evidence of indebtedness or guarantee, whether secured or unsecured), subject to restrictions set out in section 3(5).
Exemptions under The Farm Lands Ownership Regulations (Manitoba)
Any individual that is not a Canadian citizen or permanent resident, or any corporation, partnership or other entity which has an interest holder that is not a Canadian citizen or permanent resident will be restricted in acquiring an interest in farm land in Manitoba if such farm land is in excess of 40 acres in the aggregate (across any number of titles). For any prospective interest in farm land in excess of 40 acres, the individuals or entities with the prospective interest may apply to the Manitoba Farm Industry Board (the Board) for an exemption by way of a written submission to the Board and oral hearing with the Board, the decision of which may not be appealed. Pursuant to Section 2 of the Farm Lands Ownership Regulation (Manitoba), the Board will provide favourable consideration in any exemption application for applicants that meet any of the following guidelines:
- The applicant is a non-resident but intends to take up residence in Manitoba within a reasonable period of time;
- The applicant is a resident who plans to leave the province temporarily and to return within a reasonable period of time;
- The applicant is a religious, charitable or non-profit organization;
- The applicant is a non-resident who resides and farms within 10 miles of the Manitoba border;
- The acquisition of farm land by the applicant is likely to confer a significant benefit on the province; and/or
- The acquisition of farm land by the applicant is in the public interest.
Please note that exemptions also exist for certain facilities that currently generate electricity by wind which is subsequently sold directly or indirectly to Manitoba Hydro, as well as those facilities which may be under construction.
Given the differences across jurisdictions and the intricate nature of the farm land ownership regimes in Western Canada, any non-resident individuals or corporations which may have non-resident interest holders should consult a practitioner for guidance on the applicable regime regarding farm land ownership prior to making any investment.
MLT Aikins has successfully assisted non-residents in their efforts to comply with the various regimes that exist across Western Canada. Our offices are well-equipped to address unique and complex scenarios and non-resident farm land ownership requirements across provinces from a corporate and individual perspective.
If you have any questions about farm land ownership and the applicable regimes in Manitoba, please contact the authors Steven Dressler and Pamela Hilderman directly. Also look out for future articles in this series regarding farm land ownership in Saskatchewan and British Columbia.
Note: This article is of a general nature only and is not exhaustive of all possible legal rights or remedies. In addition, laws may change over time and should be interpreted only in the context of particular circumstances such that these materials are not intended to be relied upon or taken as legal advice or opinion. Readers should consult a legal professional for specific advice in any particular situation.