On Monday, March 7, the Canadian Government imposed additional sanctions in response to Russia’s invasion of Ukraine.
These sanctions have the potential to impact the real estate sector because dealing in real property involving a sanctioned individual or entity is now prohibited under the Special Economic Measures (Russia) Regulations and the Special Economic Measures (Ukraine) Regulations.
What you need to know
REALTORS® should be aware of the people and entities that the Canadian Government has identified in Special Economic Measures (Russia) Regulations and the Special Economic Measures (Ukraine) Regulations. The names are found near the end of each government publication. As the circumstances resulting from the invasion continue to evolve, so may the list of individuals and entities that the Government of Canada identifies as being subject to sanctions.
Please continue to know who you are working with. As a reminder, if you’re working with a new client, making sure to verify their identity at the beginning of your representation relationship is optimal. This will help reduce REALTOR® risk around accidentally transacting with an individual or entity listed on the Special Economic Measure Regulations.
Being mindful of unrepresented or unspecified buyers
We recognize that REALTORS® are already doing this due to FINTRAC, so this is a good opportunity to bring awareness to REALTOR® obligations. Although FINTRAC is a result of existing legislation and is separate from legislation enabling Canadian Sanctions, your FINTRAC compliance processes will be useful to know who is involved in a transaction. Under FINTRAC, REALTORS® are required to take reasonable measures to determine the identity of an unrepresented buyer.
If you are working on a deal where “Nominee” or “Assignee” appear as a buyer, and the transaction could potentially involve unknown individuals or entities, we recommend that you consult a lawyer to better understand how to manage a transaction with unidentified parties. Consultation with a lawyer regarding this type of sale would be best practice even in the absence of the current situation with Russia and Ukraine as AREA’s purchase contracts are not designed to account for assignment of a contract to a third party.
What to do if you or your brokerage are concerned that a transaction involves a sanctioned individual
REALTORS® and brokerages should seek a legal opinion to review any concerns on a case-by-case basis to determine if there is a risk to a specific transaction potentially violating Canadian Government Sanctions. A lawyer will be able to guide agents on steps to be taken depending on the circumstance.
We understand that Canadian Government Sanctions may evolve, and we will continue to update members as new information becomes available.
We recognize the impact the current conflict has on our friends, families, communities, nations and global stability. If you feel overwhelmed by this situation, or any situation, support is available for you and your family through the REALTOR® and Family Assistance Program.
