What liability does a buyer face if they fail to withhold funds when buying from a non-resident seller?

A buyer who fails to withhold when required under the federal non-resident disposition rules can become personally liable to the Canada Revenue Agency for the amount that should have been withheld, essentially standing in for the seller's unpaid tax exposure rather than simply having made an administrative oversight. This is a serious risk, because it means a buyer acting in good faith, who simply took a seller's word about their residency status, can still end up on the hook if that status turns out to be incorrect.

This is exactly why Ontario real estate lawyers are generally careful to confirm a seller's residency status early in a transaction, often through a formal declaration, and to build in appropriate withholding or holdback protections whenever there is any genuine uncertainty about whether a seller is a non-resident. Relying on an informal assurance alone is not considered adequate protection given the stakes involved.

Make sure your lawyer formally confirms the seller's residency status as part of any purchase, and do not rely on an informal assurance if there is any doubt.