All about IRAC and buying PEI real estate

It should be noted that PEI has legislation that restricts the amount of PEI real estate that non-residents can own. These regulations are administered through IRAC, the Island Regulatory and Appeals Commission. IRAC also sets the price of gasoline and other petroleum fuels as well as regulating property rental prices.

When PEI was originally settled, lots of 20,000 acres were created and given to absentee landowners. Gradually residents bought the land back however in the 60's the land boom once again resulted in large areas of coastal land being in non-resident ownership. As a result of this continued trend, in 1972 the government made changes to the PEI real estate. Act to control the amount of land a non-resident could own.

In determining how much land a person or corporation may hold the Aggregate Land Holding of the individual or corporation is calculated as all land held by that person and their minor children as well as the amount of land held by any corporate body in which that person owns 5 percent or more of. This works backwards for the corporation in that the corporate holdings are calculated as all lands held directly by the corporation, plus all lands owned by a shareholder having a holding in the corporation of 5% or more and any lands held in the name of a minor child of the landholder and additionally any lands held by a second corporation that the first owns 5% or more of shares.

Any person or corporate body wishing to purchase land in PEI must make application to the Commission if such purchase will result in the person or corporation having an Aggregate Land Holding greater than 5 acres or a shore frontage greater that 165 feet. This does not apply to land inherited from spouse, sibling or other relative.

A purchase may be approved subject to certain conditions being met including restrictions on subdividing, agreement that land not be developed, that a buffer zone be implemented or that the applicant becomes a resident.

A purchase may be denied if the Aggregate Land Holdings of the individual or corporation exceed limits, the purchase would result in a non-resident controlling too much waterfrontage or too much waterfrontage in any given area falling under the ownership of non-residents or the Commission believing that land speculation is at the heart of the purchase. In any case the maximum amount of property any individual may own is 1000 acres and corporation 3000 acres.

Application takes in the order of 3-4 weeks and non-residents should always add "subject to IRAC approval" to any offer they make. When making an application as well as the completed form you will need an acceptable map of the parcel, legal description, details of the advertising that lead you to be interested in PEI real estate property and a fee of 1% or $500 whichever is greater.

While this sounds very onerous the process is usually easily completed and was never intended to prevent non-islanders from buying land - rather to prevent speculative purchases by investors that would have unnecessarily increased land prices to residents.

This is an overview of the process and is not intended as a final authority. Talk to your realtor or lawyer for further information.

Ron Wesleyi is a PEI real estate consultant and he is vast experience in PEI real estate field. If you want to know more about real estate visit here http://www.royallepagepei.com/