Corporate interest holders in British Columbia are now likely familiar with the recently introduced disclosure requirements implemented by the province for all BC companies. A similar disclosure will now be required as it relates to real property in British Columbia This is the result of new legislation known as the Land Owner Transparency Act, SBC 2019, c 23 and supplementing Land Owner Transparency Regulation (collectively, “LOTA”) which will come into force on November 30, 2020.
What is LOTA?
LOTA is legislation that is designed to enhance disclosure and transparency of ownership in real estate in British Columbia. The key essence of LOTA is the creation of the Land Owner Transparency Registry which will be administered by the Land Title and Survey Authority of British Columbia (“LTSA”).
What is the Land Owner Transparency Registry?
The Land Owner Transparency Registry will result in mandatory reporting about indirect ownership of real property. The information that is obtained via the reporting requirements will be publicly accessible. Beginning on November 30, 2020, any person who applies to the LTSA to register an “interest in land” (in practical terms, whenever a land transfer occurs) will be required to file a transparency declaration as part of their registration.
What is a Transparency Declaration?
A transparency declaration will contain information about whether a transferee in a real estate transaction is a “reporting body” as defined in LOTA. There are three types of reporting bodies:
- relevant Corporations, being all corporations and limited liability corporations;
- relevant Trusts, being all forms of trusts; and
- relevant Partnerships, being all types of partnerships including general partnerships, limited partnerships, limited liability partnerships, professional partnerships, foreign partnerships, prescribed partnerships, or a legal relationship, created in another jurisdiction.
LOTA does contain some exclusions on the above categories, but for the most part these are all encompassing definitions.
If a transferee is deemed to be a “reporting body” they must further disclose identifying information about themselves and all indirect owners of the interest in land. LOTA considers these entities to be “interest holders”. Interest holders may be one of the following:
- Beneficial Owners, defined as an individual who:
- is a beneficial interest in land other than an interest that is contingent on the death of another individual;
- has the power to revoke the relevant trust and receive the interest in land; or
- is a corporate interest holder in respect of a relevant corporation and has a beneficial interest in land or the power to revoke the relevant trust and receive the interest in land.
- Corporate Interest Holders, defined as an individual who:
- has a beneficial or registered interest in a significant amount of shares of a corporation (defined as 10% or more of outstanding shares or 10% or more of the voting rights in a corporation); or
- has the rights or ability to directly or indirectly appoint the majority of the board of directors in a corporation or has the ability to significantly control an individual with the rights or ability to appoint or remove a majority of directors; or
- through jointly held interests, rights or abilities, meets the criteria set out in (a) or (b).
- Partnership Interest Holders, defined as an individual who:
- is a partner in a relevant partnership; or
- is a corporate interest holder in a relevant corporation which is a partner in a relevant partnership.
When is a Transparency Declaration Required?
As of November 30, 2020, there will be three situations where a transparency declaration will need to be filed:
- the registration of a new interest in land with the LTSA (a land transfer);
- pre-existing interests in land; and
- changes in interest holdings in land.
When registering a land transfer, the transferee must file a transparency declaration to disclose whether or not the transferee is a reporting body, and if so, which type of reporting body. If the transferee is considered a reporting body the transparency declaration must contain information on the interest holders.
If, immediately before November 30, 2020, a reporting body is a registered owner of an interest in land, that owner must file a Transparency Report by November 30, 2021 (one year after LOTA comes into force). If any owner of a pre-existing registered interest in land is not a reporting body they will not need to file a transparency declaration.
What information must be disclosed?
Reporting bodies and interest holders will need to disclose the following information:
Interest Holders must disclose primary identification information (full name, citizenship status, location of principal residence, etc.), last known address, SIN number, tax number (if applicable), residency status for tax purposes, and a description of how they are an interest holder.
Relevant Corporations must disclose the information described above for all of its interest holders. In addition, the relevant corporation’s business number, if any, within the meaning of the Income Tax Act (Canada), the incorporation, continuation, amalgamation or other identifying numbers given to the corporation by the jurisdiction in which they were incorporated, and the parcel identifier assigned to the land to which the transparency report relates.
Relevant Trusts must disclose the information required above (for interest holders) for each of the settlors of the relevant trust as well as the parcel identifier assigned to the land to which the report relates. In addition, the reference number of any relevant trust instruments must be disclosed.
Relevant Partnerships must disclose the partnership’s primary identification information; business number under the Income Tax Act (Canada), and the identifying number, if any, issued to the partnership by the jurisdiction in which it was formed.
What information will be available on the public registry?
The Land Owner Transparency Registry will be maintained by the LTSA and will disclose primary identification information in respect of interest holders and reporting bodies. The implementation of certain provisions of LOTA that deal primarily with inspection rights and searches of the Land Owner Transparency Registry do not come into force until April 30, 2021. As a result, it is likely that the Land Owner Transparency Registry will not be available for inspection until such time.
What are the penalties for non-compliance?
If a party improperly submits or fails to submit the appropriate documents, the LTSA has the authority to refuse registration of an interest in land. In addition, administrative penalties can also be enforced.
Moving Forward
The scope of the reporting obligations under LOTA is widely encompassing. LOTA will have ramifications for all property owners (both residential and commercial) who use companies, trusts and partnerships for holding interests in land. Given the complexity and novelty of LOTA, along with the rigorous disclosure requirements, it will be crucial for purchasers, land owners, and developers to obtain legal advice and understand the requirements of LOTA moving forward.
This article is provided as information only and should not be construed as legal advice. Always consult with a lawyer to provide you with advice specific to your own situation. For more information, please contact Patrick Bobyn by calling (250) 869-1286 or by email at [email protected].
Patrick Bobyn is a solicitor practicing in the areas of business law, and real estate. His real estate practice involves assisting both residential and commercial clients with purchases, sales, financing and leasing.
