Land Owner Transparency Act- Disclosing Beneficial Ownership of Land by Ron Kelly

BC Land Owner Transparency Act (“LOTA”)

The British Columbia Land Owner Transparency Act (“LOTA”) became law May 16, 2019, and is in force from November 30, 2020.  The purpose of LOTA is to establish a new registry in BC disclosing the beneficial ownership of land in BC.  The idea is to “drill down” from the registered owner of the land, through any and all layers of entities to find out the particulars of the actual individual people who are the beneficial owners of that land.  This is part of the Province’s efforts to prevent tax evasion, fraud and money laundering.

LOTA applies to all situations where land in BC is owned by a company or held in trust for beneficial owners.  It also applies to lands leased for a term of more than ten (10) years registered at the Land Title Office.  There are very few exemptions from this new law, although it does not apply to First Nations Lands or any other types of land which the Province might exclude by regulation.

LOTA introduces two (2) new concepts to the law in BC.  The first is that of a “reporting body” which is required to file a transparency declaration and possibly transparency reports in the new registry.  Reporting bodies are legal entities (or relationships) which are capable of owning land and for which there are distinct legal and beneficial owners.  The three (3) types are:

1. “Relevant corporations”, being all corporations except those specifically excluded (such exclusions include government entities, statutory authorities, public companies, financial institutions, insurance companies, strata corporations, corporations owned by First Nations and wholly owned subsidiaries of other excluded entities);
2. “Relevant trusts”, being almost all express trusts and their trustees, including bare trusts and the nominees or bare trustees thereunder (but excluding testamentary trusts, charitable trusts and the Public Guardian and Trustee);
3. “Relevant partnerships”, being all types of partnerships including general partnerships, limited partnerships, limited liability partnerships, professional partnerships and foreign partnerships.

The second new concept introduced by LOTA is that of “interest holders”.  There are three (3) categories of interest holders.  They are:

1. A “beneficial owner”, which is an individual who has an interest in land registered in the name of a trustee, has the power to revoke a relevant trust and receive the interest in the subject land or is a “corporate interest holder” in a “relevant corporation” which itself has a beneficial interest in land or the power to revoke the “relevant trust” and receive the interest in land itself;
2. A “corporate interest holder”, which is an individual who:
   • has a beneficial or registered interest in a significant amount of shares of a corporation (being defined as a 10% or more ownership of outstanding shares or a 10% or more voting right control in a corporation); or
   • has the right or ability to directly or indirectly appoint the majority of the board of directors in a corporation or to significantly control an individual with such rights; or
   • through jointly held interests, rights or abilities, meets one of the criteria set out in (a) or (b) above, with all such individuals being considered corporate interest holders;
3. A “partnership interest holder”, which is 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”.

These two new concepts determine who has to file and when filings are required under LOTA’s new registry.  A reporting body has an obligation to file under LOTA if:

1. There is a registration of a new interest in land at the Land Title Office;
2. There is a pre-existing interest in land; or
3. There are changes in interest holdings in land or in a reporting body.

When a new interest in land is registered at the Land Title Office, the transferee must file a transparency declaration disclosing whether or not the transferee is a reporting body, and, if so, which type of reporting body.  If the transferee is a reporting body, then it must also file a transparency report in which it discloses information about itself and all its relevant interest holders.

If a relevant corporation, a trustee of a relevant trust, or a partner of a relevant partnership is already a registered land owner on November 30, 2020, then it must file a transparency report by November 30, 2021.  A very large percentage of BC land owners will need to make a filing under LOTA (a transparency declaration and, where applicable, a transparency report) in the near future.

In addition, if a land owner becomes a reporting body or discovers that a prior filing (either a transparency declaration or a transparency report) is or becomes inaccurate due to a change in the interest holder (which could merely be a change of shareholders in a relevant corporation) then the reporting body must file a new transparency report within two (2) months of becoming a reporting body or becoming aware of the inaccuracy or change.

The information which needs to be disclosed by reporting bodies and interest holders in transparency reports is:

1. For individual “interest holders”, each individual’s primary identification (being full name, citizenship status, location of principal residence and other required items), last known address, social insurance number, tax number (if applicable), residency status for tax purposes and a description of how such individual is an interest holder;
2. For “relevant corporations”, for each individual interest holder in the corporation, the information set out in item 1 above plus the relevant corporation’s business number, the incorporation, continuation, amalgamation or other identifying numbers for the corporation from the jurisdiction in which it was incorporated and particulars of the land to which the transparency report relates;
3. For “relevant trusts”, the information required in item 1 above for the trustee or settlor of the relevant trust (including the nominee or bare trustee in bare trusts), any relevant registrations pertaining to such trust and particulars of the land to which the transparency report relates; and
4. For “relevant partnerships”, for each individual interest holder in the partnership, the information set out in item 1 above plus the partnership’s primary identification information, type of partnership, business number, identifying registration number (if any) from the jurisdiction in which it was established, registered office or head office address and particulars of the land to which the transparency report relates.

Information filed at the new LOTA registry will be reviewable at two (2) levels.  The public will be able to search the database through the Land Title and Survey Authority and obtain only primary identification information concerning interest holders and reporting bodies for any particular property in BC.  LOTA does provide for a ninety (90) day delay in the provision of such information so that the registry may provide notice of the request to the interest holder affected in order to give that interest holder an opportunity to apply to keep their information confidential where permitted under LOTA.  All information in the database will be available to LOTA enforcement officers, Ministry of Finance officials, federal and provincial tax authorities, the BC Assessment Authority, federal and provincial law enforcement and regulators (including the BC Securities Commission, the BC Financial Services Authority, FINTRAC and the Law Society of BC).

Failure to submit a transparency declaration (and, if required a transparency report) will result in the Land Title Office refusing to register the interest in land.  Less significant contraventions of LOTA are subject to penalties up to the greater of $25,000 for individuals or $50,000 for non-individuals and 5% of the assessed value of the subject property.  The most serious contraventions of LOTA are subject to fines up to the greater of $25,000 to $50,000 for individuals or $50,000 to $100,000 for non-individuals and 15% of the assessed value of the subject property.

As a significant percentage of properties in BC were owned on November 30, 2020 either by a corporation or an owner holding title in trust for an unregistered and undisclosed beneficial owner, it is necessary for all such owners to prepare and register transparency reports and transparency declarations by November 30, 2021.  If you require more information on LOTA you may wish to read the information brochure available at the following link – https://landtransparency.ca/wp-content/uploads/2020/06/LOTR_Presentation_WEBSITE-June-9.pdf, on their website – landtransparency.ca or contact one of our lawyers at Baker Newby LLP.  We can also assist you in the completion and filing of your reports when they are due, if you so wish.

• This communication is intended for general informational purposes only and does not constitute legal advice or an opinion on any issue. We would be pleased to provide additional details or advice about specific situations if you wish.