On November 30, 2020, British Columbia’s new Land Owner Transparency Act, S.B.C. 2019, c. 23 (“LOTA”) came into force. New applicants registering an interest in land may be required to file a Transparency Report setting out information about the applicant and the interest holders of real property. LOTA also requires most trustees, corporations, and partnerships that own land to file a Transparency Report before November 30, 2021.
(1) What is LOTA?
LOTA requires the registered owner of real property to report individuals with an indirect interest in land (i.e., ownership held through a corporation, partnership, or trust) in the Land Owner Transparency Registry, which is administered by the Land Title and Survey Authority of British Columbia. Some of the information in the Registry is accessible by the public.
LOTA requires any “Reporting Body” to file a Transparency Report by November 30, 2021. A failure to file a Transparency Report may lead to administrative penalties or significant fines. The requirement to file is outlined below.
(2) Who will LOTA impact?
LOTA requires the disclosure of individuals who have an “interest in land” that is held indirectly through a corporation, trust (including a bare trust or nominee arrangement), or partnership. An “interest in land” is not just ownership in fee simple, but is defined more broadly to include a life estate, a right to occupy land under a lease over 10 years (some leases are exempt under the Regulations), and a right to occupy land under an agreement for sale.
Where an interest in land is held indirectly, LOTA requires the Reporting Body to file a Transparency Report with prescribed information. A Reporting Body includes:
- a “relevant corporation”, defined as all corporations and limited liability companies, unless specifically excluded in Schedule 1 of LOTA (for example, reporting issuers, corporations listed on a designated exchange and trust companies are excluded);
- a trustee of a “relevant trust”, defined as all express trusts, including bare trusts, as well as similar legal relationships in other jurisdictions, unless specifically excluded in Schedule 2 of LOTA (for example, registered owners that are testamentary trusts, alter ego trusts, joint spousal or common-law partner trusts and trustees that are administrators of estates are excluded); and
- a partner of a “relevant partnership” which includes general, limited, limited liability, professional, and foreign partnerships, as well as legal relationships in other jurisdictions similar to partnerships in British Columbia.
A discussion of how LOTA applies to partnerships is outside the scope of this article, which will only discuss the application of LOTA to trustees and corporations.
(3) What information must be disclosed?
The Reporting Body must disclose certain information about the Reporting Body itself, namely:
- Individuals must include their full names, whether they are citizens or permanent residents of Canada (and if not, every country or state where they are citizens), and the cities and provinces of their principal residences (or, if the principal residence is outside Canada, the city and country where the principal residence is located);
- Corporations must include the corporation’s name, registered office address, head office address, jurisdiction of incorporation, and, if applicable, the jurisdiction into which the corporation was most recently continued or transferred (the “Corporation’s Primary Identification Information”).
Additionally, the Transparency Report must include details regarding the interest holders, being individuals who own an indirect interest in land. The definition of “interest holder” with respect to trusts and corporations are as follows:
- Corporate interest holders include individuals who, alone or jointly with one or more other individual(s),
(a) legally or beneficially owns 10% or more of the issued shares or shares carrying 10% or more of the voting rights (beneficial owners whose interests are contingent on the death of another individual are excluded);
(b) have direct or indirect control over 10% or more of the issued shares or shares carrying 10% or more of the voting rights;
(c) have a right (or indirect control over a right) to elect, appoint or remove a majority of the corporation’s directors; or
(d) have the ability to exercise direct significant influence over an individual that has the (direct or indirect) right to elect, appoint or remove the majority of the corporation’s directors.
If an individual has more than one type of interest, those interests are aggregated. In some cases, multiple individuals’ interests are aggregated, including where the individuals are “associated”[1] or their rights are subject to an agreement or arrangement to exercise the rights jointly or in concert.
- Trust interest holders include beneficial owners, meaning individuals who have a beneficial interest in the land (unless that interest is contingent on the death of another individual), individuals who have the power to revoke the trust and receive the land personally, and corporate interest holders of companies with similar rights. Trusts must also disclose information about their settlors.
Reporting bodies have a positive obligation to take steps to confirm the accuracy of the information in a Transparency Report. If some information is not obtainable, the Reporting Body must make a declaration providing the information the Reporting Body has obtained and outlining the steps they have taken to obtain any missing information.
The information that must be provided in respect of each Reporting Body, interest holder and settlor is extensive (dates of birth, last known addresses, social insurance numbers or individual tax numbers, tax residency and information about any mental capacity determinations) and some information (name, citizenship and permanent residency details, and city of principal residence) is publicly accessible. Some individuals, including minors, individuals who have been determined by a court or health authority designate not to have capacity, and those who have successfully applied for an exemption from public disclosure, will be excluded from the public disclosure aspect of LOTA. The entire Transparency Report is available to law enforcement agencies, tax authorities and other regulators, including where they are providing assistance to agencies outside of Canada pursual to an agreement, arrangement, treaty or law.
The Reporting Body has a positive obligation to give written notice to each interest holder required to be identified the Transparency Report before filing the report. This notice must explain to the interest holder that their information is required and that they have a right to apply to omit certain information from the publicly accessible Land Owner Transparency Registry. The Reporting Body must also provide an extract of the Transparency Report to each interest holder showing the information contained therein within seven days of submitting the report.
(4) Ongoing Disclosure Obligations
Reporting bodies have ongoing obligations to update information filed in the Land Title Transparency Registry. These include an updated report filed within two months if there is a change in interest holders, the registered owner becomes or ceases to be a Reporting Body, or if an interest holder is no longer able to manage their own affairs.
(5) What deadlines are imposed by LOTA?
For registered owners who were reporting bodies when LOTA came into force (i.e., on November 30, 2020), the legislation sets a deadline of November 30, 2021, to file a Transparency Report. Those who fail to do so can be subject to administrative penalties or fines, which can be as high as the greater of:
- $50,000 for corporations, $25,000 for individuals, or
- 15% of the assessed value of the property (for both corporations and individuals).
(6) How will LOTA impact your corporation or trust?
If your corporation was the registered owner of an interest in land on or after November 30, 2020, it is required to file a Transparency Report prior to November 30, 2021 to identify the individuals who are the beneficial owners of the land unless your corporation is one that is specifically excluded in Schedule 1.
If you are the registered owner of an interest in land and act as trustee in respect of that interest, you are required to file a Transparency Report prior to November 30, 2021 to identify the individuals who are the beneficial owners of the land (even if a trust instrument is not registered on title).
(7) Conclusion
LOTA is a detailed and complex piece of legislation that warrants close review and personalized advice. To avoid penalties, if you or your organization falls within the definition of a “Reporting Body” (described above), we recommend you seek advice now to ensure timely filing.
[1] The LOTA partially adopts the definition of “associate” in the British Columbia Business Corporations Act. In general, this will result in the aggregation of the interests of spouses, parents and children as well as other relatives who live in the same home.