Deadline Fast Approaching for Retroactive Disclosure
In an ongoing attempt to curb money-laundering, tax evasion and hidden property ownership, the BC provincial government introduced the Land Owner Transparency Act (“LOTA”) and Land Owner Transparency Registry (“LOTR”), which came into force on November 30, 2020.
With the introduction of LOTA and LOTR, there are now requirements to file a transparency declaration disclosing “interest holders” and a subsequent report if the holder of an “interest in land” is a “reporting body”. These declarations and, if applicable, reports, must accompany every registration for the transfer of land at the Land Title Office, as well as other registrations relating to “interests in land”.
Further, on or before November 30, 2021, “reporting bodies” will need to file a retroactive Land Owner Transparency Report disclosing all “interest holders” with “interests in land” for any pre-existing real property holdings, with limited exceptions. This will affect most corporate interest holders who hold a beneficial or indirect interest in land through corporate ownership.
This deadline should not be overlooked, as the potential fines and penalties for failing to file the transparency report are significant. Individuals may be liable for fines of up to $25,000 and reporting bodies, for fines of up to $50,000. Additional fines of up to $100,000 may be imposed for other offences under LOTA.
What is an “interest in land”?
An ”interest in land” pursuant to LOTA includes:
- fee simple estates;
- life estates;
- leases with a remaining term greater than 10 years;
- a right to occupy or require a transfer of land under an agreement for sale; and
- other prescribed real property interests.
What is a “reporting body”?
Under LOTA, a reporting body is a:
- “relevant corporation”, which includes privately held corporations or limited liability companies, including incorporated associations and societies; but excludes entities specifically exempt under Schedule 1 of LOTA (e.g., strata and public corporations);
- “relevant trust”, being express trusts, bare trusts or a similar legal relationship created in another jurisdiction, but excluding those trusts specifically exempt under Schedule 2 of LOTA; or
- “relevant partnership”, which includes general partnerships, limited partnerships, limited liability partnerships, professional partnerships or foreign partnerships within the meaning of the BC Partnership Act or a similar legal relationship created under another jurisdiction.
Who/what are “interest holders”?
The ultimate purpose of LOTA is to identify the individual(s) with an interest in land. More specifically, the individual(s) who holds the beneficial interest in land or has prescribed rights in relation to the land through a reporting body. LOTA breaks interest holders into three categories: corporate interest holders; partnership interest holders; and beneficial owners.
Corporate Interest Holders:
Under LOTA, corporate interest holders are individuals that:
- directly or indirectly own, or indirectly control:
- 10% or more of the shares or equity in the relevant corporation; or
- shares of the relevant corporation that carry 10% or more of the voting rights at general meetings; or
- have the right that if exercised, would result in the election, appointment or removal or the majority of the directors of the relevant corporation.
Partnership Interest Holders:
When an interest in land is partnership property, under LOTA partnership interest holders are presumed to be individuals that are:
- partners in a relevant corporation; or
- corporate interest holders of a relevant corporation that are partners in a relevant corporation;
in each case, either directly or indirectly through a chain of relevant partnerships.
Beneficial Interest Holders:
Under LOTA, a beneficial interest holder is an individual that:
- has a beneficial interest in land that is not contingent on the death of another individual, registered in the name of the trustee of the relevant trust; or
- has the power to revoke the relevant trust and receive an interest in land;
in each case, either directly or as a corporate interest holder of a relevant corporation with such rights.
What information is disclosed in the report?
The LOTR is a publicly accessible registry. Any person can search an individual’s name or a parcel identifier (PID) to determine an individual’s various interests in land in the case of a name search, or beneficial ownership in land in the case of a PID search. This is achieved by filing the above noted declaration and report, as applicable.
Each report must include “primary identification information”. For individual interest holders this disclosure (which is publicly available) includes:
- the individual’s full name;
- whether or not the individual is a Canadian citizen or permanent resident of Canada;
- if the individual is not a Canadian citizen or permanent resident of Canada, every country or state of which the individual is a citizen;
- if the individual’s principal residence is in Canada, the city and province in which that principal residence is located; and
- if the individual’s principal residence is outside Canada, the city and country in which that principal residence is located.
Other non-public disclosure requirements include date of birth, SIN or individual tax number, and a description of how the individual is an interest holder.
There are additional disclosure requirements for relevant corporations, relevant trusts and relevant partnerships.
Takeaways for our Clients
If you are an “interest holder” in a “reporting body” you should confirm if a transparency report needs to be filed for your relevant corporation, partnership or trust before the November 30, 2021 deadline. LOTA is complex and relatively new legislation, with potentially significant consequences for non-compliance. As a result, consulting a legal professional to assist in preparing your transparency report is advisable. If you have questions or would like assistance in meeting these disclosure requirements, we encourage you to reach out to our business law practice group.