Canada: What You Need To Know About The Land Owner Transparency Act

The Land Owner Transparency Act (British Columbia) ("LOTA" or the "Act") received royal assent on May 16, 2019 and will be in force once regulations are passed. LOTA is part of the government's efforts to bring enhanced visibility on the ownership of land in British Columbia. Once the Act is operational, individuals and entities who directly or indirectly hold beneficial interests in British Columbia land will be required to disclose specific information such as place of residence, SIN number, tax residency, etc. The disclosure requirements will apply to all parties who fundamentally own and control land including corporations, partnerships and trusts. A portion of the information collected will be made available and publically searchable by way of registry administered by the Province's Land Title and Survey Authority ("LTSA").

Who will be affected?

LOTA's disclosure requirements are wide-reaching. With certain exceptions, LOTA will affect anyone who currently holds or may acquire an interest in land in British Columbia (including any leased land where the term of the lease is more than 10 years). Reporting bodies and interest holders are obligated to comply with LOTA.

1. Reporting Bodies

A reporting body is defined under LOTA as a relevant corporation, a trustee of a relevant trust or a partner of a relevant partnership. Such reporting bodies are required to file transparency declarations and/or transparency reports. There are three main types of reporting bodies, all of which are subject to certain reporting obligations: relevant corporations, relevant trusts and relevant partnerships:

1. Relevant Corporations – LOTA defines relevant corporations as all corporations and limited liability corporations which have not been expressly excluded.
2. Relevant Trusts – LOTA applies to all trusts unless they are excluded.
3. Relevant Partnerships – LOTA captures 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 that is similar to any of the above-mentioned types of partnerships.

2. Interest Holders

LOTA's disclosure obligations extend to individuals who are considered interest holders under the Act. Interest holders fall into three broad categories: a i) beneficial owner; ii) corporate interest holder; or iii) partnership interest holder:

1. A Beneficial Owner – An individual is a beneficial owner if the individual:
   1. has a beneficial interest in land other than an interest that is contingent on the death of another individual; or
   2. has the power to revoke the relevant trust and receive the interest in land; or
   3. is a corporate interest holder (described below) in respect of a relevant corporation and the relevant corporation has a beneficial interest in land or the power to revoke the relevant trust and receive the interest in land.
2. A Corporate Interest Holder – An individual is a corporate interest holder if the individual:
   1. 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
   2. 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
   3. through jointly held interests, rights or abilities, meets the criteria set out in (a) or (b), in such case, all such individuals are considered cooperate interest holders.
3. A Partnership Interest Holder – An individual is a partnership interest holder if the individual:
   1. is a partner in a relevant partnership; or
   2. is a corporate interest holder in a relevant corporation which is a partner in a relevant partnership

What actions are required?

Three main situations trigger a reporting body's obligation to file under LOTA: i) the registration of a new interest in land at a land title office ("LTO"); ii) pre-existing interests in land; and iii) changes in interest holdings in land. When registering a new interest in land, 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. The transferee is considered a reporting body it is also required to file a transparency report to disclose information about the reporting body itself and all relevant interest holders. If immediately before the coming into force of section 15 of LOTA, a relevant corporation, a trustee of a relevant trust, or a partner of a relevant partnership is a registered owner of land, then such corporation, trustee or partner must file a transparency report within a limited time period to be set by the LOTA regulations. If an entity becomes a reporting body or discovers a prior filing is inaccurate due to a change in the interest holder, the reporting body must file a transparency report within two months of the entity becoming a report body or being aware of the inaccurate information.

What information must be disclosed?

The following information must be disclosed in a transparency report by reporting bodies and interest holders:

1. Interest Holders – Reporting bodies must report the following information regarding each of their interest holders: 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.
2. Relevant Corporations – Relevant corporations must disclose the information described in (a) for all of its interest holders; 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.
3. Relevant Trusts – The reporting body must disclose the information required in paragraph (a) above 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.
4. Relevant Partnerships – The 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?

In an effort to enhance transparency, a searchable registry database will be make available to the public. The registry database will be maintained by the LTSA and will disclosed primary identification information in respect of interest holders and reporting bodies. There will also be a 90-day window before information is made public to allow for an application under LOTA to keep the primary identification information confidential in certain cases.

What inspections and demands for information can be made under the act?

Under LOTA, enforcement officers are permitted to carry out investigations to ensure compliance with the legislation. The enforcement officers are granted the power to: inspect records and other material or property that may relevant to the investigation; obtain personal information; remove records or other property for the purposes of conducting the investigation; and make copies or extracts of records.

There is a duty under LOTA to cooperate with the investigation, however, LOTA does not extend the powers of the officers to search the records of a lawyer if the lawyer claims such records are protected by solicitor-client privilege.

What are the penalties for non-compliance?

Non-compliance with LOTA can have significant consequences. If a party improperly submits or fails to submit the appropriate documents, the LTO has the authority to refuse registration of an interest in land. Apart from the refusal to register the land, direct contraventions of LOTA can result in administrative penalties.

This article was co-authored by James Stewart, an articling student in Gowling WLG's Vancouver office.

Read the original article on GowlingWLG.com

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