A Whole Lot to Know About the Land Owner Transparency Act #533
CATEGORY: Legally Speaking
TAGS: Land Owner Transparency Act Land Owner Transparency Registry LOTR
On November 30, 2020, the Land Owner Transparency Act1 (LOTA) came into effect, and with it, the Land Owner Transparency Registry (LOTR). Now, with every change in title to a property in British Columbia, a transparency declaration must be filed with the Land Title and Survey Authority of British Columbia (LTSA). Individuals acquiring an interest in land are responsible for completing the declaration. REALTORS® should be aware of these new requirements so they can advise clients to speak to a legal professional as needed. Legal professionals will assist clients with the required filings on all future property purchases.
On the transparency declaration, the transferee (i.e., the person or entity about to become the new registered owner) must declare if they are a reporting body. A reporting body is any one of the following:
- a relevant corporation;
- a trustee of a relevant trust; or
- a partner of a relevant partnership.
If the transferee is a reporting body, then a transparency report must also be filed. The type of information that must be included in the transparency report can include the following (depending on the type of reporting body): full names, citizenship of individuals, country of residence and address of principal residence, date of birth, social insurance number, tax number, last known address, the type of partnership, the address for the partnership, jurisdiction (laws) that governs the partnership, head office, and information about the settlor of a trust.2
Practically speaking, this means all properties owned by a company, or properties that are held in trust for another party under a trust (including a bare trust) or a partnership, are reporting bodies and therefore must file a transparency report to confirm who the interest holders of the corporation, the trust, or the partnership (as applicable) are. The Province introduced LOTR as part of its plan to address housing affordability in BC and "end hidden ownership."
Here is an example of how LOTR works:
Pretend Holdings Ltd. purchases a property closing on December 18, 2020. The only shareholders of Pretend Holdings Ltd. are John Smith and Jane Smith. John and Jane each own 50% of the shares in Pretend Holdings Ltd.
On the closing date, before the transfer documents can be filed with the LTSA, a transparency declaration must be filed. Since a company is going on title to the property, the transparency declaration will confirm that the transferee, Pretend Holdings Ltd., is a reporting body since it is a relevant corporation. This means that a transparency report also needs to be filed. The transparency report will confirm who the interest holders of Pretend Holdings Ltd. are. A corporate interest holder is someone who owns 10% or more of the shares or voting shares in a relevant corporation. Therefore, in this example, the transparency report will disclose that John Smith and Jane Smith are the corporate interest holders.
All existing reporting bodies (where the transfer was filed prior to November 30, 2020) must file a transparency report by November 30, 2021, disclosing who the interest holders of the property are. Clients may wish to reach out to legal professionals for assistance with filing these reports.
Moving forward, if there is a change of interest holder, the reporting body must file a new transparency report, regardless of whether registered ownership changes or not. For example, using the fact pattern set out above, if Jane Smith were to sell her shares in Pretend Holdings Ltd. to John Doe, then Pretend Holdings Ltd. would need to file a new transparency report disclosing that Jane Smith ceased being an interest holder and that John Doe is now an interest holder in the property.
The registry will become publicly accessible beginning April 30, 2021. Similar to land title searches, a fee will be charged for all LOTR searches. According to the LOTR website, the search fees will be $5.00 per search.3 However, not all information filed with the registry will be available to the public, only primary information about interest holders. Secondary information including birth dates and social insurance numbers will only be accessible by those defined as a regulator, a taxing authority, or law enforcement.4
British Columbia has a new registry that records and discloses who the beneficial owners, or interest holders, of properties are. The registry will soon become publicly accessible. It is unclear at this time how the information noted in the registry will be used by the public, financial institutions, and the government.
Realtors need to be able to understand the basic principles of the LOTR and inform their clients as to what kinds of information will become publicly available through the registry. Realtors may also wish to help educate past clients who are reporting bodies, that they need to file a transparency report prior to November 30, 2021, for all existing properties that were acquired prior to November 30, 2020. If you believe your client is a reporting body, have them reach out to the legal representative to discuss LOTR filing and disclosure requirements. Note there are fines of up to $100,000 or 15% of the assessed value of the property, for offences, failure to file, or providing false or misleading information under LOTA.
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