Landowners in British Columbia risk hefty fines if they do not comply with new legislation that came into force on November 30, 2020.
The Land Owner Transparency Act (“LOTA”) requires the disclosure of information about any indirect or “hidden” owners of property in the Province – that is, those who have an interest in or material control over a property that is not reflected in the land title register.
LOTA was implemented as a part of the Province’s efforts to improve the affordability of housing and to combat money laundering and tax evasion. Under it, you must provide disclosure about any indirect ownership of land upon every property transfer from November 30, 2020 onwards and on certain properties that were held prior to November 30, 2020.
The legislation is complex and, unfortunately, in order to determine what, if any, requirements you may have under LOTA, it is necessary to first understand the meaning of several terms.
There are two elements to LOTA’s disclosure requirements:
- a Transparency Declaration (a “Declaration”); and
- a Transparency Report (a “Report”).
In certain instances, an entity (e.g. an individual, corporation, trustee, or partner) may be required to file a Declaration that confirms whether or not it is a Reporting Body. If it is a Reporting Body, then it must take the additional step of submitting a Report. A Report requires detailed information about the Reporting Body and its Interest Holders. In certain other circumstances, an entity may be required to submit a Report, without first completing a Declaration.
What is a Reporting Body and who is considered an Interest Holder?
Under LOTA, there are three types of Reporting Bodies – and they must file a Report about their interest holders.
- Corporations – this includes all private corporations and LLCs, with certain exceptions (such as strata corporations). A corporate Interest Holder is a party that:
- owns or controls, either solely or jointly, and either directly or indirectly, 10 percent or more of the equity (e.g. shares) or voting rights; or
- has the direct or indirect right to appoint or remove a majority of the directors.
- Trusts – this refers to all express trusts, with certain exceptions (such as testamentary or charitable trusts). An Interest Holder for a trust has any of the following:
- a beneficial interest in the land
- the power to revoke the trust and receive the interest in land
- a corporate interest holder of a corporation that has a beneficial interest in the land or the power to revoke the trust and receive the interest in land
- Partnerships – this includes all partnerships. An Interest Holder in a partnership is any of the following:
- a partner in the partnership; or
- a corporate interest holder of a corporation that is a partner in a partnership
What constitutes an Interest in Land?
For the purposes of LOTA, an interest in land includes:
- an estate in fee simple (outright ownership);
- a life estate;
- a right to occupy under lease (with a term greater than 10 years);
- a right to occupy or require transfer under agreement for sale; and
- a right that is prescribed by regulation.
Who is required to file a Declaration and/or Report and when?
Existing Land Owners
Reporting Bodies that owned land prior to November 30, 2020 and still own the land a year later, must file a Report by November 30, 2021.
New Land Owners
Any person who receives an interest in land in B.C. on or after November 30, 2020, is required to file a Declaration. If you are purchasing a new property and fail to file a Declaration, the Land Title Office will not register the transfer. If you are also a Reporting Body you are required to file a Report, in addition to the Declaration.
New Reporting Body
If an existing owner of an interest in land becomes a Reporting Body after November 30, 2020, then it must file a Report within two months of the change. Conversely, if a Reporting Body ceases to be a Reporting Body, then it is not required to file a Report by November 30, 2021.
Reporting Bodies have an ongoing obligation to disclose changes in circumstances that would render previously filed Reports out-of-date.
What will be done with the Information?
The information you disclose will be available, in varying degrees, to both government agencies and the general public through a searchable database called the Land Owner Transparency Registry (“LOTR”). Select government authorities, such as the Canada Revenue Agency, the BC Securities Commission, and law enforcement, will have access to your complete information, while the general public’s access will be more limited. LOTR becomes functional on April 30, 2021.
If you have concerns that making your information public may pose a health or safety risk to you or your family, you may apply to have your personal information hidden from public view. By default, your information will not appear on LOTR until 90 days after the Report has been submitted, to allow you time to make such an application.
Violators of LOTA face significant penalties. If a Reporting Body fails to file a Report or provides false information, it can be fined up to the greater of 15 percent of the assessed value of the property at issue and $25,000 for individuals or $50,000 for corporations and others.
Any other offences under LOTA may be subject to a fine of $50,000 for individuals or $100,000 for corporations and other entities.
As previously mentioned, the Land Title Office will not accept an application to transfer land unless a Declaration has been filed.
Considering the risks of non-compliance and the complexity of the legislation, it is recommended that you contact a lawyer to assist you in determining your obligations under LOTA, preparing your Declarations and/or Reports, and making any applications to prevent public access to your information on LOTR.