Important Changes coming soon to Disclosure of Beneficial Ownership of Land in BCNov 4 2020
The Land Owner Transparency Act (“LOTA”) will come into effect on November 30, 2020 creating the Land Owner Transparency Registry (“LOTR”). The LOTR is a first of its kind registry which will contain information about individuals who have an indirect interest in real property within British Columbia.
The essential purpose of LOTA and LOTR is to trace through the layers of a particular ownership structure to determine the individual “interest holders” who beneficially own a property in British Columbia. It was one of the main recommendations arising from the expert report commissioned by the Ministry of Finance and titled, Combatting Money Laundering in BC Real Estate, and is an attempt by the Provincial Government to stop illegal money from negatively affecting market prices and housing affordability in British Columbia.
How does the LOTR affect me?
LOTR will be a public and searchable database when its search functionalities become operative on April 30, 2021.
LOTR creates reporting obligations whenever a transferee makes an application to register an interest in land (i.e. a purchaser of an ownership interest of real estate in British Columbia). In each instance, a “transparency declaration” must be filed.
If the transferee (purchaser) is a “reporting body” as defined in LOTA, then a more detailed “transparency report” must be filed. A reporting body is defined in LOTA as including all private corporations and LLCs, all express trusts, and all partnerships. The reporting body must then disclose individual interest holders, such as individual shareholders in the case of corporations, and individual partners in the case of partnerships.
LOTR also creates reporting obligations for pre-existing owners of real estate in British Columbia who fall within the definition of a reporting body. These pre-existing owners who fall within the definition of a reporting body must file a transparency report disclosing its interest holders by November 30, 2021.
What information is stored and accessible in LOTR?
LOTR will contain both primary and secondary identification information of the reporting body and individual interest holders.
In the case of an individual, primary identification information means the interest holders full name, whether they are a Canadian citizen or Permanent Resident, and their City and Province of residence (if in Canada). Secondary identification information for an individual includes their date of birth, address, social insurance number, tax number, residence for tax purposes, and a description of their interest held in the reporting body.
Importantly, the public can only obtain primary identification information about interest holders, by searching either the parcel identifier of the property, or by name. The only five entities that are entitled to all information in LOTR are the LOTA enforcement officer, employees of the Ministry of Finance and Taxing authority, Law enforcement officers, and certain regulatory organizations (BC Securities Commission, FICOM (BCFSA), FINTRAC, Law Society of BC).
What happens if lota/lotr reporting obligations are not met?
The Ministry of Finance is responsible for the general enforcement of LOTA. An enforcement officer designated by the Ministry of Finance may conduct inspections, make rulings related to compliance, and even issue administrative penalties and fines (up to $25,000 in the case of an individual and up to $50,000 otherwise).
The structure of LOTR makes it mandatory for transparency declarations to be filed whenever an application to register an interest in land is made. Furthermore, if the transferee is a reporting body, a more detailed transparency report must also be filed. If these filing requirements have not been met, the Registrar of Land Titles must refuse to accept the application to register the interest in land.
RDM Lawyers LLP is committed to guiding our clients through these important changes. Important information regarding LOTR can also be found on www.landtransparency.ca. We encourage you to contact a member of RDM’s Real Estate Team to address any questions at 604.853.0774.