Land Owner Transparency Act and Land Owner Transparency Regulation: Both Now in Force
On November 30, 2020, the Land Owner Transparency Act (“LOTA”) came into force together with the Land Owner Transparency Regulation (“LOTR”), to create the Land Owner Transparency Registry (the “Registry”). Introduced in hopes of curbing the acquisition of real property in British Columbia through illicit funds, the Land Owner Transparency Registry will be a searchable, public database housing information about individuals who are deemed to have an indirect “interest in land”.
In order to gather this information, the LOTA imposes two new reporting requirements for those who acquire or hold “an interest in land”: Transparency Declarations and Transparency Reports. Reporting bodies who fail to comply with the LOTA by filing the required Transparency Declaration and Transparency Report in a truthful and timely manner may face hefty fines.
Under the LOTA an “interest in land” is defined as:
- + an estate in fee simple;
- + a life estate in land;
- + a right to occupy land under a lease that has a term of more than 10 years;
- + a right under an agreement for sale to occupy land or to require the transfer of an estate in fee simple; or
- + an estate, right or interest to be prescribed by regulation, which could eventually include interests such as mortgages, options to purchase and rights of first refusal.
Under the new reporting requirements, all transferees who acquire such an interest in land must file, concurrently with their application to register the interest, what is known as a “Transparency Declaration”. Primarily, the Transparency Declaration outlines whether the transferee is a “reporting body” and, if so, which reporting body they are. There are three types of reporting bodies under the LOTA:
- a relevant corporation, meaning a corporation or limited liability company but does not include a corporation or limited liability company that is excluded pursuant to Schedule 1 of the LOTA;
- a relevant partnership, meaning a general partnership, limited partnership, limited liability partnership, professional partnership or foreign partnership within the meaning of the Partnership Act (British Columbia), a prescribed partnership or any legal relationship created in another jurisdiction that is similar to any of the legal relationships described in this paragraph, but does not include a prescribed partnership or legal relationship; and
- a relevant trust, meaning an express trust, including a bare trust, a prescribed trust or any legal relationship created in another jurisdiction that is similar to any of the legal relationships described in this paragraph, but does not include a trust excluded pursuant to Schedule 2 of the LOTA or a legal relationship, created in another jurisdiction, similar to those excluded pursuant to Schedule 2 of the LOTA.
For non-reporting bodies, the requirements under the LOTA generally end after filing a Transparency Declaration. Reporting bodies, however, face further obligations.
Pursuant to the LOTA, a reporting body that either acquires or holds an interest in land must file what is known as a “Transparency Report”. The Transparency Report must be filed:
- + concurrently with the application to register the interest in land;
- + if the reporting body already has a registered interest in land, then before November 30, 2021, unless the reporting body ceases to be a reporting body during this period, or disposes of its interest in land prior to such date;
- + if a non-reporting body becomes a reporting body after November 30, 2021, then within two months of becoming a reporting body.
Transparency Report requirements vary depending on what type of reporting body the entity is. Below are the notable reporting obligations:
A relevant corporation must disclose information for all “Corporate Interest Holders”, which are individuals who:
- + own or control, alone or with others, directly or indirectly, 10% or more of the equity or voting rights of the corporation; or
- + have the right, alone or with others, directly or indirectly, to appoint or remove a majority of the directors of the corporation.
A relevant trust must disclose information for all “Beneficial Owners”, which are individuals who:
- + hold a beneficial interest in the subject land;
- + have the power to revoke the trust and receive the interest in land; or
- + are a corporate interest holder of a corporation that has a beneficial interest in the land, or has the power to revoke the trust and receive the interest in the land
A relevant partnership must disclose information for all “Partnership Interest Holders”, which are:
- + a partner in the relevant partnership; or
- + a ‘Corporate Interest Holder’ of a corporation that is a partner in the ‘Relevant Partnership’.
Continuing Disclosure Obligation
Reporting bodies have an obligation to take reasonable steps to obtain and confirm the accuracy of the information included in their Transparency Report, and any errors or omissions may be corrected by filing a new Transparency Report.
Additionally, if a reporting body becomes aware that an individual who is an interest holder or settlor may be incapable of managing their financial affairs, the reporting body must take reasonable steps to determine whether a determination of incapacity has been made by a court, designated health authority, or prescribed person, and a new Transparency Report must be filed within two months, unless the reporting body disposes of its interest in land to which the Transparency Report relates within that period.
Finally, if a reporting body ceases to be a reporting body in respect of an interest in land, a notice must be filed with the LOTA administrator within two months of the date it ceases to be a reporting body.
If you have any questions about your reporting requirements under the LOTA, please don’t hesitate to contact Navnit Duhra from our Business Law Group. Reporting bodies who fail to comply with the LOTA by filing the required Transparency Declaration and Transparency Report in a truthful and timely manner may face hefty fines.