We recently published an article on compliance with the disclosure requirements of the Land Owner Transparency Act. The BC Government announced on November 2, 2021 that it was extending the disclosure compliance deadline for existing landowners from November 30, 2021 to November 30, 2022. See the following government bulletin for further details on the extension here.
Overview
The Land Owner Transparency Act, SBC 2019, c. 23 (the “LOTA”) is BC legislation that came into effect on November 30, 2020. It is designed to eliminate hidden ownership of land by requiring disclosure of the identity of any significant beneficial or indirect owner. However, it applies not only to new transferees of real property but also to existing property owners if they are a “reporting body” as defined in the LOTA. Existing landowners only have until November 30, 2021 to comply with the LOTA’s requirements or they risk imposition of financial penalties.
“Reporting Bodies”
A “reporting body” under the LOTA means:
• a “relevant corporation” (a corporation or limited liability company, including incorporated associations and societies);
• a trustee of a “relevant trust” (including an express or prescribed trust, or a similar legal relationship created in another jurisdiction); or
• a partner of a “relevant partnership” (including a general partnership, limited partnership, limited liability partnership, professional partnership or foreign partnership, or a similar legal relationship created under another jurisdiction).
Exempt from disclosure requirements are: public companies, testamentary and charitable trusts, insurance companies, strata corporations, savings institutions, or corporations and trusts related to government bodies, First Nations authorities, or pension funds.
If an exemption does not apply, a reporting body that holds title to real property must file a transparency declaration and a transparency report on or before November 30, 2021 no matter when the interest in land was acquired.
“Interest Holders”
The identity of “interest holders” is what needs to be disclosed under the LOTA regime. An “interest holder” will include any person who fits any of the following definitions.
“Corporate interest holder” – any individual who, alone or jointly with one or more other individuals:
(i) directly or indirectly owns or controls at least 10% of a “relevant corporation’s” shares; or
(ii) directly or indirectly has the voting rights to elect, appoint or remove a majority of the directors; or
(iii) has the ability to exercise direct and significant influence over an individual who has the above rights.
“Beneficial owner” – any individual who:
(i) has beneficial interest other than an interest contingent on the death of another individual; or
(ii) has the power to revoke the relevant trust and receive the interest in land; or
(iii) is a corporate interest holder of a relevant corporation that has any of the above rights.
“Partnership interest holder” – any individual who is:
(i) a partner in a relevant partnership where at least one of the partners holds a registered interest in land that is partnership property of the relevant partnership; or
(ii) a corporate interest holder in a relevant corporation that is itself a partner in a relevant partnership.
“Settlor” – any individual who is a settlor of a relevant trust, except for any settlor who is also a trustee or an individual beneficial owner in respect of the trust over the subject property.
Penalties
If a landowner contravenes the LOTA, an enforcement officer may impose a penalty based on factors set out in section 60. These factors include (i) previous enforcement actions under the LOTA, (ii) the gravity and magnitude of the contravention, (iii) whether the contravention was repeated or continuous, (iv) whether it was deliberate, (v) whether any economic benefit was derived by the person due to the contravention, and (vi) whether the reporting body made efforts to correct the contravention. The maximum penalty for an individual is the greater of $25,000 or 5% of the assessed value of the subject property. The maximum penalty on a person other than an individual is the greater of $50,000 or 5% of assessed value.
Implications
Prospective and existing landowners should seek legal advice to make sure they are compliant with the LOTA, especially in more complex land ownership structures that involve multiple layers of corporations, partnerships or trusts. Failure to comply with disclosure requirements may result in hefty fines, and existing landowners who have not yet done so are running out of time.
