Land Owner Transparency Act

The Government of British Columbia has committed to a 30-Point Plan for Housing Affordability.  A part of the recently announced plan, involves the ending the “hidden ownership” of real estate to make sure people are paying their fair share of taxes.  In that regard, the Government has released a White Paper, setting out its policy objectives in this regard.

The draft legislation in this White Paper sets out a framework for the Land Owner Transparency Act (Act). The purpose of the Act is to increase transparency of landownership in BC by eliminating the ability to hide ownership through vehicles like trusts and shell corporations. Under the Act, corporations, trustees and partners (reporting bodies) will be required to identify the individuals that have a beneficial interest in land, that have a significant interest in the landowning corporation or that have an interest in land through a partnership. This disclosure requirement will apply to all land in BC unless specifically excluded.

The framework under the Act creates new disclosure requirements for reporting bodies in three situations:

1. on any application to register an interest land in the name of a reporting body;
2. any time there is a change of interest holders or beneficial owners (even when this does not result in a transfer of legal title to the land); and
3. during an initial transition period all those holding an interest in land for a beneficial owner will be required to file a disclosure report.

The information to be collected varies depending on the type of entity that owns the land; however, in all cases, the intent of the legislation is to identify the individual(s) who fundamentally own and control the land. For corporations, information that must be disclosed includes:

1. identification information about the corporation itself (including name, head office and business or incorporation number);
2. identification information about each individual (including name, citizenship and place of residence) who directly or indirectly owns or controls 25% or more of the shares or otherwise falls under the definition of a “corporate interest holder”;
3. each corporate interest holder’s date of birth, social insurance number or individual tax number, and the nature of the interest in the reporting corporation; and
4. information about the person completing the report (including name, position name or title, and contact information).

Where the legal owner of the land is a trustee:

1. identification information about the trustee, beneficial owner(s) and settlor(s);
2. date of birth and social insurance number or individual tax number of beneficial owner(s) and settlor(s); and
3. information about the person completing the report.

For partnerships:

1. identification information about the partnership (including name, head office and business number);
2. identification information about individuals that have an interest as a partner in the interest in the land or are a corporate interest holder in a corporation that is a partner;
3. date of birth and social insurance number or individual tax number of these individuals; and
4. information about the person completing the report.

The legislation recognizes that corporate or other structures used to own land can be very complicated and, in some cases, the reporting body may not be able to determine or confirm the identity of the individuals who ultimately own or control the corporation. In these cases, the reporting body is required to take steps to try and determine the identity of the individuals who control the corporation, outline the steps that were taken to identify the appropriate individuals, and provide the reasons the identity could not be confirmed.

The proposed legislation seeks to preserve and maintain the integrity of the land title system by clarifying that persons dealing with legal interests in land are not affected by transparency declarations and disclosure reports filed under the legislation and that these documents are not records filed under the Land Title Act.

The basic identification information disclosed under the Act will be publicly available. Transparency is a core element of this legislation and is a key part of the government’s efforts to crack down on tax fraud and close loopholes. A publicly available database will help to foster accurate reporting by registered land owners. In addition, a publicly accessible data base of beneficial ownership may be important for tenants, contractors and others who deal with land owners. A public database of beneficial ownership of land could also help financial institutions, lawyers, notaries, real estate agents and others who have a statutory or professional duty to inquire into and confirm the beneficial ownership identity.

One of the key priorities of the legislation is to balance the need for increased transparency with the privacy concerns associated with a public database. The proposed Act includes a number of provisions to address these concerns including the following:

1. restricting the information that is available to the public and allowing more sensitive information such as social insurance numbers and dates of birth to be available only to authorized entities such as law enforcement agencies and tax authorities;
2. automatically omitting information relating to individuals under the age of 19 or those legally incapable of managing their financial affairs;
3. creating the ability for vulnerable individuals (e.g. victims of domestic violence) to apply to have their personal information omitted from the publicly accessible information;
4. requiring that the person filing the report contact corporate interest holders, beneficial owners and/or partnership interest holders in writing to advise them of the right to apply to omit information from the publicly accessible information; and
5. creating a mandatory 30 day waiting period before making information in the disclosure report publicly available to provide an opportunity for vulnerable individuals to make an application to omit information.

Other key proposals in the draft legislation include provisions relating to compliance and enforcement.

Examples include:

1. requiring the registrar of land titles to refuse to accept an application to register an interest in land if a completed transparency declaration and, if applicable, a completed disclosure report is not provided;
2. creating administrative penalties up to $50,000 for designated contraventions of the Act;
3. creating criminal offences with penalties up to $100,000 for designated contraventions of the Act; and
4. giving the administrator the power to conduct inspections in order to determine whether the Act and the regulations have been complied with.

For more information about the Land Owner Transparency Act, or for assistance in planning for its implementation and application, please contact our firm at (604) 688-4900, or email Paul S.O. Barbeau at paul@barbeau.co.