In May 2019, the BC government passed the Land Owner Transparency Act (“LOTA”) as part of an effort to combat real estate money laundering and tax evasion within the province.
The purpose of the LOTA is to eliminate hidden ownership of land. Currently, the land title system in BC only requires the legal owner to be registered on the title of a property. It is therefore possible to conceal the identity of the real or beneficial owner by using a corporation, trust, or partnership to hold legal title.
The LOTA seeks to create transparency and to close loopholes by introducing mandatory reporting obligations for “interest holders” who have an indirect interest in land (i.e. interests held through corporations, trusts, and partnerships), with limited exemptions. Partial information about the interest holders disclosed through such reports will be housed in a publicly searchable database via the newly-established Land Owner Transparency Registry.
Beginning on November 30, 2020, any time an application is made to register or transfer an interest in land under the Land Title Act, a “transparency declaration” must be filed to declare whether the transferee is a “reporting body” (an entity required to file a “transparency report” under the LOTA), and if so, which type of reporting body it is (i.e. a corporation, trustee, or partner). If the transferee is a reporting body, the transparency report must be submitted along with the application. The transparency report will disclose details about both the reporting body and the interest holder, including the interest holder’s legal name, date of birth, social insurance number, principal residence, citizenship, and nature of interest in the reporting body.
It is important to note that the LOTA applies retroactively. Pre-existing owners that fall into the definition of reporting bodies must file a transparency report by November 30 of next year.
If the filing requirements of the LOTA are not complied with, the Registrar of Land Titles will decline to register or transfer an interest in land. Furthermore, a reporting body that fails to file a transparency report or provides misleading information in a transparency report may be subject to a fine of not more than the greater of: (a) $50,000 for a corporation or other entity, or $25,000 for an individual; or (b) 15% of the assessed value of the property to which the transparency report relates.
If you are wondering how these changes will impact you, or would like additional information, contact Kyle Wang today for advice.