British Columbia Land Owner Transparency Act becomes law

In its 2018 budget, the British Columbia government stated it would track information about beneficial ownership of land in the province. Interests in land are often held by corporations, trusts and partnerships, in which case the registered owner on title may not hold any beneficial interest, and there are currently no public records of beneficial interests.

On May 16, 2019, Bill 23, the Land Owner Transparency Act (the Act) received royal assent. The Act will create a publicly accessible registry of beneficial interests in land.

Interest in land

The primary obligations under the Act concern an “interest in land,” which includes freehold interests, life interests, leasehold interests under leases with a term of more than 10 years, contractual rights to occupy land or require the transfer of a freehold interest and other interests prescribed by regulation. The obligations under the Act arise in relation to interests in land that are registered under the Land Title Act and not unregistered interests.

Reporting bodies

The Act will create obligations upon certain “reporting bodies” to report on holders of beneficial interests in land in British Columbia. The following are reporting bodies under the Act:

• relevant corporations – corporations and limited liability companies, other than certain exempt corporations such as government bodies, municipal corporations, statutory authorities, certain financial institutions, public companies and corporations owned by Indigenous nations;
• trustees of relevant trusts – trustees, including under express trusts and bare trusts or similar relationships under the laws of other jurisdictions, subject to exceptions, including for special trusts such as charities, pension plans, mutual funds, REITs, estate trustees and bankruptcy trustees and exceptions to be prescribed by regulation; and
• partners of relevant partnerships – partners, including under general partnerships, limited partnerships, liability limited partnerships, professional partnerships and foreign partnerships, subject to exceptions to be prescribed by regulation.

Transparency reports

Upon application to register an interest in land in the land title office, a transferee will be required to file a transparency declaration stating whether or not it is a reporting body. Each reporting body that is a registered owner of land will be required to file a transparency report in respect of interest holders. The obligation to file a transparency report will arise upon (i) registration of an interest in land in the name of a reporting body and (ii) any change of interest holders (even when legal title is not being transferred). In addition, during an initial transition period after the provisions of the Act come into force, all reporting bodies will be required to file an initial transparency report.

The transparency report will include certain information about the reporting body and “interest holders,” being:

• corporate interest holders – in relation to a corporation, individuals, directly or indirectly owning or controlling 10% or more of the shares or voting rights or who otherwise fall under the definition of a “corporate interest holder”;
• beneficial owners – in relation to a relevant trust, individuals who have a beneficial interest in land, have a power to revoke a trust in respect of an interest in land or are a corporate interest holder of a corporation that has a beneficial interest in an interest in land or the power to revoke a trust in respect of an interest in land; and
• partnership interest holders – in relation to a partnership, individuals who have an interest as a partner or are a corporate interest holder in a corporation that is a partner.

The transparency report will be required to include:

• for relevant corporations, the corporation’s name, registered address and head office address (if any), jurisdiction of incorporation or continuation and incorporation number and business number;
• for relevant trusts, information about the individual or corporate trustee(s) and settlor(s) corresponding to certain of the information that would be required for individual interest holders or relevant corporations;
• for relevant partnerships, the partnership’s business name, type of partnership, registered address or head office address and address of principal business premises, jurisdiction of organization and identification number (if any) and business number;
• in each case, for each interest holder:
  • the individual’s name, date of birth, social insurance number, tax number, location of principal residence and last known address;
  • the date on which each individual became or ceased to be an interest holder and the nature of the individual’s interest in the reporting body; and
  • whether or not the individual is a Canadian citizen or permanent resident of Canada.

The Act recognizes that, in certain cases, reporting bodies will not have information about interest holders or will have difficulty obtaining and verifying such information. In this respect, it creates a duty for reporting bodies to take reasonable steps to obtain and confirm the accuracy of interest holder information.

Although basic information, including names of interest holders, will be publicly available, more sensitive information such as social insurance numbers and dates of birth will only be available to government and law enforcement agencies. Certain information will also be omitted from the public database entirely, such as any information on minors or those otherwise legally incapable of managing their affairs. Persons at risk from disclosure of such information (such as victims of domestic violence) can apply to have information omitted from the public database.

Reporting bodies may need to seek advice as to the content of transparency reports, as there are notification provisions for individual interest holders named in a transparency report, and penalties for failure to comply.

Offences and liability

The registrar of land titles will be required to refuse to accept an application to register an interest in land if the transferee does not submit a transparency declaration or if a reporting body does not submit a transparency report. A reporting body that fails to file a transparency report or provides false or misleading information in a transparency report may be subject to a fine of up to the greater of (i) $50,000 for a corporation or other entity or $25,000 for an individual or (ii) 15% of the assessed value of the property. Other offences under the Act may be subject to a fine up to $100,000 for a corporation or other entity or $50,000 for an individual.

Timeline

The Act’s operative provisions will come into force by regulation. While the exact timeframe for implementation is not clear, it is expected that there will be a transition period to allow affected parties to develop compliance procedures.

The authors wish to thank articling student Adam Lazar for his help in preparing this legal update