The New Land Owner Transparency Act and Strata Lot Owners: What You Need to Know
By Paul G. Mendes and Alexendar R. Starr
Paul Mendes, Partner Alexander R. Starr, Associate
Phone: 604-685-4894 Phone: 604-674-9943
Email: pgm@lmlaw.ca Email: ars@lmlaw.ca
To aid taxation enforcement, the government has passed the Land Owner Transparency Act, 2019 SBC c. 23 (“LOTA”) to create a new registry to track beneficial land ownership. This legislation comes into effect on November 30, 2020. Below are a few key points for Stratas and Owners of Strata Lots to know:
The new Land Owner Transparency Act establishes a Land Owner Transparency Registry (“LOTR”) so that all beneficial ownership in land is recorded and tracked in British Columbia. Starting November 30, any relevant partnership, trust, or corporation will be required to file a transparency declaration when registering an interest in land. There are several named exemptions to these categories, including strata corporations and public companies, for example. There could be advantages of LOTR for Stratas, who may be able to utilize searches in the LOTR to investigate Owner issues. The responsibility for the LOTR falls to the Land Title and Survey Authority of British Columbia, responsible for maintaining BC’s land title system.
Starting November 30, 2020 transparency declarations must be filed on all land transfers
After November 30, 2020, whenever an application is made to register an interest in land, such as a transfer of land following a sale, a transparency declaration must be filed to the LOTA Administrator by the transferee. This transparency declaration must disclose whether the transferee is a ‘reporting body.’ For private individuals and other transferees that are not reporting bodies, the transparency declaration will merely disclose that they are not a reporting body. For reporting bodies, the transparency declaration must include a transparency report, including information about the reporting body and individuals who are interested in the reporting body.
Any partnership, trust or corporation which is not excluded under the Schedules to LOTA is considered a reporting body. A transparency report must disclose certain information about an interest in land, such as the relevant parcel identifier. The report must also disclose information about each person who is an interest holder in the reporting body, such as the individual’s name, social insurance number, and tax residency status.
The LOTR will use transparency reports to track who holds the beneficial interest in each parcel of land in BC, although there are some interesting exceptions. For example, transparency declarations are not required for leases with an initial term of less than 10 years. Generally speaking, most partnerships and private corporations qualify as reporting bodies, although the exceptions for trusts are broader. Additionally, certain lands are exempt; for example, no transparency report is required for lands that are the treaty lands of a Treaty First Nation.
All reporting landowners must file an initial transparency report by November 30, 2021
By November 30, 2021, any reporting body, being a partnership, trust, or corporation with an interest in land, must file an initial transparency report for the properties held by the reporting body. These initial transparency reports, mirroring those filed on the transfer of an interest in land, will disclose details about beneficial interest holders of partnerships, trusts, and corporations with an interest in land.
These initial transparency reports will ensure that the LOTR contains information about beneficial ownership for all land parcels in BC, not just those transferred after the implementation of the LOTA.
Individual Persons and Stratas are NOT required to report to the Land Owner Transparency Registry
Strata Corporations, as defined in the Strata Property Act, are expressly excluded from the definition of a relevant corporation under 1(n) of Schedule 1 to LOTA and are not required to file transparency reports. Because only relevant corporations must file a transparency report, a Strata Corporation is not require to file a transparency report even if it owns property which is not common property, such as an individual strata lot.
Additionally, most strata lot owners will not be required to file a transparency report, as they are individual persons and not considered a reporting body.
However, both Stratas and Owners will still need to file a transparency declaration when initially registering an interest in land, merely disclosing that they are not reporting bodies.
Some Owners may be reporting entities
Because investing in land is common in British Columbia, some strata lot owners may be corporations or trusts, such as real estate investment trusts or privately-held property management companies. These reporting bodies, which hold strata lots, will need to file transparency reports. This is likely more common in newer buildings or high profile buildings, where the property may be a more attractive investment.
The required disclosure by these reporting owners does not modify the Strata’s responsibilities under the LOTA. Reporting owners will disclose directly to the LOTR, and the Strata is not entitled or required to know the beneficial owners of any strata lots.
Starting April 31, 2021, the LOTR will be searchable for a fee, enabling Strata’s to discover the beneficial owners of strata lots
The registry will be searchable starting April 31, 2021, for a nominal $5.00 search fee. However, some filed information (such as interest holders’ social insurance numbers) will not be provided to the public. Strata Corporations will be able to pay the $5.00 search fee and obtain information about the beneficial owners of any lot in the Strata. However, Strata Corporations should have a justifiable reason for the search and budget line item for the search fee.
It is also noted that initial transparency reports do not need to be filed until November 30, 2021, so searches before that date will only reveal information about land interests which have been transferred since November 30, 2020.
Conclusion
Most key aspects of the Land Owner Transparency Act come into effect in British Columbia on November 30, 2020, including establishing the Land Owner Transparency Registry and the requirement to file transparency declarations on transfers of interests in land. Other elements of the legislation, such as initial transparency reports and the searches of the LOTR, will be in effect by November 31, 2021. This act will not likely cause significant changes to the operation of Strata Corporations, or to the obligations of Strata Corporations and individual persons who are Owners of strata lots.
WHAT WE DO: Lesperance Mendes advises strata lot owners, strata corporations and property managers on all aspects of strata property law. For information on this strata alert, please contact Paul G. Mendes at pgm@lmlaw.ca or 604-685-4894 or Alex Starr at ars@lmlaw.ca or 604-674-9943.
THIS ARTICLE IS NOT LEGAL ADVICE: This article provides general information and should not be relied on upon without independent legal advice.