The BC Government (“Government”) recently provided updated guidance for interpreting the Land Owner Transparency Act, SBC 2019, c. 23 (“Act”), which came into force on November 30, 2020. Under the Act, any person or entity that will acquire an “interest in land” will need to make a disclosure filing called a transparency declaration, identifying whether the registered owner of the interest in land is a “reporting body”. If the registered owner is a reporting body, it will be required to file a transparency report in addition to the transparency declaration, which will include certain information about the registered owner and the “interest holders,” which are the individuals that are the indirect or beneficial owners of the interest in land. Alternatively, any person or entity that is a “reporting body” and already owns an “interest in land” will only need to file a transparency report disclosing the applicable interest holder information by November 30, 2022. For more information, see our article on the Act coming into force or our article on the public Land Owner Transparency Registry.
The following updated guidance has been provided:
Incorporated societies are considered to be relevant corporations under the Act and must file a transparency declaration and transparency report, as applicable, if a society acquires or already owns an “interest in land.” Societies are independent entities with their own constitution and bylaws. Members of a society who have the ability to appoint or remove the majority of directors of a society are “corporate interest holders” and must be disclosed. If there are no members who have the power to appoint or remove a majority of the directors of a society, the society must still file a transparency report indicating that there are no interest holders.
Relevant trusts can be express trusts, prescribed trusts, or trusts created through legal relationships. The following information has been offered:
- No written trust agreements
If a registered owner of property owns the property in trust for another entity, even if there is no written trust agreement, the registered owner is considered to be a “relevant trust” and must file a transparency report disclosing the “beneficial owners” of the property.
- Class beneficiaries, contingent interests and discretionary trusts
- If a trust does not name specific individuals but rather a class of beneficiaries, the filing party can simply indicate the class of beneficiaries without disclosing the individuals.
- An individual who is a beneficiary through an express trust that may receive the benefit of an interest in land, even if on a contingent or discretionary basis, is considered a beneficial owner under the Act and must be disclosed in a transparency report.
- The disclosure requirements do not include trusts that are contingent upon the death of another individual or alter ego trusts, among other excluded trusts as listed in Schedule 2 of the Act, since these trusts do not provide for the possibility of a beneficiary receiving the benefit of the interest in land. Alter ego trusts are a type of inter vivos trust, where the grantor is alive and names beneficiaries of property upon their death.
- Alter ego and bare trusts
Interests in land held through bare trusts must also be disclosed as bare trusts involve the separation of legal and beneficial ownership of a property.
If an interest in land is held in an alter ego trust and a bare trust is the trustee of the alter ego trust, the trustee of the bare trust must file a transparency report identifying the “beneficial owners.”
- Partnerships and trusts
If the interest in land pertains to partnership property, an individual who is both a trustee and a partner should file the transparency report as a partner of a relevant partnership and disclose the “partnership interest holders” of the interest in land. If it is not partnership property, the individual should file as trustee of a relevant trust and identify the “beneficial owners” of the interest in land.
Partial Interests in Land
A parent who helps their child with a down payment and assumes a partial, albeit nominal, interest in the land may be required to submit a transparency declaration as trustee. In these circumstances, one must consider whether the parent has an actual beneficial interest in the land (such that they would receive a portion of the proceeds upon sale), or whether the interest is only being held for financing purposes. If the latter, the parent is likely considered a trustee and must file a transparency report identifying the child as the actual beneficial owner. If the parent is not the legal and beneficial owner of the interest in land, then they would need to file a transparency report as the trustee of a relevant trust identifying the actual beneficial owner of the interest (i.e. the child).
Beneficial Owners of a Corporation’s Shares
Both the registered and beneficial owners of a “significant number of shares” (as defined in the Act) of a corporation must be identified in a transparency report. A beneficial owner can include an individual whose interest is held through a trustee. Where shares are held in a trust, the beneficiaries of that trust must be disclosed. However, certain trusts may not allow for a beneficiary to receive any benefit from shares held in trust. For example, shares held in a discretionary trust are generally exempt as the terms of those trust documents do not entitle the individual to receive the benefit of the interest in land.
For advice on the LOTR disclosure requirements, please contact a member of our Commercial Real Estate Group.