This is the first in a series of articles to be published by Lawson Lundell on the subject of the BC Government’s Land Owner Transparency Act (British Columbia) (“LOTA”).
In 2018, the B.C. government released a White Paper on LOTA which set out a draft legislative framework for the introduction of a publicly accessible registry (the “Registry”) for the disclosure of beneficial ownership of lands in B.C. The redraft of the proposed legislation was introduced in the B.C. legislature under Bill 23 on April 2, 2019, and on May 16, 2019, LOTA received Royal Assent. It is expected that LOTA will come into force in the second half of 2020 once its regulations are passed.
The Registry is to be administrated by the Land Title and Survey Authority of British Columbia (“LTSA”), and its stated intent is to identify all individuals who ultimately own real estate in B.C. for the purposes of, among other things, allowing government authorities and law enforcement agencies to address tax evasion and money laundering activities connected to the ownership of land in B.C.
The scope of the reporting obligations under LOTA is extensive and will have implications for all property owners (including developers) who use corporate vehicles (including partnerships and trusts) to hold or acquire prescribed interests in land in B.C., including ownership and a lease of more than 10 years. As of today, mortgages are not included in the categories of land registration that require disclosure under LOTA.
The creation of the Registry is a complex, first-of-its-kind undertaking in Canada and many of the specifics of the legislation have yet to be clarified by regulation. Regardless, LOTA will create additional administrative costs, fees and delays to real estate ownership and transactions in B.C. On that basis, it will be critical for developers to obtain legal advice so that this additional burden can be minimized.
Set out below is a summary overview of the most important things we know (and don't yet know) about LOTA.
Who Will be Impacted?
LOTA introduces the concept of a “reporting body” which must report on the beneficial ownership of B.C. lands. A reporting body means:
- a “relevant corporation”, meaning all corporations except certain exempted entities such as government bodies, reporting issuers, publicly-listed corporations, corporations incorporated by an enactment, schools, strata corporations, insurance companies, trust companies, and pension funds; 
- a “relevant trust”, meaning any trust except certain exempted entities such as charitable trusts, testamentary trusts, alter ego trusts, trusts in respect of pension plans, and mutual fund trusts ; and
- a “relevant partnership”, meaning any form of partnership (including limited partnerships).
Reporting bodies will have to disclose the individuals who either hold a significant number of shares in the corporation, a beneficial interest in the land, or have an interest in land through a partnership, as the case may be. A “significant number of shares” is broadly defined in LOTA and includes (but is not limited to) ownership of 10% or more of the issued shares of the relevant corporation.
Notably, there is not yet any definition in LOTA of what constitutes a “beneficial interest” (although it will be obvious in some cases) and there is no equity test provided in respect of participation in a partnership (i.e. no minimum investment threshold for limited partners which triggers disclosure).
What Information is Collected and How is Privacy Protected?
The information to be collected varies depending on the type of entity that owns the land. Unless reversed by regulation, the disclosure requirements of LOTA have the potential to be particularly onerous on those participating in partnerships that own land in B.C.
In all cases, regardless of the type of entity, there will be a requirement under LOTA to provide personal information regarding individuals which the legislation deems to be “interest holders”.
The required personal information includes both publicly accessible information that will be posted on the Registry (including name, citizenship status and city of principal residence) and other information which will be accessible only by government agencies (including date of birth, social insurance and tax numbers).
The information of minors is automatically omitted and LOTA also allows for individuals to apply to have their personal information omitted from the public Registry in limited circumstances where that disclosure could put health or safety at risk.
When is Disclosure Required?
The framework under LOTA creates new disclosure requirements for persons or entities that qualify as “reporting bodies” in three situations:
- on any application to register an interest in land in the name of a reporting body;
- 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
- during an initial transition period where all reporting bodies will be required to file a disclosure report (which will have the effect of creating a current registry of all beneficial ownership in B.C.).
The timing for the commencement of the initial transition period has not been confirmed by the Government.
Does LOTA Actually Have Bite?
The LTO will refuse to register a transfer application if the LOTA filing requirements are not followed.  As well, failing to file or providing false or misleading information may lead to administrative penalties. For individuals, the penalty cannot exceed the greater of $25,000 and 5% of the assessed value of the property. In all other cases, the penalty cannot exceed the greater of $50,000 and 5% of the assessed value of the property. 
Inspection powers are also granted to an enforcement officer to be designated by the Minister of Finance under the Public Service Act (British Columbia) to determine compliance with LOTA, including powers to enter a place of business or records office and to require persons to produce records or answer questions relevant to an inspection.
Other Unknowns and Implications
Many of the most important provisions in LOTA have been made subject to regulations which have not yet been finalized, and therefore the finalized regulations may significantly add to or alter the requirements of LOTA as we understand them today.
With LOTA’s disclosure requirements, developers may find land assemblies become more challenging. Often, land assemblies are conducted through the use of shell companies such that sellers do not know who the beneficial owner of the buyer is. Going forward with LOTA, once the first transfer is filed in the LTO, the identity of the beneficial owner will be publicly available. This may make some land assemblies more challenging to complete, particularly those that take place over a longer time period.
As well, there has been speculation over the years that the B.C. government would amend the Property Transfer Tax Act (British Columbia) to capture beneficial as well as legal transfers of real property in B.C. Many lawyers speculate that LOTA is an initial step to the government extending the property transfer tax (“PTT”) to transactions involving a change of beneficial ownership. PTT on beneficial transfers of real property where there is no corresponding legal transfer could significantly affect the way real estate developers and investors do business and structure their affairs in B.C.
 Schedule 1 of LOTA
 Schedule 2 of LOTA
 Sections 11 and 14 of LOTA
 Section 61 of LOTA
With thanks to summer student Katherine Zhou for her assistance drafting this post.
Tim practices in the Corporate Commercial Group at Lawson Lundell and has advised clients of private companies on various legal matters relating to business associations, corporate reorganizations and drafting commercial ...
Chad works in the Real Estate Group at Lawson Lundell and assists clients with all aspects of real estate development, commercial leasing and municipal planning. In particular, Chad has experience: acting for developers in ...
Ed practices in the real estate and municipal law fields with a specialty in real estate development.
Ed has assisted clients in such projects as: redevelopment of industrial sites to permit multi-family residential uses; heritage ...
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