This Blog was written by: Peter Meitanis
WANTED: The Beneficial Owners of Real Estate in British Columbia
If you’re a fan of movies about the Wild West, you’ll know that many plotlines revolve around a mysterious stranger coming to town. But in British Columbia, the mysterious strangers aren’t riding into town to rob the stagecoach. They’re here to buy up all the real estate.
In recent years, the BC government has been putting measures in place to tackle foreign speculation, prevent tax fraud and boost housing supply. Unlike the Wild West, it hasn’t been able to identify potential lawbreakers by their black cowboy hats. Legal entities like trusts continue to be used to hide the true ownership of real estate, making it difficult to expose tax frauds and those engaged in money laundering. How successful has the government been in identifying foreign buyers and owners? One might say that it’s been the real estate equivalent of tumbleweed slowly rolling across the province.
Earlier this summer, the BC Ministry of Finance issued a white paper on the proposed Land Owner Transparency Act. The purpose of this legislation is to create a registry of beneficial ownership in land, the first of its kind in Canada. The Act would require certain corporations, trustees and partnerships to file disclosures regarding the identity of the beneficial owners of interests in land. This sounds like the beginning of a saloon brawl.
Where the legal owner of the land is a trustee, the information that must be disclosed includes:
- identification information about the trustee, beneficial owner(s) and settlor(s)
- the date of birth and social insurance number or individual tax number of beneficial owner(s) and settlor(s)
- information about the person completing the report
It has also been proposed that the more basic identification information provided would be publicly accessible. So any member of the general public can mosey on down to the Land Registry Office and complete a search.
One of the key priorities of the legislation is to balance the need for increased transparency with the privacy concerns associated with a public database. Fortunately for Billy the Kid, the White Paper proposes the mandatory omission of information about minors and incapable individuals from the publicly accessible information.
Other provisions of interest under the proposed Act include:
- the right for beneficial owners to apply to omit information from the publicly accessible information
- the creation of administrative penalties and criminal offences for designated contraventions
- requiring the registrar of land titles to refuse to accept an application if a completed transparency declaration is not provided
- the exclusion of charitable and testamentary trusts from the reporting requirements
Can the BC government hang its hat on the registry? Will the rest of the provinces follow? Only time will tell if the response will be a showdown at dawn, or riding off into the BC sunset.