Are you buying real estate, adding to your investment portfolio? A first-time investment property buyer looking to get a little nest-egg of income properties together and you're aware of certain protections or advantages that a corporation might provide? Or a sophisticated large landowner or developer who has been holding lands in corporations or via co-tenancy interests for decades? Maybe your company owns land from which you run your business.
Well then, listen up because you may need to visit your lawyer.
As of December 10, 2016, changes to the Ontario Business Corporations Act, came into force requiring every corporation incorporated under that Act to maintain at its registered head office a register of its ownership interests in land in Ontario. The register must identify each Ontario property acquired and owned, show the dateof acquisition and, if applicable, disposition, of the property and--here's the kicker--a copy of any deeds, transfers "or similar documents" contaiining any of the following information:
1. The municipal address, if any.
2. The registry or land titles division and the property identifier number.
3. The legal description.
4. The assessment roll number, if any.
You can see that compliance with the new rules could be a substantial undertaking, depending on how organized your paperwork is. It could involve various lawyers as well--real estate lawyers as well as corporate/commercial lawyers who you may engage to maintain the register.
"No worries," you say: "My real estate holdings are owned via a trust agreement or co-tenancy interest. I'm good." Not so fast. If your company holds a beneficial interest in land, the new laws apply to you. That means that, although title to your real estate is registered in the name of a trustee corporation or a friend, but your company owns all or part of it through a trust agreement, the company must still record all the required information at its registered head office. In fact, both the trustee in whose name the property is registered and the beneficial owner must, if they are Ontario corporations, maintain a register in respect of the same lands.
(What's a beneficial interest? A very simplistic explanation is that it is the important part of the ownership of an asset to which the benefits of ownership attach. The law, in its wisdom, has, over the centuries, developed a way of conceptually separating ownership into two parts. Registered ownership relates to whose name the property is in, and beneficial ownership pertains to who the property is held for. This is a complex topic which I am drastically oversimplifying here.)
"Well, I don't need to do all that!!" you say. "What will happen to me if I don't do it, anyway? Nothing has happened to me yet." While many leading lawyers do not expect these rules to be strictly enforced, here is what the legislature said about failure to comply:
Failure to comply "without reasonable cause" constitutes an offence.
If convicted, a corporation is liable to a fine of up to $25,000; and
Any director or officer who authorized, permitted or aquiesced in the offence is also guilty of an offence and, on convicion, is liable to a fine of up to $2,000 or imprisonment for a term of up to one year, or both.
Obviously, you are safest to keep the necessary registers and a lawyer cannot suggest you flout them.
This article is only a very brief overview of the legislative changes and by no means covers the details of the laws. If you require more information, you should consult your corporate/commercial lawyer.
Sorry to be the bearer of expensive news, but the fact is that governments can sometimes saddle us with prohibitively expensive legal requirements that seem to only benefit lawyers and accountants, forgetting that we are not all major corporations and seemingly eating up any spread between costs and income that property owners may hope to achieve.
* Nothing contained in this article is intended as legal advice and readers should consult their lawyers for advice as it pertains to their own specific situation.