Chapter 5: Professional Liability of Licensees

Question 1

What is LOTA? When did it come into effect?

What is LOTA’’s purpose? Name 2.

Answer 1

LOTA is Land Owner Transparency Act, came into effect in April 2021.

1. LOTA is to combat tax evasion, fraud, and money laundering in BC.
2. To end the “hidden ownership” of real estate in BC.

Question 2

What is LOTA’s requirement?

Answer 2

LOTA requires that a transparency declaration be filed when applying to register certain interests in land (fee simple / life estate / lease exceeding 10 years, etc)

It also requires information reporting body and interest holder.

Question 3

If the interest will be registered in name of a reporting body, what should the reporting body file under LOTA?

Answer 3

1. transparency report

2. transparency declaration

Question 4

What defines “Interest holder” legally?

Answer 4

i. who may not have direct ownership of land but are considered to have an indirect interest in it.
ii. who have a beneficial interest in the land (owns control 10% or more of a corporation)
iii. individuals who have the power to revoke the relevant trust and receive the interest in land

Question 5

Whose name should be mentioned in the transparency report?

Answer 5

1. individuals who owned 10% or more of the issued shares
2. 10% or more of shares that carry the voting rights
3. have rights or abilities to elect, appoint or remove the majority of the directors (even if it is less than 10% of shares)
4. For land that is property of a relevant partnership and is registered in the name of a partner of the relevant partnership

Question 6

What identification info should be provided by the “reporting body”?

Answer 6

1. full name
2. Citizenship
3. principal residence
4. in case of a corporation, the name, address, and jurisdiction of the corporation

Question 7

What identification info should be provided by the “interest holder” ?

Answer 7

1. birthdate
2. social insurance number
3. description of how the interest is an interest holder (% of voting shares)

Question 8

What should the licensee do related to LOTA?

Answer 8

Licensee will not be responsible for creating and filing transparency declarations and transparency reports. These should be prepared by lawyers and notaries public on behalf of their clients. Licensee should just direct clients about LOTA disclosure to these professionals.

Question 9

What is LOTR? What is the difference between the LTA records and the LOTR records?

Answer 9

Land Owner Transparency Registry.

It is a record-keeping system of LOTA. Separate from the LTA records. Under section 5 of LOTA, any documents or records made under LOTA are not considered docs or records for the purpose of the LTA.

Unlike the LTA registry, LOTR does not confirm title or ownership of interests and estates.

The correctness of LOTA records has not been complied with rules by anyone other than the transferee.

Question 10

Are LOTR records searchable ?

Answer 10

LOTA records are searchable by public, includes real estate licensees. But some confidential inf (DOB, SIN) only available to certain individuals and authorities. And individuals under 19 years old identity will be protected as well

Question 11

How do you search a LOTR record and why would a licensee care to search ?

Answer 11

By PID or by name.

LOTR is a tool licensee can use to assist them in fulfilling their anti-money laundering obligations. If you search and a client’s name reveals a different picture than what the client told you, you might want to investigate further, or ask your client to seek legal advice.

Question 12

If a licensee encounters a PEP (politically exposed persons) or HIO (head of the international organization) or family member or close associate of these people, what should do you do?

Answer 12

Consult your brokerage’s compliance program

Question 13

What are the three reporting obligations to FINTRAC upon licensees and what is the purpose?

Answer 13

Purpose: provide certain reports that help FINTRAC to develop financial intelligence, a key component of the anti-money laundering regime. The quality of the reports will be part of FINTRAC’s examination of their brokerage.

Three obligations:

Terrorist Property
Large Cash Transactions
Suspicious Transactions (with Reasonable Grounds to suspect)

Question 14

What are the components of an STR (Suspicious Transaction Report)?

Answer 14

STR has 8 parts and must include at least one transaction. Details such as:Accounts, individual involved,
Part G is the key part of STR : state reasons.
Part H - what did reporting entity do? (e.g. report to law enforcement directly)

Question 15

What is tort?

Answer 15

Torts are civil wrongs for which the courts will grant a legal remedy.

Such as: assault, defamation of character, false arrest, deceit and negligence.

Question 16

What is trespeassing?

Answer 16

Wrongfully entering, remaining on, or placing something on another land. And it must be direct act, not indirect act or not willingly.

Throwing stones is trespassing

Characteristics to valid a trespass:

1. Intentional
2. DIrect
3. Actionable - physical damage doesn’t need to occur for an occupier to sue in trespass

Question 17

What are the exceptions of the situations where a person has some “rights” to enter and will not be considered as trespass? Name 2 situations.

Answer 17

1. Easement
2. Express / implied permission of the occupier - a person entering on land to speak to the occupier - except if the owner of property puts up a “no Soliciting” sign.
3. Tenant
4. In commercial tenancies, the landlord has right to enter and sell tenant’s belonging to pay for owe rent - this is called right of distress
5. Take action to stop a tort from continuing (under Nuissance)
6. municipality enter to build and maintain a sewer line or sidewalk

Question 18

Trespass VS nuisance

What are the 2 distinctions between trespass and nuisance?

Answer 18

1. Trespass is physically entering another person’s land or causing something to be placed upon. Nuisance is a consequence of something being done to the land. The common law holds that a person may not use their property in such a way that it causes injury to another
2. Trespass - single occurrence or a few isolated occurrences. Nuisance is unreasonable interference , must be a significant interference. Continuous activity.
   ** Trespass - does not need to show damage caused by the action.
   Nuisance - you have to show damage or significant interferences

Nuisance = 扰民

Question 19

What are the three remedies for trespass and nuisance?

Answer 19

1. Damages
2. Injunction (granted by the court to stop something from happening continuously)
3. Abatement (for nuisance)

Question 20

What are the two different respects that differentiate deceit and fraudulent misrepresentation from negligent misresp?

Answer 20

1. You don’t have to be an expert to be liable

2. Moral fraud as opposed to carelessness

Question 21

If you encounter clients who wish to speak directly to potential buyer. Why should you advise them not to do so?

Answer 21

Because they may be exposed to substantial legal risks for misrepresentation. the licensee has legal duty to protect the interests of the client and mitigate legal risks.

Question 22

When you are disciplined by BCFSA or board (such as CREA/ BCREA) can the EnO insurance cover it?

Answer 22

No.

It also does not cover when you have deceit and fraudulence misrep.

It only covers tort and fiduciary liabilities.

Question 23

What are the two requirements of licensee in business relationship?

Answer 23

1. Keep records that can proof the biz relationship (deposit check, contract, etc)
2. Keep ongoing monitoring

Question 24

What if you cannot find the Beneficial Ownership information?

Answer 24

1. Identity the CEO or equivalent

2. Apply your brokerage’s high risk anti money laundering policies and procedures

Question 25

What are the two obligations of licensees regarding Beneficial Ownership?

Answer 25

1. Obtain the information of BO (for corp: all directors, names and addresses of all persons who directly or indirectly owns or control 25% or more of the company)
2. Take measures to confirm that the information you obtained is indeed accurate (such as asking your client to sign a document to confirm that the information of BO is correct , or search the LOTR , review company’s official documents)

Question 26

What are the 6 key records a brokerage must keep either to submit to FINTRAC or to keep for 5 years?

Answer 26

6 key records:
 
1. STR

2. Large cash transaction

3. Client Information Records

4. Receipts of Funds Records

5. Unrepresented Party Records

6. Reasonable Measures Records