Standard 9: Ensuring Sound Transactions
The land trust works diligently to see that every land and conservation agreement transaction is legally, ethically and technically sound.
Background
A land trust usually intends to protect the property it conserves in perpetuity. To help secure the perpetual conservation of land, its transactions must hold up over time and withstand challenges. Sound transactions rely on the land trust performing “due diligence” in its transaction steps. Land trust representatives need not be lawyers, but they must have good legal advice, and they should familiarize themselves with basic principles of real estate and tax law. The land trust should draw a landowner’s attention to issues that must be addressed as the transaction proceeds. However, a land trust should not represent itself as giving specific legal or financial advice; a landowner’s own advisors should do that. A land trust may have to call on other financial and technical experts in order to complete the transaction. Carefully documenting the steps a land trust takes in performing its due diligence can help secure the perpetual conservation of the property.
Relevant Law
- Property Law Act, RSBC 1996, c. 377, s. 35.
- Land Title Act, RSBC 1996, c. 250, s. 218-223.
- Canada Revenue Agency policy interpretation of Income Tax Act, SC 1985, c. I; see:
- Environmental Management Act, SBC 2003, c. 53, s. 40
- Contaminated Sites Regulation, BC Reg. 375/96, as am., s. 3.
- Land Title Act, RSBC 1996, c. 250, Parts 10 and 10.1
- Canada Revenue Agency policy interpretation of Income Tax Act, SC 1985, c. I;
see Income Tax Technical News No. 26 at:
- Taxation (Rural Area) Act, RSBC 1996, c. 447.
- School Act, RSBC 1996, c. 412.
- Police Act, RSBC 1996, c. 367.
- Property Transfer Tax Act, RSBC 1996, c. 378.
- Social Service Tax Act, RSBC 1996, c. 431.
PRACTICE
B. Independent Legal, Financial and Tax Advice
The land trust refrains from giving specific legal, financial and tax advice and recommends in writing that each party to a land or conservation agreement transaction obtain independent legal, financial and tax advice.
Background
In many transactions, the land trust and the landowner are working so closely together toward the same goal that it can be easy to forget that each has independent interests to protect. Thus, each party should have separate legal and financial representation. By advising landowners to obtain legal, financial and tax counsel, land trusts make them responsible for their own legal, financial and tax interests. By documenting that recommendation in writing, land trusts safeguard themselves from claims by landowners that the land trust gave them legal, financial or tax advice. Land trusts should never give assurances about a particular legal outcome or donation value. Land trusts are not licensed to practice law, and they should not give, or appear to give, legal advice. However, land trusts do provide technical assistance, and they provide information to help the landowner and his or her advisors understand the ramifications of proposed transactions. Land trusts should consider including a clause in the conservation agreement that states the landowners have obtained independent legal, financial and tax advice.
Assessment Questions
BC Assessment Questions
- Does the land trust advise, in writing, all landowners to seek independent tax, legal and financial advice for every land transaction?
- Does the land trust require landowners to acknowledge, in writing, that they have been advised to seek independent advice?
CLTA Assessment Questions
- Does the land trust inform each landowner in writing to obtain independent legal, financial and tax advice?
Resources: Example Policies & Template Documents
Template Documents
- LTABC US Tax Consequences
- Covenants Easements and Servitudes Legal EC
- Tax Land Conservation Transactions EC
- Environment Canada EcoGift Guidelines for Appraisals
- BC Assessment Conservation Covenants
- WCEL Giving it Away Tax Implications
- LTABC Tax Consequences 05
- Property Transfer Tax Info
- LTABC Appraisal Assistance Procedure
