CHAPTER 11 Real Estate
USE OF NOMINEES For a variety of reasons, beneficial owners of real property may wish to use a separate entity – usually a single-purpose corporation – to hold registered title to the property as a bare trustee or nominee (called a mandatary in Québec). For example, the beneficial owner may not be a legal entity capable of holding title in its own name (such as a partnership) or may be a joint venture between multiple parties. Using a separate entity provides other advantages – keeping the identity of the beneficial owner confidential and transferring beneficial ownership without having to register such transfer on title. Usually only the nominee corporation will be named as the purchaser or vendor, mortgagor or mortgagee, or lessor or lessee in transactions pertaining to the property. In general, a declaration of trust or nominee agreement will be entered into to document the relationship between the bare trustee or nominee (or mandatary) and the beneficial owner. A bare trust or mandate exists where the only function of the nominee is to hold property for the beneficiary and to deal with the property only in accordance with directions from the beneficiary.
REAL ESTATE INVESTMENT TRUSTS A real estate investment trust (REIT) is a special form of business trust established to invest in real estate, often through the direct acquisition of income-producing real estate assets. In addition to investing in income- producing properties, REITs may also buy, develop, manage and sell a wide variety of real estate assets. Investors in the REIT are usually issued units, which represent an undivided beneficial interest in the REIT’s assets and a corresponding share of the income and losses of the REIT. The REIT structure has grown in popularity because REITs provide a number of advantages to both real estate companies and REIT unitholders. These include favourable tax treatment and improved tax efficiency on distributions to unitholders (see the Tax Considerations chapter in this guide), improved access to equity markets for real estate companies and a generally stable stream of income with the potential for high-yield capital growth for real estate investors.
The REIT structure has grown in popularity because REITs provide a number of advantages to both real estate companies and REIT unitholders.
109
Davies | dwpv.com
Powered by FlippingBook