Working with Corporations and Ownership Rights

Corporations

Corporations may be involved in real estate transactions. In order for an entity to be incorporated in Alberta, it must meet a number of legislative requirements set out by the provincial government. Once all the requirements for incorporation have been met, a Certificate of Incorporation is issued as proof that the registration has occurred. As a legal entity, a corporation has all the rights, powers, and privileges of a person and from a legal perspective is considered a person. As such, a corporation can enter into contracts dealing with real property that a person can enter into, unless restrictions related to such activities are noted in its Articles of Incorporation.

Information: The Articles of Incorporation set out the structure and basic governance of the company, including the legal name and address of the business, the class of shares, the number of directors, and any restrictions and/or provisions to be complied with by the corporation.

A corporate seal is the official mark or signature of a corporation, typically consisting of an embossed impression on paper, evidencing the formality of the corporation's execution of a document. While a corporation may choose to use its seal on legal documents, it is not a requirement. However, any contract executed on behalf of a company under its corporate seal should indicate the authority of the person signing by inserting that person’s position above their signature. If a corporate seal is not used, the following words should be used: “I have the authority to bind the corporation.”

When a real estate professional represents a party who is contracting with an individual acting for a corporation, extra care and attention are required to ensure that:

• The corporation exists.

• The individual has the authority to enter into contracts on behalf of the corporation.

• The corporation itself has the right to sell, lease, purchase, or rent real estate.

In addition, the real estate professional must ensure that the party they represent understands that a corporate seal is equivalent to the signature of a person and that by signing, the parties are bound by the terms of the contract. Once this discussion has occurred, the real estate professional should obtain the party’s lawful instructions on how to proceed.

Ownership Rights

Corporations can own property in their name and exercise ownership rights similar to individuals. Ownership rights include the right to:

• Possess the property.

• Use and enjoy the property.

• Sell, lease, or transfer the property.

• Mortgage or encumber the property.

• Exclude others from the property.

However, these rights can be limited by the corporation’s Articles of Incorporation, by-laws, or agreements entered into by the corporation. Additionally, corporate ownership may be subject to internal approvals from shareholders or directors. Real estate professionals should be aware of any restrictions on property ownership when dealing with corporate clients.

Due Diligence and Verification

Real estate professionals are responsible for conducting proper due diligence when dealing with corporations in real estate transactions. This includes verifying the legal existence and standing of the corporation through a corporate search via Service Alberta’s Corporate Registry. If the seller is a corporation, a title search should also be performed to ensure accurate spelling of the corporation’s name.

Real estate professionals should obtain written documentation from the directors of the corporation confirming that the person acting on behalf of the corporation has the authority to legally enter into agreements such as seller brokerage agreements, purchase contracts, or lease agreements.

Money Laundering Risks

Real estate is one of several business sectors at risk for money laundering. Criminals may use real estate transactions to obscure the source of funds and hide ownership of assets. Under the federal government’s anti-money laundering and terrorist financing legislation, real estate professionals are required to confirm the existence of corporations in the following situations:

• When a legal entity is a client in a purchase or sale of real estate.

• When a legal entity provides funds in any amount or form as part of a real estate transaction.

By conducting a corporate search, real estate professionals can confirm the corporation’s name, address, status (active, inactive, or dissolved), as well as the names and addresses of directors and shareholders. In cases of uncertainty, real estate professionals should seek guidance from their broker.

Understanding corporations and ownership rights is essential for real estate professionals to ensure lawful and compliant transactions while protecting their clients' interests.

📅 What Is a Corporation?

A corporation is a legal entity created under provincial or federal law. Once registered, it is issued a Certificate of Incorporation. Corporations have:

• The same rights and privileges as a person

• The ability to enter into contracts, including for real estate

• Ownership rights (possess, use, sell, lease, mortgage, etc.)

However, these rights may be limited by:

• The Articles of Incorporation

• Bylaws

• Shareholder or director resolutions

✅ Working with a Corporation as a Client

When your buyer, seller, or lessor is a corporation, follow this step-by-step guide to confirm legal status, signing authority, and meet FINTRAC requirements.

🧾 Step 1: Confirm Legal Status of the Corporation

Obtain at least one of the following:

• 📄 Articles of Incorporation – confirm the legal existence of the corporation

• 📄 Most Recent Annual Return – shows current directors and registered address

• 🔍 Corporate Registry Search (via Registry Express or Service Alberta agent) – verify:

  • • Corporation is active

    • Legal name

    • Registered office address

    • List of current directors

📁 Save all documents to the Deal Management System (DMS).

✍️ Step 2: Verify Signing Authority

You must ensure the person signing on behalf of the corporation is authorized to do so.

Acceptable proof includes:

• A signed board resolution or authorization letter

• Corporate bylaws that allow that individual to sign alone

• If the corporation uses a corporate seal, ensure the signer’s title is listed

• If no seal is used, the signature line must state:
  
  “I have the authority to bind the corporation.”
  
  
  

Signing Line on Contracts Must Read:

“ABC Holdings Ltd., by its authorized signatory Jane Smith”

🧑‍💼 Step 3: Identify the Signing Officer

• Use Really Trusted to:

  • Confirm and verify the signer’s ID

  • Ensure the person matches registry info or is authorized by resolution
    
    

🏛️ Step 4: Identify Directors and Beneficial Owners (25%+)

This is a FINTRAC requirement.

🔍 How to Collect Beneficial Ownership Info:

1. Ask the Signing Officer to declare ownership structure
   
   

2. Use the Beneficial Ownership section in Really Trusted, which includes:

   • Full names of all individuals who directly or indirectly own 25% or more of the corporation

   • Their % ownership or nature of control

   • Signature and date from the declarant

✅ Verify ID for each beneficial owner listed.

🟰 If No One Owns 25%+

Ask for a written declaration confirming no one meets the 25% threshold (negative confirmation). Record and upload to the DMS.

📎 Optional Supporting Docs (not required, but helpful):

• Shareholder register

• Organizational structure chart

• Unanimous shareholder agreement

• Minute book extracts
  
  

⚠️ Step 5: Sanctions & PEP Screening

Use Really Trusted to screen:

• The corporation itself

• All identified beneficial owners
  
  

Check for:

• ❗ Sanctions matches

• 🧑‍⚖️ Politically Exposed Persons (PEP) or Heads of International Organizations (HIO)

🔺 Pause and escalate to the Compliance Officer if any matches are found.

🔁 Step 6: Ongoing Monitoring (FINTRAC)

For all corporate clients:

• Confirm beneficial ownership each time you represent the corporation

• Reassess and update records if ownership changes

🕒 For medium- or high-risk entities, you must complete an Ongoing Monitoring Schedule over 5 years. You will receive this via Really Trusted — it is your responsibility to complete and diarize.

🧾 Step 7: Confirm Third-Party Involvement

If someone other than the corporation is funding or directing the transaction:

• Identify the third party

• Complete the applicable third-party form in WebForms or Really Trusted
  
  

🔒 Step 8: Maintain Complete Records

Upload and retain in the deal file:

• Corporate registry search or proof of incorporation

• Signed declaration of beneficial ownership

• All ID verification records (via Really Trusted)

• Resolution or signing authority proof

• Completed FINTRAC forms
  
  

🏢 Brokerage Policy – Working with Corporations

Before listing, purchasing, or leasing with a corporation, our brokerage requires:

• ✅ Proof of Incorporation (e.g., Articles or Corporate Summary)

• ✅ Confirmation of Signing Authority (resolution or corporate bylaws)

• ✅ Completion of FINTRAC forms and beneficial ownership ID via Really Trusted
  
  

🚧 Risk Management & Red Flags

Always pause and consult your broker if:

• The signer’s authority is not clearly established

• The corporation’s right to sell or lease appears restricted

• Internal approvals (e.g., board consent) may be missing

• You cannot verify beneficial ownership or sanction screening
  
  

🧠 Why This Matters

Failing to verify corporate identity and authority may:

• Invalidate the contract

• Expose the client or brokerage to legal and regulatory risk

• Result in non-compliance with federal law (FINTRAC)
  
  

Real estate professionals are personally responsible for:

• Confirming the corporation is active and valid

• Verifying signing authority

• Ensuring complete FINTRAC documentation

• Maintaining records for 5 years
  
  

🏷 Common Corporate Client Examples

• “123 Holdings Ltd.” selling a rental property

• A development company buying raw land

• A private corporation selling a commercial asset

• A property manager signing leases for a numbered company

🧭 When in doubt, ask your broker or request legal review.