First Time Buyer - Types of Ownership
Leasehold property ownership means that the purchaser does not own the land. The purchaser will own any improvements on the land, but is leasing the property itself from the owner.
The purchaser owns the structure and buildings on the land, but leases the land from the owner. This land is leased by the developer (called a head lease) for at least fifty years from the federal, provincial or municipal government, a regional district or an approved public authority (such as an native band, school board, university).
When a buyer purchases a leasehold strata lot, they register an interest as a leasehold tenant. The buyer is assigned this right from the developer. When the first purchaser sells to the second purchaser, the first purchaser's interest is assigned as a tenant to the second purchaser, and so on.
The buyer purchasing an interest under the lease is buying the right to occupy the property for the balance of the term remaining under the lease. With each subsequent year the term remaining on the lease diminishes.
This type of ownership is not as common as freehold ownership in Vancouver. You'll find it to be most common in certain parts of the West End, False Creek and UBC.
Leasehold property is not as easily financed as freehold. Most lenders are uncomfortable with the fact that the purchaser does not own the land and thus require a minimum of a 30% downpayment.
Terms, renewal procedures, rate reviews, and assignability are elements of the lease which a buyer should review with advice from a lawyer that is familiar with leases.
There are other issues involved with purchasing a leasehold property that require further review and care. Not only should the title be searched, but a copy of the head lease should always be obtained. You should also ensure that you learn who will be providing services such as water, sewer, garbage and snow removal. How are property taxes collected?
More about Freehold Property in Vancouver
More about Co-op Property in Vancouver