Buying a leasehold strata property

Are you thinking of getting into a leasehold strata property? Metro Vancouver has hundreds of leasehold townhouses and condos. Some of them offer an attractive lifestyle because of their central location and stunning views. You don’t own the land, so a leasehold strata property costs less than a freehold one. Compared to renting, getting into a leasehold strata property might be a good investment for you. Because rents go up over time, the value of a leasehold strata property can go up, too, though not as much as the value of a freehold strata property can.

When you get into a leasehold strata property, you take over a long-term lease. Originally, the landowner—a government, university, school board, or Indian band—grants the lease to a developer. After the developer builds, it divides its building into strata lots and common property. The landowner owns each strata lot, and the developer has a leasehold interest in each strata lot. The developer can assign its leasehold interest to a buyer like you. When you take over the lease, you get the right to live in the strata lot until the lease expires. Most buyers assign their leasehold interest to someone else before the lease expires.

If you’re thinking of getting into a leasehold strata property, make your offer subject to getting legal advice on the lease and all related documents. In addition, keep the following points in mind:

·         Unless the developer prepays the lease, you must make monthly lease payments on top of your mortgage, property tax, strata fee, and special assessment payments. When the landowner reviews your lease rate, you might face an increase if the market value of your property has gone up.

·         When the lease expires, you might have to move. If so, you’ll receive a buyout from the landowner.

Disclaimer

Do not substitute the legal information in this blog post for legal advice tailored to your situation. If you or someone you know is thinking of getting into a leasehold strata property, contact Stephen Graf & Company, Solicitor & Notary Public at 604-314-5700. www.stephengraf.com