Leasehold Apartments and Townhouses in Downtown Vancouver and False Creek information page.
If a developer leases the land for a strata development, they may only lease from the federal, provincial or municipal government or from some other public authority [in B.C. these include UBC, Simon Fraser and First Nations] .
The developer leases the land under a document called a “ground lease” (sometimes called a “head lease”) that sets out the terms and conditions.
When the developer wishes to register a strata plan over land that is subject to a ground lease, it is called a “leasehold strata plan”.
A leasehold landlord (developer) may impose restrictions on the further leasing, assignment or occupancy of the Strata lots included in the leasehold strata plan. These restrictions must be set out in a “schedule of restrictions” filed in the land titles office. These restrictions are binding on the strata corporation and everyone who buys a leasehold interest in any of the strata lots.
When the developer, as the long term tenant, deposits the Strata plan, several things happen:
· Land Titles office issues new fee simple titles in the name of the leasehold landlord for each of the strata lots created
· Ground lease is converted into individual strata lot leases of the leasehold landlord’s interest in each strata lot.
When the Strata lot is sold the buyer, in effect, takes an assignment of the developer’s interest, as a leasehold tenant, under the strata lot lease with the leasehold landlord. The buyer’s interest is registered as a “leasehold tenant”.
Since the Buyer is purchasing an interest under a lease, he or she buys the right to occupy the strata lot for the balance of the term remaining on the ground lease of the Strata lot. With each passing year the term remaining diminishes. When the term of the ground lease expires, the right to occupy terminates and the buyer must vacate the premises.
At the end of the term of the ground lease, the Strata Property Act requires the leasehold landlord to purchase the leasehold tenant’s interest in the Strata lot. The purchase price must be calculated according to the formula, if any, in the strata lot lease, or failing that, in the schedule filed with the strata lot plan. If the Strata lot lease is silent and no schedule exists, the Act requires the leasehold landlord to pay the fair market value of the leasehold tenant’s interest in the strata lot calculated in accordance with the regulations.
On termination of all the strata lot leases, the leasehold strata plan must be cancelled and the strata corporation wound up. Alternatively the Strata Property Act permits the leasehold landlord to transfer fee simple title for each of the strata lots to the leasehold tenants. The strata development can only convert from leasehold to freehold if the leasehold landlord transfers fee simple title to all of the strata lot owners. When the leasehold landlord sells the strata lots to the tenants, each tenant becomes a fee simple owner of their strata lot with a proportional interest as a tenant in common in the common property and the strata plan continues as if there was never any ground lease.
Purchase of a leasehold property requires a minimum of 25% down payment for banks or lenders to provide a mortgage
Ground Lease (Head Lease):
Is the ground lease constant, prepaid or variable?
It is extremely important for your realtor to read the ground lease as there could be provisions for a rent/lease revision during the term of the lease.
Provision of Services:
What services are included? Water, sewage, Garbage and snow removal?
How are property taxes collected? Are they included in the monthly maintenance fees?