 (1).png)
Leasehold strata properties can be attractive to buyers, because of their lower purchase price compared to freehold units. But that discount exists for a reason.
Over the past year, we acted on various conveyances involving leasehold strata lots. In this post, we aim to highlight differences and risks of such transactions.
Below are the key legal issues that arise in leasehold purchases, and why extra diligence is essential.
In a standard strata purchase, the owner holds the beneficial ownership interest in the strata lot and a proportional interest in the common property.
In a leasehold strata, the buyer instead acquires:
Ownership expires when the lease expires, unless the lease is extended or renewed, which can often be uncertain.
This single fact impacts value, financing, resale, and long-term planning.
One of the first things to determine is how much time is left on the head lease?
A lease that began decades ago may have only 20–30 years remaining. This creates several problems:
The remaining term can materially affect both financing options and resale risk.
Even though the Strata Property Act applies, it does so subject to the lease. Common examples include:
It is crucial to review the head lease, any amendments and renewals, to have a proper understanding of the terms and conditions of the lease.
Unlike strata fees, lease payments may be subject to:
We frequently see buyers surprised to learn that their monthly housing cost may rise substantially even if strata fees remain stable.
These increases can affect affordability and resale value.
Institutional lenders may either:
In practice, financing uncertainty alone can derail a transaction late in the process. This risk should be identified before subjects are removed.
At the end of the lease term:
Some leases contemplate renewal or compensation. Many do not.
This is not theoretical. Several high-profile leasehold developments in BC have already faced this issue.
Leasehold stratas can face unique complications when:
Insurers and contractors often scrutinize leasehold developments more closely, particularly where the remaining lease term is short.
Leasehold properties are not inherently bad purchases — but they are fundamentally different assets.
The lower price reflects:
For buyers, the most important step is ensuring that:
For lawyers, leasehold transactions demand a level of due diligence well beyond a standard conveyance.
If you are considering purchasing, selling, or refinancing a leasehold strata property, or have already signed a contract, obtaining early legal advice can prevent expensive surprises later on.
