Title to Land
Different Types of Ownership of Land
Title to land can be described as freehold, leasehold (prepaid or not prepaid) or shares in cooperative. A second component to title to land is strata or non-strata.
Freehold, Leasehold or Shares in Cooperative
Freehold: The greatest interest you can hold in land is freehold. You own the building and the ground (or airspace) it sits upon out right. As the owner, you have full use and control of the land and buildings on it subject to any rights of the crown, local land-use bylaws and any other restrictions in place at the time of your purchase.
Leasehold Ownership: You own the actual building or unit but not the land it rests upon. The land itself is rented or at leased by you for a set period of time. The terms are dictated by the head lease. Terms such as length of the lease and whether the lease has been prepaid or not play a role in the market value of the property. Typically leasehold properties are approximately 20% cheaper than freehold properties. No property transfer tax is payable on closing. However, leasehold properties can be more difficult to finance and require a larger down payment (25 to 30% down payment). In a leasehold situation you are buying the actual building or unit and a right of exclusive possession of the land it sits upon until the end of the lease or until you sell that right to another person.
· Prepaid or non-prepaid: if the lease has been prepaid, that value will be incorporated into the purchase price. If the lease is not prepaid those payments will need to be made in addition to any strata fees, taxes and mortgage payments. The amount of those lease payments could also increase if provided for in the head lease so read it carefully!
Examples of Leasehold Pockets in Vancouver:
- City-owned False Creek South neighbourhood between the Cambie and Granville bridges with condos and townhouses nestled beside Burrard Inlet.
- City-owned Champlain Heights near Boundary and East 54th Ave. in East Vancouver, featuring spacious townhouses and community amenities in a park-like setting.
- University-owned UBC endowment lands with surrounding forest and commanding views. Prepaid 99-year leases with prices mostly on par with similar freehold properties.
- Musqueam-owned area close to Pacific Spirit Park, UBC and shopping districts. Mix of prepaid and non-prepaid. In June 2015:
- 4 Bedroom 3,000 sq. ft. home offered at $199,000 non-prepaid leasehold property with a lease payment of $74,443/year until its renewal in June 2035.
- 9 Bedroom 5,350 sq. ft. home offered at $830,000 non-prepaid leasehold property with a current lease payment of $11,220/year.
- Commercial leaseholds – 6 buildings in the West End of Vancouver leased out apartments in the early 1970s for 99 years, many with ocean views. These buildings include: 1250 Burnaby, 1251 Cardero, 1100 Harwood, 1330 Harwood, 1850 Comox, and 1720 Barclay.
- Certain areas throughout the city, including in Kitsilano, Fairview Slopes, Mt. Pleasant East / West
Shares in Cooperative: You and your neighbors collectively own the cooperative through the purchase of shares. The cooperative owns the property. Your purchase of shares reflects the relative value of your particular unit. The shares will typically appreciate in value as values in real estate appreciate. Monthly fees, should they exist, would be similar to building maintenance fees in a strata arrangement. As with leasehold properties shares in cooperative properties are cheaper than similar freehold properties.
Be advised that when purchasing shares in a cooperative, the offer will be subject to the new owners being approved by the cooperative's board of directors in order for a transfer of shares to be completed.
Also take note that it is typical for a down payment of 35% to be required and financing may be more difficult.
An example of shares in the cooperative listing in June 2015:
One bedroom, 680 square-foot condominium built in 1960 in the Oakridge area, 15,000 shares in a Cooperative offered at $249,900.
Strata and Non-Strata Ownership
Strata Ownership – A form of title over parts of real property such as multi-level condominiums and horizontal subdivisions. Strata title allows individual ownership of part of a property (for example a particular town home, ½ duplex or condominium) with shared ownership in the remainder or common property.
Non-Strata Ownership – Real property that is not regulated by a strata council - for example, a detached home or a West End Commercial Pre-Paid Leasehold property.