Definitions
RESIDENTIAL LEASEHOLD PROPERTIES
A definition of Long-Term Residential Lease is now available on the BC Government Housing website. Here is the link:
If this link does not work, please do the following:
1. Don’t use Google
2. Go to gov.bc.ca
3. Click the magnifying glass in the yellow box
4. Type leasehold
5. Press enter
What is a Long-Term Residential Lease (also referred to as a ’99-year lease’ or a ‘leasehold unit’)?
A long-term residential lease is a form of home ownership where a person (the lessee, or leaseholder) purchases from the owner of a leasehold building (the lessor) the right to occupy a premises (either a house, or an apartment suite) for a long term, fixed period (more than 20 years, and usually for 99 years). Monthly fees are paid by the lessee to the lessor for the maintenance and repair of the building. These fees cover regular building maintenance and taxes and thus are not “rent”.
Once purchased, the “right of occupancy” can be bought and sold in a conventional real estate market, although some oversight of these transactions is typically retained by the lessor. The value of the lease tends to decline as the lease term approaches its termination date, but will fluctuate over time with market values.
How Long Term Residential Leases Work
Through a lease agreement, a leaseholder purchases the right to occupy a unit for a fixed length of time (usually 99 years).
The lease agreement is a contract with obligations for the lessee (leaseholder) and the lessor alike.
In most cases, the lease contract has been drawn up by the lessor and is non-negotiable.
An existing leaseholder may sell the “right to occupy” within the regular real estate market.
The leaseholders pay monthly fees for
- building administration and maintenance services
- repairs
- water and sewer
- garbage pickup
- natural gas
- electricity for the common building areas
- property taxes
- building insurance
Most contracts stipulate that maintenance fees and extra assessments cover replacements and repairs. However, the lease contract does not cover upgrades or enhancements of any kind.
It is customary for annual audit reports to be issued to each leaseholder. However, contracts do not stipulate that leaseholders be given specific details or access to invoices and receipts for items in the report for which maintenance fees or extra assessments have been spent. However, this information may be required should a dispute go to court.
Units within a “leasehold strata plan” or “strata lot lease” are subject to the Strata Property Act because, under certain circumstances, those leaseholders have the right to vote on decisions. Currently, leaseholders in residential lease properties do not usually have the right to vote on decisions concerning the building.
Long term lease residential properties are owned and operated by private lessors and are not on land leased from a province, city, or Native Band (These are described in Strata Lot Lease, Part 12 of the Strata Property Act.)
Regulation of Long Term Residential Leases in British Columbia
Ownership of suites held by leasehold contracts is registered with the Land Title Office by leaseholders or their representatives at the time of purchase.
As home owners, lessees of leasehold properties who occupy their suites are entitled to the BC Government’s Home Owner Grant. The grant is claimed by the lessor and must be passed on to the lessees.
Long term leases in BC are subject to the principles of contract law and common law. In principle, contract terms can vary widely from one building to another.
Disputes between lessors and lessees that cannot be resolved by negotiation are resolved through the courts, often through small claims court. The Ministry responsible for Housing has no role in the resolution of disputes.
Long term leases fall outside the scope of the Residential Tenancy Act as leaseholders are not considered to be renters. However, where leaseholders rent their unit to a tenant, the Residential Tenancy Act applies to that relationship.
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Homeowner Grant
Resident leaseholders of leasehold buildings are entitled to the Homeowner Grant based on provincial legislation. Here is a link to information about the Homeowner Grant:
https://www2.gov.bc.ca/gov/content/taxes/property-taxes/annual-property-tax/home-owner-grant
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