Your mortgage pre-approval doesn’t include leased land | 100,000’s of foreign nationals became Permanent Residents in Canada…see ya later foreign buyer tax! | wtf…rate’s didn’t go up?! | are variable rate mortgages a bad play right now?
Every so often I receive a mortgage application for a property purchase that is situated on leased land. By definition, this means that if you purchase/own a leasehold property you own only the structure/property on the land, not the actual land beneath it. So…heads up (literally)! You only own what lies ON the land. It’s not your typical real estate transaction as you will always be attached to a lingering sense of uncertainty - what if the lease doesn’t renew? Or when it does renew, will there be new conditions? Can the leaseholder suddenly appear at my doorstep and rescind on the lease? These are excellent questions and all of which require your lawyer's involvement early on in the offer stage. DO NOT remove conditions on an offer without having your lawyer review the lease agreements (be sure to forward all documents and sub-sections associated with the lease - there could be many). And while your lawyer is reviewing the leasehold agreement, have your mortgage broker inquire to lenders to see which ones will finance the property (because most of them won’t!).
Here are some key points regarding leasehold properties: Click Here to be redirected to the blog version of this episode.
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