What is a leasehold interest and how is it different from owning freehold title?

When you buy a freehold property in Ontario, you own both the building and the land beneath it outright. The title vests in you with no time limit. A leasehold interest, by contrast, means you own the building (or your unit in a condominium) but not the land — instead, the land is leased to you from the landowner (the lessor) under a long-term lease, often 99 years or more.

Leasehold properties exist in Ontario, most commonly in certain condominium developments where the developer retained ownership of the land and leased it to the condominium corporation. They are more common in some commercial and resort settings. The ownership of a leasehold interest can be registered on title and can be bought, sold, and mortgaged, but the rights of the holder are always subject to the terms of the underlying lease.

The key difference for buyers is that a leasehold interest diminishes over time — once the lease expires, ownership of the improvements could revert to the landowner unless the lease is renewed. This affects the property's long-term value and its mortgageability, since lenders get less comfortable as the remaining lease term shortens. If you are considering a leasehold property, have your lawyer review the lease carefully, including renewal terms, rent escalation provisions, and what happens at the end of the term.