Leasehold Strata and Prepaid Leases in BC: Risks for Buyers

Some units are sold on a lease rather than as a conventional owned strata lot. You may pay a large amount up front, or pay ongoing rent, for the right to occupy a unit for a set period.

This article explains the questions to ask before buying in British Columbia. How a particular lease works depends on its wording, so have a lawyer read it before you remove your subjects.

This article covers the law of British Columbia.

Leasehold versus owning

When you own a strata lot, you hold title to it. With a lease, you hold a right to occupy for a term that someone else grants. That difference shapes almost everything: how long your rights last, what you can do with the unit and what it is worth when you sell.

A prepaid lease means the cost of the term is paid at the start, often as a lump sum. Do not assume it works like a purchase. Ask exactly what you are paying for and what happens to that money at the end.

What happens when the lease ends?

This is the most important question, and the answer sits in the lease. Read it for the end date, whether you can renew, on what terms, and what you must do or give up when the term finishes.

• The length of the remaining term, not just the original term.
• Whether renewal is a right or only a possibility.
• Any payment, rent increase or charge on renewal.
• What happens to improvements you have made.
• Who is responsible for repairs and costs during the term.

Strata documents still matter

If the unit is in a strata, the usual strata paperwork is still relevant. A purchaser is anyone with an agreement to buy a strata lot not yet conveyed, and the agreement does not have to be unconditional, so you can ask for a Form B during the subject-removal period. The strata must give it within one week of a request.

The Form B discloses monthly strata fees, amounts owing, approved special levies, expected budget overruns, the CRF balance, unfiled bylaw amendments, outstanding notices and work orders, and an insurance summary. The rules, current budget and most recent depreciation report are attached. If the strata has sections, ask both the strata corporation and the section.

Special levies matter here too. A levy generally needs a 3/4 vote, and if one is approved before the conveyance, the seller owes the part payable before it and the buyer owes the part payable on or after it.

Depreciation reports are required every five years for strata corporations with five or more lots, and the most recent one must be attached to the Form B given to buyers. Stratas with fewer than five lots do not need one. Existing stratas with no report, or one dated before December 31, 2020, had to obtain one by July 1, 2026 in Metro Vancouver, the Fraser Valley and the Capital Regional District, or must do so by July 1, 2027 in other areas. Insurance is worth reading too: the strata's policy covers common property and the buildings on the strata plan, but not your personal contents or living expenses after a loss. Strata policy deductibles can range from $100,000 to $750,000 or more, and a deductible is a common expense paid through strata fees.

Resale and financing

A bylaw is unenforceable to the extent it restricts an owner's right to freely sell, lease, mortgage or dispose of a lot. That rule is about strata bylaws, though, and it does not change what your lease itself says about assigning or selling your interest.

The Land Title Office requires a Form F, the Certificate of Payment, to register a lease or an assignment of a lease. The strata must issue it within one week of a request if the owner owes nothing, a debt has been paid into court or to the strata in trust, or satisfactory arrangements are made, and it is current for 60 days. The fee is capped at $15.

A Form F may include amounts owing for fines and remedy costs and for liens. If a debt is disputed, once arbitration, a Civil Resolution Tribunal claim or court proceedings have begun, the disputed amount may be paid into court or to the strata in trust, which allows a Form F to be issued despite the dispute. The strata may register a lien against a lot for unpaid strata fees and special levies, and it must remove the lien within one week of payment.

Lenders may treat leasehold interests differently from owned property, and a shorter remaining term can make financing and resale harder. Ask your lender early, and ask your lawyer how the remaining term could affect a future buyer.

What to do next

• Get the full lease and any amendments before removing subjects.
• Ask a lawyer to explain the end of term, renewal rights and assignment limits.
• Request the Form B, and from the section as well if the strata has sections.
• Read the depreciation report and the insurance summary.
• Confirm financing with your lender in writing before you commit.

Frequently asked questions