No and upon purchasing a property, you will likely receive a copy of the property title too. For most of us scanning a property title proves overwhelming. It's full of complicated legal jargon, easements, restrictive covenants, mineral claims and other charges including financial. It's certainly best to let your real estate lawyer dig through the title information and explain its implications for you. Of particular interest though should be the identified ownership type, either freehold, leasehold, or strata. Some ownership types include limitations and restrictions that may inhibit your enjoyment or use. The ownership type also speaks to what it is that you own, be it the structure, a specific portion of the structure, or both the land and the structure. So upon purchasing your next property, it is essential that you understand the difference between the three types of ownership. Here is a brief explanation of what it means to own freehold, strata and leasehold property.
In many cases a detached home is a great example of a freehold property. Essentially a freehold property means that you own the property (the land and the structure) including the right to reside in it provided that you make payments to your mortgage lender as agreed. The downside of freehold property is that in comparison to leasehold properties they are significantly higher in price. A big advantage of freehold properties is that they tend to appreciate overtime, and when compared to leasehold properties, your ownership of the land (in addition to the structure) leaves you in complete control of when you choose to sell.
Leasehold properties are unique from freehold properties in that they allow you to purchase the physical structure, like the condo, townhouse or home, while leasing the land from another party. The landlord in many cases is a government or a first nations group. The leases are often 99 years in length. While the length of a lease may not be overly concerning to someone purchasing at the beginning of a lease you could imagine the risk for those residing on properties that are nearing the end. The end of a lease means that the landlord can choose not to renew the lease or can renew at a higher price. Leasehold properties may be disadvantageous for two reasons; first is that they are challenging to finance, and they do not appreciate in value the same way freehold properties do.
The most common strata properties are condos and row townhouses which are properties with shared common areas. Some detached homes can be part of a strata known as bare land strata. Strata properties are different from freehold properties essentially having a form of joint ownership. The administration of these properties are governed by the Strata Property Act. For example, an elevator in a condo building is used by most residents and becomes jointly owned by the strata corporation. For this reason, strata properties usually form strata councils and are often managed professionally by a property management company. The council and property management group collects strata fees from owners and then administers those fees for property maintenance, inspections, repairs as well as building and land improvements. While strata fees may seem like extra expenses, they pay for the general maintenance of the property. Strata properties are advantageous in that they are often less costly than on a freehold property. Strata properties can be disadvantageous in that while the interior of the property belongs to the owner, some special permissions are still required for things like renovations. Also, strata owners must abide by standard bylaws and in many cases internal 'house rules'. Strata have the right to set rental restrictions, pet restrictions, and age restrictions too.
Whether you choose a freehold, leasehold, or strata property as your next purchase you must ensure that you understand the advantages and the disadvantages of your choice and how it might impact you as well as any future buyers.