Dear David,

What’s the difference between a “land lease” and a “life lease”? – LEASED OF MY WORRIES

DEAR LEASED: In a typical freehold home purchase, you’re buying a house and the land it sits on. In a “land lease” or “life lease”, the land belongs to someone else.

In a land lease, you own the building, lease the land and pay rent to the landowner. The lease on the land is updated for each new homeowner and can span 20, 50 or 100 years, which is probably longer than most of us would expect to own a home. Typically, a land lease allows the homeowner significant freedom with regards to the interior and exterior of their home, since they own the building. A group of homes on leased land tends to feel like a traditional neighbourhood and home values can be expected to appreciate.

With a life lease, you’re not buying property at all. You’re paying for an interest in a property, which gives you the right to occupy a specific unit and use the common elements (much like renting an apartment). Life leases typically require a lump sum payment up-front, along with monthly maintenance fees. They tend to be slightly more affordable than comparable condominium units and are often geared towards retirees who live independently. Life lease housing is quite often operated by non-profit, not-for-profit or charitable organizations who sometimes control their membership. This may allow them to limit residents to a select demographic or age group (i.e. 55+).

PRO TIP: Before you commit to a land or life lease, do your homework. Speak to other residents. Also have your lawyer review your agreement and the costs associated with buying or selling, so you’re prepared when it’s time to move on.

Dear David,

We found a home we really want, so need to act quickly. The sellers are asking for a $20,000 deposit. We have half the money available, but the other half is locked in our GIC for another week. We need to deliver the deposit in 24 hours, help! – RUSHED

DEAR RUSHED: You’re in a tough situation. Deposits in general are getting higher as housing prices rise. It’s getting harder for people to gather the necessary funds on short notice, since most of us don’t have 10, 20 or 50 thousand dollars lying around — I know I don’t!

A solution might be to offer two deposits. Have your agent draft the offer so that you deliver one deposit upfront, and the second a week later (or perhaps when your conditions are removed). I’ve used this strategy successfully in my own negotiations.

PRO TIP: Communication is often the most important tool in the toolbox. If you’re thinking of trying a “second deposit” strategy, have your agent call the seller’s agent to explain the plan in advance. It may help if the seller understands that the funds are available but need to be liquidated. Otherwise, if you were to offer less than the full deposit amount, it would likely throw up red flags. #AskDavid #Advice