Land Lease in Alberta

In Canada, the two most common home ownership structures are freehold ownership and condominium ownership. Freehold owners own the house and also the land beneath it, and are solely responsible for its upkeep. Condo owners own their unit and jointly own the common areas with the other unit owners.

A third, lesser-known, ownership structure is leasehold ownership, in which the resident owns the house, but leases the land on which it sits. About 60% of Alberta's land is Crown land. While residential leases are rare compared to BC or Ontario, much of it is actively leased for agriculture and grazing.

Unlike traditional freehold ownership, in a leasehold structure, the resident owns the home or building, but not the land on which it sits. Individuals, companies, First Nations communities, institutions or governments can own the land.

Keep the following in mind when buying a leasehold property:

• Monthly rent: The resident pays monthly rent to the landowner for the full lease term.
• Lower purchase price: Leasehold properties are typically priced lower than freehold, since the land is not included in the purchase.
• Community fees: If the property is part of a planned community, you may also pay community association fees on top of rent.
• Financing is difficult: Traditional lenders are often unwilling to finance leasehold purchases. Because you do not own the land, some lenders may require a chattel loan rather than a traditional mortgage. These often come with higher interest rates and require larger down payments (typically 20–35%). Alternative lenders may offer mortgages, but at higher rates. Financing becomes increasingly difficult as the lease nears its end.
• Surrender clauses: Some lease agreements may include a surrender clause, which can require the leaseholder to leave structures on the land when the lease expires. Moving a structure off the property is generally only possible if it is a mobile home.
• Eviction risk: If lease conditions are not met, the leaseholder may be evicted. In Alberta, leasehold arrangements can vary depending on the type of property. Mobile home site leases are governed by the Mobile Home Sites Tenancies Act (MHSTA), while other leasehold interests may fall under contract law and the Land Titles Act if registered.

Land lease properties are uncommon in Alberta, though one notable example is the University District in Calgary, a leasehold community on land owned by the University of Calgary. Requirements for a lease in Alberta include:

• Minimum term: Leases must be for a term longer than three years to be registered under the Land Titles Act, and a registration process must be followed.
• Legal description: The lease must legally describe the land with sufficient detail to identify it.
• Covenants and purchase options: Covenants and a lessee's option to purchase may be included in the lease.
• Mortgage consent: If the land is mortgaged or encumbered, the lease is not binding on the mortgagee unless they have consented to or adopted it.

Land lease communities can be found across Alberta. Parkbridge, Canada's largest land lease developer, operates several manufactured home communities in the province, including Maple Oak Ridge and Evergreen Community in Edmonton, Parkland Village in Spruce Grove, Bridge Villa Estates in Lethbridge, and Ranch Estates near Calgary in Strathmore.

Leasehold properties may be suitable for buyers prioritizing lower upfront costs, such as retirees, first-time buyers, or those purchasing a seasonal property.

The common types of land lease houses in Canada are:

1. Built on Institutional Lands: Properties built on lands belonging to public institutions such as universities or municipalities.
2. Planned Communities: Communities developed by real estate developers where the homeowners can buy the houses, but the land still remains the developer's property. This is seen across some retirement communities, and more recently in some urban areas.
3. Built on First Nations lands: The First Nations of Canada have reserved lands across the country, and some of them have been leasing the land out for private use. This structure is particularly popular in the case of cottages, as it makes owning a cottage much cheaper than a freehold.

Advantages	Disadvantages
Often cheaper than freehold, reducing upfront cost and freeing up money for other uses and investments.	Upfront cost is less, but you will have to keep paying a monthly rent for using the land.
Often a more affordable option, especially for retirees and first-time homebuyers.	Not a great option for building equity. The property's value may also depreciate if the lease is about to expire, and the equity might be lost at the end of the lease term if the lease fails to renew.
Can offer access to better facilities if a part of a planned leasehold community.	HOA / Community fees may be applicable for the available facilities, even if you don't use those facilities.
Property taxes are usually lower than a freehold, as the land is not owned.	Traditional lenders may not finance, and interest rates for borrowing may be higher. The mortgage tenure would depend on the time left on the lease.
An option for buying a second property, such as a cottage, with a lower budget.	Finding buyers may be challenging, especially when there is very little time left on the lease.

Alberta has about 100 million acres of crown land in total. According to the Government of Alberta, there are about 5 million acres of crown land in Alberta that have been leased for agriculture and grazing. Agricultural leases allow for the leasing of provincial crown land for agriculture-related activities such as growing crops, harvesting hay and grazing livestock. Agricultural dispositions can take the form of farming and grazing leases and permits.

In 1998, an organization called the Alberta Grazing Leaseholders Association (AGLA) was established, the main objective of which is advocating for the rights of grazing leaseholders and protecting their assets and income.

The Alberta government requires agriculture leaseholders to allow recreational access to the leased crown land, unless the activity poses a risk to the land, crops or livestock. The leaseholders may be thought of as stewards looking after the land and a leaseholder can deny access under the following circumstances:

• The access is by any other means than on foot.
• There are livestock present on the land in a fenced field.
• The recreational activity involves hunting in an area that is very close to pasture where livestock may be present.
• Crop has not been harvested on the land.
• There is a fire ban in effect.
• The recreational users plan to camp.
• The proposed recreational activity is not allowed under government conditions or the recreation management plan.

To access crown lands for recreation, one must follow the steps outlined below:

1. Find out if the land you are planning to access is private land or crown land. A private owner may not allow access to their land for recreational purposes; and for accessing crown land, Recreation Access Regulations must be followed. You can use the Recreation Access Internet Mapping Tool to find out the leaseholder contact information and recreation conditions for a land you are planning to access.
2. Contact the leaseholder at least two weeks before your planned visit so that you could discuss important information and confirm your plans.

Leasing a land can allow a lessee exclusive rights over the land without having to buy it. Leasehold structure can also allow landowners to generate revenue from land they cannot sell; for example land belonging to institutions or First Nations communities. Land lease houses can be an affordable option for retirees looking to downsize or first-time homebuyers looking to get into the market. That said, before buying a leasehold property, one should carefully consider factors such as time left on the lease, additional fees they may have to pay and surrender clauses.