What Is Freehold vs Leasehold?

April 20, 2023

What Is Freehold vs Leasehold? - Featured Image

Are you considering buying a home in Edmonton? If so, you may have heard there are three primary forms of property ownership: freehold and leasehold ownership. Freehold ownership grants you complete ownership of both the property and the land, and is the most prevalent form of ownership in Canada. In contrast, leasehold ownership only grants you ownership of the property, not the land, which means you must pay ground rent and condo fees. Freehold properties tend to be more expensive as you are purchasing the land as well, but they also appreciate in value more compared to leasehold properties.

In this article, we’ll explain exactly the different components to each ownership type, so that you can be well-informed when making your decision. 

Freehold Ownership

A freehold property is owned outright by its owner, meaning there are no rental fees or other obligations related to the property. The only restrictions on freehold properties would come from any local zoning laws in place. This is one of the most common forms of property ownership in Canada.

Leasehold Ownership

A leasehold property means you only own the unit and the land is leased from a landlord or other entity for a set amount of time and under certain conditions. Individuals living in a leasehold property pay a monthly fee to the landlord in exchange for permission to use and occupy the property during their lease period.

Freehold Strata

A freehold strata is a combination of these two types of ownership. It involves both buying an individual unit (or title) with the land and also paying rent or strata fees to the strata association that manages the development as a whole. Each unit owner is responsible for the maintenance and upkeep of their own property, but they’re part of a larger group which shares certain common areas or facilities.

Note: you may have seen the term “freehold condo” which is the exact same thing as a freehold strata; it just depends on which province you’re in!

paperwork with graph and keys


Other Types Of Freehold Ownership

Fee Simple Absolute

Fee simple absolute is the most common form of freehold ownership. It means that you own the land and everything on it outright, without any conditions or restrictions from a landlord or other entity. You’re able to use your property as you please, including selling it or renting it out if you wish.

Fee Simple Determinable

Fee simple determinable is similar to fee simple absolute, but with a caveat. The owner of the property must agree to certain conditions or restrictions set by the landlord or other entity. For example, a lease may stipulate that you can only use the property for residential purposes and not for business or commercial operations. If these conditions are breached, the landlord may have the right to repossess the property.

Life Estate

A life estate is a form of freehold ownership in which the owner has exclusive rights to use and occupy the property during his or her lifetime. After they pass away, the property passes on to another family member or designated individual.

Other Types Of Leasehold Ownership

Estate For Years

An estate for years is a type of leasehold ownership in which the owner has exclusive rights to use the property for a fixed period of time. The landlord retains ownership of the land and can repossess it after the lease expires.

Estate From Year To Year

An estate from year to year is a type of leasehold ownership in which the owner has exclusive rights to use the property for an indefinite period of time. The landlord retains ownership of the land and can repossess it after giving notice to vacate.

Tenancy At Will

A tenancy at will is a type of leasehold ownership in which the tenant has exclusive rights to use the property for an unspecified period of time. The landlord retains ownership of the land and can repossess it at any time with proper notice. 

Tenancy At Sufferage

A tenancy at sufferage usually occurs when a tenant’s lease agreement comes to an end, but they haven’t yet vacated the property. An example of this would be an eviction proceeding where the landlord has initiated the legal options to evict the tenant, but they continue to live on the property and can’t yet be forcibly removed.

paperwork and calculator


Pros And Cons Of A Freehold Property


  • You own the property outright and you’re able to use it as you please, including renting it out or selling it. 
  • You don’t have a landlord or other entity dictating how you should use the property.
  • You can make changes to the property without having to get permission from a third party.


  • You’re responsible for all maintenance and repair costs associated with the property, and you may have to pay additional dues or fees to local homeowners’ associations. 
  • If you want to sell the property, it can be difficult to find a buyer in the current market. 
  • You’ll be subject to local taxes and zoning laws, which could potentially limit what you can do with the property. 

Pros And Cons Of A Leasehold Property


  • The lease agreement usually sets out specific rules for how you should use and maintain the property, making it easier to manage. 
  • You’re usually only subject to the terms of your lease agreement, which can be beneficial if local laws or regulations change. 
  • You don’t have to worry about finding a buyer when the time comes to move on from the property. 


  • You don’t own the property, so you’re not able to make any changes to it without permission from the landlord or other entity.
  • You may be subject to additional fees and restrictions set out by the lease agreement. 
  • If the landlord decides they want to repossess the property, there’s nothing stopping them from doing so. 

What Are My Responsibilities As An Owner in a Freehold Strata?

As an owner in a freehold strata, you’ll be responsible for the maintenance of your own property and for paying any applicable strata fees. You may also have to comply with certain rules or regulations set by the strata association – such as pet restrictions or noise levels – so it’s important to research those beforehand if they’re relevant to you. Additionally, if the strata association makes any changes to shared areas or amenities, such as installing a new pool or changing the landscaping, you may be responsible for helping cover those costs as well. 

You should have a clear understanding of what your rights and obligations are in your role as a freehold strata owner, so it’s often wise to seek legal advice before you begin making your purchase.

people looking at building plans


What You Should Know Before Purchasing a Strata Property

This type of property purchase is not quite the same as a typical real estate transaction, which means there are some key terms and things you need to look into before signing on the dotted line.

The Strata Council

When buying a strata property, it’s important to remember the strata corporation is a legally-established entity. The owners of these strata developments must elect members to handle the duties of the strata corporation as mandated by the Strata Property Act. If you buy a strata property, you do have the option to run and become a council member. Council members must act in good faith and exercise due diligence when making decisions, to ensure they are in the best interest of all owners within the strata. 

Strata Bylaws and Rule

When it comes to strata properties, certain bylaws and rules could be in place that could limit the usage of your property, for example, rental restrictions. In order for any changes to be made to the existing bylaw, a resolution of 3/4 must be obtained. Therefore, it’s essential that anyone who is looking to buy a strata property reviews its bylaws thoroughly to make sure there isn’t anything from the strata council that you don’t feel comfortable with. It’s also important to note that while having specific rules is not mandatory, all strata must have a bylaw.

The Strata Plan

Prior to buying strata housing, it’s crucial to carefully examine the strata plan. The strata plan furnishes particular information about the unit you are interested in and the site layout. You should review the plan to ensure it corroborates with the legal title. Look for details such as the strata plan number, unit number, drawings of units and the whole development, boundary lines, roads, and comparable factors.

Unit Entitlement

When a strata corporation is created, the schedule of unit entitlement table specifies the proportion of common property interest each owner holds. Initially, this table is utilized to determine the amount that each unit owner must pay towards the strata fees in addition to the percentage of common property that their unit owns. This table is key when purchasing a new strata development as it helps anticipate the initial strata fee expenses. When purchasing in an existing strata, it’s crucial to verify whether your unit number matches your listing details and other relevant information.

Strata Council Minutes

We recommend you thoroughly examine a minimum of two years’ worth of strata minutes, along with any special meetings that may have been conducted. These meetings can reveal essential information about the property and your unit that the seller may be unaware of or might not have divulged, considering that they may not have been in attendance. Reviewing the minutes helps you to gauge how the strata is being administered, the emerging issues, and the likelihood of significant repairs or special levies that may emerge after acquiring the unit.

Depreciation Report

Effective from December 2011, any strata comprising five or more strata lots must procure a depreciation report by December 2013. Now, that report is mandatory every three years, but the strata can opt to abandon or postpone the renewal with a 3/4 vote, which must be repeated annually. The depreciation report offers an assessment of the overhaul and substitution expenses of significant items.

This document is must-have when considering a strata property. It provides insights into the maintenance schedules of the building. While reviewing the depreciation report, examine any significant, un-maintained items or repairs required by the strata. If you see some larger items or repairs that may be needed, you should try to negotiate some cushioning to prepare for these expenses when the strata decides to execute the repairs.

Reserve Fund

The quality of financial statements in a strata may fluctuate significantly, depending on the strata’s size. However, all strata must possess a contingency reserve fund. The amount available in this reserve fund is the money accessible to the strata for repairing unexpected or future damages. The greater the amount in the reserve fund, the lower the probability of raising funds by imposing a special levy on the strata proprietors or increasing the strata fee.

What is a special levy? A special levy is an option that strata corporations can choose to raise additional funds required to cover unforeseen or significant expenses. The amount is typically determined by considering the total expense amount, the number of strata lots in the development, and the percentage of total development ownership held. If there is inadequate funds in the contingency reserve, and you discover that major repairs are likely due soon, the strata will probably impose a special levy on all unit owners to raise the repair amount. Typically, these special levies are one-time charges that supplement the regular monthly fees paid by the strata owners.

The depreciation report can also shed some light on the adequacy of the strata’s reserve fund. It is crucial to have a sufficiently large fund relative to the size and intricacy of the strata development.

Maintenance & Repairs

As a general rule, the strata is accountable for repairing the building’s exterior and common property. On the other hand, individual unit owners are responsible for fixing any repairs specific to their unit. Additionally, you should know that if an issue originates within your unit and causes damage to another unit or the exterior, you as the unit owner in question will be held accountable for all damages.

Outstanding Fees & Levies

Your real estate agent should help you get all the proper documentation but it’s critical you check for any payable outstanding fees or special levies already imposed on the unit you’re looking at. For example, say there is a $2,000 special levy required for the unit you plan to buy, but the payment is not due until after you become the new unit owner. Make sure your Realtor® factors that expense into the price or have the existing owner pay that levy upon closing to avoid paying for an expense incurred before becoming the unit owner.

Strata Fees

If you do nothing else, do this – examine the strata fee before purchasing a property. You can utilize the strata minutes to gauge whether the strata fees have risen or remained steady over the previous year. If there are frequent rises in fees, it might suggest the current fees are insufficient to fund all the strata expenses and costs. If you see a lot of necessary repairs but a low strata fee, it may again indicate a potential increase in the strata fee. Request your real estate agent provide you with details of comparable buildings on the market to evaluate their strata fee relative to the property you intend to purchase. This will give you insight into whether the current strata fee you see is likely to remain flat or increase in the upcoming years.

sign which says time to invest


Finding a Good Freehold Strata Investment Opportunity

If you’re looking to buy a property as an investor, freehold stratas can be a great option. They often have lower fees than traditional condos, and they tend to appreciate in value over time. When evaluating potential investments, it’s important to investigate the development’s location, the amenities that come with it, and any legal or financial restrictions you might need to comply with as an owner. Additionally, it’s worth researching the strata association to make sure they’re a responsible and organized group that will be able to provide the necessary services. 

Don’t forget that talking with neighbouring owners and residents in the area can also give helpful information about any prospective properties you’re considering investing in. With these strategies in hand, freehold strata investments can offer secure returns with the right amount of due diligence!

Ultimately, purchasing a freehold strata property can provide you with a safe, secure home (or investment) that comes with many benefits. Whether you’re buying for your own use or as an investor, understanding the details of your ownership rights and obligations is key to making sure it’s the right fit for you.

With the proper research and advice from experts in the field, freehold strata can be a great option for home buyers and investors alike. If you’re still unsure, give us a call today. Our team of home-building experts can help steer you in the right direction!

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About the Author:

At Sterling Homes, our mission is to provide the opportunity for affordable homeownership without compromise. Over the last 70 years, Sterling Edmonton has quickly become one of Edmonton’s most popular builders. We bring more than seven decades worth of exceptional customer service, superior design and unparalleled craftsmanship to the greater Edmonton area. As a member of the Qualico Group, Sterling Homes focuses on greater Edmonton’s finest family communities, while being able to offer some of the region’s most family friendly prices thanks to volume purchasing power for materials, trades and land. This has not only made Sterling one of Edmonton’s bestselling, move-up builders, but also one of the industry’s most respected home providers. It is through our uncompromising commitment to our customers that we proudly deliver the Sterling Advantage – that’s why each and every home we build includes a 10-year home warranty, a completion guarantee and new home warranty excellence rating. Our Advantage is our pledge that, when you build your dream home with Sterling, we will deliver a timely, well-built home you’re sure to enjoy for years to come.

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