To buy a cottage on leased land

[hunterfisher]

Just looking at people's perspective on buying a cottage on leased land. Pros and cons. 85-90 yr lease required from private land owner but it just makes me a bit suspicious. Also why would someone make the lands size .97 acres instead if 1 acre? Thanks for the input in advance.

[densa44]

There could be lots of reasons, ask the county, the owner may have been denied a subdivision and this is their solution. If it is first nation's land it is held in perpetual trust.

Do research and talk to local experts, a lawyer would be a very good idea.

My advice would be no.

[Austin]

Also get a look at the lease agreement. A lease by definition is that you are paying for the use of something - not the ownership. Sometimes these can be worded that for every year you continue to lease from the lessor, the percent of ownership of your dwelling becomes the lessors. After 80 yrs, the dwelling becomes the lessors. I bought a house from the City of Edmonton that was on City leased land... Eventually we negotiated the land purchase once I found that out. My realtor was not very good at disclosing that us at the time of original purchase.

Also under an acre,,, seems odd too. Check that out w the local county. They can tell you what is up with the seller. Perhaps he has maxed out his allowable subdivisions with the county and this is a loop hole.

[benamen]

As mentioned above, the details of the lease and who you are leasing from is quite important. I have heard stories from others where once the existing lease was up, there were no renewals and they were refused access to the property. So any buildings had to be left behind.
With that said, I currently own a cabin on a leased lot. The lease is reasonable and renewable every 15 years. The government of Saskatchewan has been okay to work with as they hold the lease. We just added on and building on government land is just like any city. Permits, inspections etc. Some of the regional parks are way more lenient.

[Beeman]

I don't know much about leases, but I have an idea about the parcel being under an acre. If it is adjacent to a roadway and was subdivided not to recently then some land may have taken away to widen the road at some time in the past.

[hunterfisher]

There are around 100 or so cabins there who also have leases through the same people. It is a gated area and secured so you need to be an owner to access it. Not sure if that helps.

[billycap]

If you like the place and the lease is legit then why not. No different than buying a place in jasper. Maybe not the best idea if you have children although 80+ years is a long time. By the time the lease is up you will be dust and your kids will be old. Cant take land with you when you croak.

[Mhunter51]

Talk to your bank also before hand if you are taking a loan or mortgage against the cabin. May be different in Alberta ( but I can't see that it would be different ) but in Sask MOST banks a very reluctant to loan any money on leased land. This could also be a factor down the road if you ever want to sell the property. Could drastically cut down on potential buyers.

[67ZL1]

Originally Posted by Mhunter51

Talk to your bank also before hand if you are taking a loan or mortgage against the cabin. May be different in Alberta ( but I can't see that it would be different ) but in Sask MOST banks a very reluctant to loan any money on leased land. This could also be a factor down the road if you ever want to sell the property. Could drastically cut down on potential buyers.

Couldn't agree more. When we were looking for a cottage we were told the same thing by our mortgage broker. That being said, if the lease is on crown property you can negotiate a deal when you make your purchase. I know back in the 50's and 60's this was popular.

[badger]

In my opinion there is a big difference between a 99 year lease and ownership. For example, Redwood Meadows near Calgary is on a reserve, and the homes are approaching 50 years old. A new purchaser only gets 50 more years of occupation before the lease runs out, which will be well within the lifetime of any children.

Purchasers are significantly affected by this lease term and the value of the properties are diminished accordingly. As the properties reach the end of the lease and if lease renewal is uncertain, the value of the property will be reduced. If you have any intention of retaining value in the real estate, then leasing without the ability to purchase will never be the same as ownership.

There was also a cottage development near Gleichen where the reserve chose to not renew leases and the cottagers had to abandon their buildings.
http://www.cbc.ca/news/canada/calgar...lley-1.1229507

[winged1]

Had looked at a BC property but the lease (10) required an $8K deposit with registration and annual on top. Couldn't see the value in that.

[Unregistered user]

^ Further to the above, and check some of the comments afterward.
http://www.vicnews.com/news/215312961.html?mobile=true

[benamen]

When I took out our mortgage for the cabin 11 years ago, I did not have that problem. I got the loan without even having to name the bank on the insurance policy. The cabin was just two years old when we purchased it.

[hunterfisher]

After reviewing some websites and talking with the bank it seems that a mortgage is out of the question seeing it is in leased land. There may be a way to add it to my existing mortgage but my banker hasn't complete
Confirmed yet. A loan is most likely they route I will need to go. I just don't get the .97 acres instead of 1. If it goes over or under an acre it must prevent or allow for some circumstances. I am meeting up with the owner and leasee on Sunday. It's a nice cabin and at a good price which is most tempting. This one is 8 yrs old with a cistern which also seems to be an issue with the bank as they would like to see it with a well or other constant water source.
I heard that as well when leasing the value diminishes unlike when you purchase a house. That part sucks and makes me question the whole thing. I want the cabin but I also want it to still be valuable. Maybe not the right cabin for me. Thanks again guys

[Red Bullets]

The under an acre part of the lease could have been created for taxation purposes which come into play for different sized acreages.

Last year I was looking at a nice cabin/house on leased land within a 1/4 mile of chickakoo lake. Hidden away that you wouldn't even know it was there. Beautiful view of Sauer lake. But the lease was up in 37 years. The house was worth 300K if it had its own lot but on leased land I could have bought it for 140K. Then in 37 years it would have been worth nothing unless I factored in the cost of where I was going to move the cabin to, or was I willing to give it up. There always would have always been the possiblity of renewing the lease again too I suppose. I didn't buy.

It would have been good to buy as a place to rent out by the week as a getaway and make money from it but to live in it would have been a loss of investment.

[bentley]

Lease works for some people as mentioned in previous posts . Would you lease a new vehicle or buy ? Leased land & cabin or house is never yours , sometimes not transferable to the next generation . As with leased homes on certain islands on the gulf coast , returns back to the government at the demise of the occupant .