One of the less common types known types of commercial property leases that exist in Calgary are known as “Strata Leases.”
A leasehold becomes a strata lease when a leasehold landlord which owns a parcel of land or building leases out the premise for a set number of years to either a leasehold tenant or a developer.
In the case of a developer, they can sell an individual strata lot whereby they sell or lease to a buyer who then assumes the interest as a leasehold tenant.
In essence, a strata lease for commercial users is essentially a shared ownership in a property and is usually defined for a set number of years. Financing for these types of leases can be complicated and should be approached with caution.
This type of shared ownership is also often used in condominium complexes. These type of leases involving shared ownership often involve complex contractual arrangements which lease holders should have reviewed by a lawyer that specializes in these types of contracts.
As these strata lease contractual arrangements involve common areas, taxes, insurance, building repairs and maintenance, and which can be complex and potentially costly.
Another issue that also often crops up with these types of leases is what can occur towards the end of the lease such as the value of the property. It is always crucial that the lessor carefully examine the formula for the model strata lot lease regarding how the final payout is managed.
Anyone who becomes involved with a commercial strata lease is strongly advised to only do so after the contractual or purchase arrangement is fully reviewed and explained by a competent and experienced attorney.
