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Beyond Buying: Exploring Alternative to Homeownership

As the population grows, the demand for buying new houses grows. Some people might be reluctant to purchase property as it comes with loads of responsibilities, stresses, and, most importantly, expenses. There are several solutions to help deal with some of the issues, but one way to circumvent some of the costs and responsibilities of owning land is with a ground lease. A ground lease, in essence, is when you buy a structure or building on a piece of land while leasing the land from the owner. Essentially you own the building on the land but not the land itself. Typically, the landlord of a ground lease could be the government (municipal, provincial, or federal), Crown corporation, First Nation, corporation, or other people. While it could make payments more manageable or even less expensive, it comes with its own unique set of rules and challenges that are important to address.

As a tenant, you must know a few vital pieces of information and some of your responsibilities before entering a ground lease agreement. For instance, you are responsible for the property's capital and operating costs. It is your job to ensure all utilities are paid for and any renovations or similar expenses would come out of your pocket. Additionally, you have the right and the obligation to maintain or construct property on the land. If you want to add to your property, it is within your request, and you must ensure the property is maintained. The lease itself can last for a very long time, as long as 99 years, although that's typically on the longer side, and the leases more commonly last around 50 years. Finally, the tenant pays an annual rent to their landlord in fixed amounts or a percentage of the revenue made by the property. It's helpful to note that you can acquire a mortgage loan from their leasehold estate. For the estate to receive any financing though, they first need to ensure that the balance of the ground lease meets the lender's established criteria.

Another alternative for people looking for residency without the expense of buying and putting down payments on a property is a rent-to-own program. While the particulars of rent-to-own programs vary, the main idea is that the renter agrees with the property owners or investors to buy the house in the future. Next, you would put in a down payment for the property, which leads to a monthly rent being calculated based on what is required to get you to around 10% of the property's purchase price by the end of the agreement's term. After that, the property owners or investors would put the property on hold. At the same time, you work to save up the money and possibly improve your credit score, eventually qualifying you to take out a typical mortgage with a lending institution. Rent-to-own systems often have some great benefits. For instance, some programs ensure that the price you pay for the property will stay the same regardless of inflation. For example, suppose you agree to start a rent-to-own program for five years in a house with a specific purchasing price, and that price increases. In that case, you will not have to pay the additional increase and will get to keep the original value of the home that you initially contracted to buy. Of course, there are a few downsides to this system. First, the stakes are far higher; renters must make timely payments. Failure to meet payment deadlines and amounts is a breach of contract and could lead to eviction. Additionally, you would be responsible for all maintenance and upgrades on the property.

There are many other feasible alternatives to outright buying a house that will allow you to own your property without paying a fortune. This material is for informational purposes only and should not be relied upon as legal advice.

Contact Us:

We, at Buzaker Law Firm, would be more than happy to help you with all your property purchasing needs. For help, email us at or call (905) 370-0484

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