Leasehold Purchases In Redwood Meadows

Redwood Meadows is a unique community. It is currently the only Townsite recognized by Alberta Municipal Affairs. The Townsite of Redwood Meadows is located in Census Division No. 6. It falls within the federal electoral district of Foothills. Provincially, it is part of the Banff–Kananaskis riding.

Redwood Meadows is different due to its exclusive governance and location. It functions just like an incorporated municipality, but it differs from all other Alberta towns in many ways:

The location is entirely within the Tsuut’ina Nation;
It is administered by the Redwood Meadows Council as well as the Tsuut’ina Nation Council; and
It is developed on leased land.

Due to this area having leased land, any purchase of property in the Townsite is seen as a leasehold purchase.

What Is A Leasehold Purchase?

In Alberta, a leasehold purchase is where you contract into purchasing the right to use and occupy a property for the remaining term of a lease. There are conditions already set out by the landlord.

This means, you do not own the property outright. You purchase the right to use it for a pre-set number of years under the terms of the lease. You will own your home, but not the land on which the property sits upon. Your property value has the potential to appreciate or depreciate over time. In this case, the land belongs to First Nations, making them the landlord.

In Redwood Meadows, a 75-year lease was originally signed in 1974; but recently on March 12, 2021 a new renewed lease was signed, extending it to the year 2095. In Alberta, a leasehold purchase grants the buyer the right to occupy and use land and any improvements for a fixed term. The purchase agreement outlines the purchase price, lease term, rent and operating costs, maintenance and repair responsibilities, and any other key conditions.

In Redwood Meadows, leaseholders have the same rights and responsibilities as a traditional freehold property owners for the length of the lease.

How Does A Leasehold Purchase Work?

Since the land belongs to First Nations, it cannot be sold. Redwood Meadows operates on a long-term, pre-paid lease that will run until 2095, with residential properties being offered on 75-year lease terms.

When you buy into a leasehold property, you own your home and any improvements, while leasing the land from the Tsuut’ina Nation. Since the lease is prepaid, there are no additional land payments throughout the term of the lease, which ensures long-term security and peace of mind for homeowners.

Usually, a leasehold interest in land is renewable. As the remaining term decreases, the homeowner may have the right to renew the lease for a fee.

What Is The Renewal Process?

In 2020, residents of Redwood Meadows voted on a new long-term lease arrangement. That vote approved a 75-year lease that will last until 2095.

Because of that decision, each homeowner needs to sign a new sub-sublease specifically for their own residential lot. These individual agreements officially started on April 1, 2021, even though the vote happened earlier.

How Common Are Leasehold Purchases In Alberta?

Typically these types of agreements are uncommon in Alberta but are gaining traction as new communities come up. Some examples of other communities in Alberta that are also leasehold are: Taza Park and Calgary’s University District. They are typically found in long standing designated areas, recreational or specialized land such as the town of Banff or the town of Jasper. For most residential buyers in Alberta, leasehold purchases are not the norm, but they are a valid alternative in specific, curated, or restricted areas.

Key Considerations for Leasehold Purchases

Leasehold ownership differs from fee simple ownership, and it is vital to understand these differences before entering into a leasehold purchase agreement.

Unlike fee simple ownership, leasehold owners do not own the land outright. Instead, they acquire the right to use the land for a specified period under the terms of a lease agreement. Leaseholders must comply with all lease conditions, as failure to do so may result in the loss of their leasehold interest.

Leasehold properties are often more affordable than freehold properties, which makes them appealing to many buyers. However, because the lease has a fixed expiration date, the property may be considered a depreciating asset. As the remaining lease term shortens, the property’s value can decline, since its worth is closely tied to the time left on the lease.

Financing a leasehold property can be more complex. Many major lenders are careful about offering mortgages on leasehold properties, particularly when the remaining lease term is short. Higher down payments are often required, especially as the lease approaches expiration. From a lender’s perspective, leasehold properties carry greater risk than fee simple properties, which may require buyers to work with specialized lenders. As the lease term decreases, qualifying for financing can become increasingly difficult.

Foreclosures will also differ. If a borrower defaults, the lender can only take ownership of the buildings and the leasehold interest – not the land itself. Because the land cannot be sold, the property’s resale value in a foreclosure scenario is typically lower, which increases the lender’s overall risk. This is a key reason financing tends to be more restrictive for leasehold properties compared to fee simple properties.

Understanding these factors helps buyers make informed decisions and determine whether leasehold ownership aligns with their financial objectives and long-term plans.

Kahane Law Office Can Help!

When in doubt, have a real estate lawyer review your leasehold purchase agreement so you know your rights and obligations prior to entering into a contract. Often email is the fastest way to reach our team since it allows you to provide details. Email our team directly here. We also love calls. Call us at 403-225-8810 locally in Calgary, Alberta. In addition, feel free to call us toll-free at 1-877-225-8817. No matter how you reach us, we enjoy helping when you need us.

This publication is provided as an information service and may include items reported from other sources. We do not warrant its accuracy. This information is not meant as legal opinion or advice.