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Canadian High-Rise Buyers Face Tenure Choices

by PJ Wade

Canadians who decide to sell their house and adopt a high-rise lifestyle, may think the toughest decision has been made. However, one other critical choice lies ahead. A decision regarding the type of tenure that will suit their needs will be necessary before they move: "Should we rent an apartment, purchase a condominium unit, buy into a cooperative or select a life lease unit?"

Stand on the sidewalk and look at a residential high-rise building and you may not be able to tell whether the building is rental, condominium, cooperative or life lease. Individual units under these tenure variations may offer similar comforts and building facilities may be equally basic or luxurious, but your rights as a resident are dramatically different.

As a tenant in a rental suite, your rights are dictated by the provincial residential tenancy Act, such as Ontario's Tenant Protection Act, and the contract or lease you have with the owner of the building.

Purchase a condominium unit and you have ownership rights similar to those of a house owner, but with limitations related to the coexistence of multiple owners. You must agree to live by the bylaws and policies legally registered for the condominium and abide by management decisions made by the condominium board that oversees the complex.

Buy into a cooperative and you purchase a share in the corporation which owns the building and the land. As a share holder you have the right to occupy a specific unit, but you must contribute to the operation of the cooperative.

When you put your money down for a life lease unit, your rights will vary according to the province you live in. For example, in Ontario, life lease residents are neither tenants nor owners, but have a contractual relationship with the sponsoring organization that owns the building. Residents have purchased the right to occupy a specific unit, but will have little say in how the building is operated and what rules must be lived by.

No one of these four options is better than the other. Availability, location and price range are standard considerations, but each tenure type has specific advantages and disadvantages that must be weighed against your needs, finances, interests and personal preferences. For instance, life lease, the newest of the four tenure options open to Canadians, are still principally built by nonprofit organizations such as churches and legions to cater to those in retirement. Each life lease offers a unique financial, lifestyle and legal arrangement that must be carefully investigated on its own merits. Those attracted to life lease usually see an advantage in the restriction to residency to those over age 55 or 65.

You may have strong personal feelings about renting or owning that naturally draw you in one direction or the other. Your experiences as a tenant or home owner may prejudice you against the other alternative. However, to ensure you gain the greatest advantage possible when you relocate, take the time to look carefully into the financial and lifestyle aspects of both choices and the all the variations on ownership. Your financial and real estate advisors can walk you through the financial impact of each option. They will help you weigh each in relation to your entire financial portfolio, and your present and future lifestyle needs.

Be sure you select an advisor who fully understands the differences between living as a tenant and living as an owner. If the advisor sees renting as a way to free up capital that the advisor can invest to earn commissions or fees, you may not be getting the unbiased advice you need and expect.

Put as much time into selecting your tenure type and clarifying your rights as you do into selecting broadloom and other interior decorating elements and you'll ensure that your new home suits your lifestyle on all dimensions.

Published: January 21, 2003

Use of this article without permission is a violation of federal copyright laws.

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Futurist and Strategist PJ Wade is "The Catalyst" -- intent on "Challenging The Best Become Even Better." PJ earned this title by translating the dynamic impact of Boomers and their multi-generation families into relevant insights that start people thinking and taking action—in business and in life.

Author of 7 books and more than 1600 published articles, PJ encourages individuals to become their own futurist. PJ writes and speaks about the insight, knowledge and solid decision-making skills that professionals and their clients need to live and work in this vortex of change. For instance, since PJ knows that home is headquarters for the new decades-long "unretirement," she wrote the popular book "Reverse Mortgages: Best Friend, Worst Enemy... Your Choice! (CatapultPublishing.com), which is filled with suggestions and insight on protecting and using home equity. Her new business book, "What's Your Point?," which identifies 7 common mistakes professionals unknowingly repeat to their detriment, will be published in 2009.

As The Catalyst, PJ provides strategic communication, client appreciation and advanced education services to the financial, tourism, lifestyle and service sectors -- and the clients they serve. A frequently-quoted financial and business commentator, PJ is a thought-provoking strategic speaker who offers practical, real-life suggestions on leaving "the box" behind and embracing Forward Thinking -- a talent she regularly demonstrates in this column. For more on blogs, books and topics, visit TheCatalyst.com.

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