Aria is a development of multifamily condominium apartments which are located between the 8th and the 9th hole of the Two Eagles golf course in Westbank, BC (Development Website). Homeowners are issued a share in the Lessee Corp. and granted a leasehold interest.
- What is the term? Unless earlier terminated, the sublease expires: April 24, 2105. Upon termination of the lease, your leasehold interest will expire and you must remove all belongings and leave the premises in good condition. A lease may be terminated prior to the end of term in the event of an uncured default of either the sublease or the head-lease.
- Is the lease entirely prepaid? PARTIALLY- There is 1) the initial capital cost (the purchase price) is payable plus 2) ongoing monthly rent (which was initially $140/mo) plus 3) ongoing common costs (similar to strata fees).
- Other financial obligations under the lease? Although the rent is pre-paid however, there are additional components which you are responsible for paying on a monthly ongoing basis being such items as: Property Taxes, Charges and Utilities are payable to the WFN and Home Owners Association dues.
- Does the lease allow the owner to assign (sell) to a third party? YES – but, prior to assignment (sale) to any third party a certificate of good standing will have to be obtained and a transfer fee is payable by the Seller (equal to 0.4% of the sale price). The owner, prior to any assignment, will also have to pay all arrears owing to the landlord or home owners association. The Assignment must be registered with WFN.
- Does the lease permit the owner to obtain a mortgage from a bank? The lease will permit the mortgaging of the Tenant’s interest without consent of the Landlord. The lease also contains those specific provisions which are required by the CMHC to provide insurance to lenders.
- Does the lease restrict the use of the property? YES – Your use of your property is restricted to residential uses (including home office use). Illegal activities or activities creating a nuisance are prohibited. The development contains an express prohibition of “noise which would create a disruption to” your neighbours. As the property is located on a golf course, the lease expressly excludes liability of the band or landlord or the golf course operator from damage caused by errant golf balls.
- Are there unique insurance requirements? YES – the Tenant must obtain a Comprehensive General Liability Insurance policy in the amount of $2,000,000 and maintain an All Risks policy.
- Are there provisions for a homeowners association? Operating similar to a Strata, The Home Owners Association or Sub-landlord may levy fees and create bylaws and rules and fines may be imposed if you fail to pay your homeowner association fees or breach those bylaws or rules. The Bylaws are incorporated by reference into the lease and should be reviewed prior to subject removal.
(this commentary is based on the Sublease #SG03297 and Lease SG00715 (as amended) on January 7, 2012 and is provided as information only and is not legal advice for any specific transaction, Buyers should obtain legal advice from a kelowna lawyer at the time of the offer to sublease (purchase))