WFN – SAGE CREEK LEASE FAQ

Sage Creek is a development of modular homes which is located adjacent to the Two Eagles golf course in Westbank, BC (Development Website). Homeowners are issued a share in the Lessee Corp. and granted a leasehold interest.

  1. 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.
  2. Is the lease entirely prepaid?  PARTIALLY- Much like the purchase of a modular home in a park, there is 1) the initial capital cost (the purchase price) plus 2) monthly rent (similar to pad rent, which was initial $350/mo) plus 3) common costs (similar to strata fees). Increases the monthly rent are adjusted in the same manner as pad rent adjustments in manufactured home parks.
  3. Other financial obligations under the lease? There are additional components which you are responsible for paying on a monthly ongoing basis being such items as: Property Taxes, Charges and Utilities and other service fees payable to the WFN and Home Owners Association.
  4. 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 may be payable ($500). The Basic Rent (pad rent) will be adjusted on assignment to be equal to the highest Basic Rent (pad rent) payable in the development. The Assignment must be registered with WFN. If the owner is a holding corporation a change of control (share sale) of this holding corporation is deemed to be an assignment.
  5. Does the lease permit the owner to obtain a mortgage from a bank? Yes – on the condition that the mortgage is registered in the WFN Registry, the lease will permit the mortgaging of the Tenant’s interest.
  6. 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 is marketed toward a retirement lifestyle and therefore contains an express prohibition of “noise which would create a disruption to” your neighbours.  Exterior Alterations (additions) which would reduce the spacing distance between neighbouring buildings are expressly prohibited (without consent, which is unlikely to be obtained).
  7. 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.
  8. 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 #501528 and Lease SG0888 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))

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