A client, Ms. Chen, is considering purchasing a condo in a new development in Burnaby. The offering presents ownership as 'leasehold property, 99-year prepaid lease.' Ms. Chen asks you, her real estate licensee, to explain the fundamental difference between this ownership and a typical 'fee simple' condo she previously owned. Which explanation is most accurate?

Question: A client, Ms. Chen, is considering purchasing a condo in a new development in Burnaby. The offering presents ownership as 'leasehold property, 99-year prepaid lease.' Ms. Chen asks you, her real estate licensee, to explain the fundamental difference between this ownership and a typical 'fee simple' condo she previously owned. Which explanation is most accurate?

Answer options:

• With a prepaid leasehold, Ms. Chen owns the land and the building, whereas with fee simple, she only owns the building. ✅ A prepaid leasehold means Ms. Chen owns an interest in the property for a specified period (99 years) and does not own the land outright, unlike fee simple where she would own her strata lot in perpetuity.
• Under a prepaid leasehold, Ms. Chen will need to pay monthly rent to the strata corporation, which is not required for fee simple ownership.
• The primary difference is that fee simple properties come with strict strata rules, while leasehold properties have more flexible governance.

Correct answer: A prepaid leasehold means Ms. Chen owns an interest in the property for a specified period (99 years) and does not own the land outright, unlike fee simple where she would own her strata lot in perpetuity.

Explanation: Fee simple ownership grants the highest form of land ownership, whereas a leasehold interest is a right to occupy and use a property for a defined period, after which the property reverts to the landlord.