Glossary
Freehold
Freehold means owning the land and the buildings on it outright, with no expiry date and no landlord holding the underlying land..
Freehold describes ownership of both the land and the buildings on it, held outright with no time limit and no obligation to hand the property back to a landlord or the Crown. In Canada, most detached houses, semi-detached homes and many townhouses are bought as freehold, which means the buyer takes title to the land itself.
How freehold differs from leasehold
The clearest contrast is with leasehold, where a buyer acquires the building or the right to occupy for a fixed period but not the land underneath. A leasehold interest eventually runs out, and the remaining lease term becomes a factor in both value and financing. Freehold ownership does not expire on a calendar date; it continues until the owner sells, transfers or otherwise deals with the property. Condominium ownership is a related but separate structure: a strata or condo owner holds title to a unit plus a share of common property, which is why a strata corporation and monthly strata fees come with the purchase.
Why it matters for a mortgage
Because the land is the lender's security, freehold title gives a lender a straightforward charge against the whole property. That generally makes freehold homes easier to finance and easier to resell than leasehold units with a short remaining term. A buyer comparing a freehold townhouse with a leasehold unit on the same street should expect the lease term, renewal terms and any restrictions in the lease to affect both the price and how much a lender is willing to advance.
What to confirm before you close
- Confirm the property is described as freehold in the listing and in the agreement of purchase and sale, rather than leasehold or a share in a co-operative.
- Order a title search so the lawyer or notary can confirm the seller actually holds freehold title and can identify any liens, easements or charges.
- Budget for costs that apply to freehold purchases, including land transfer tax or property transfer tax depending on the province, plus legal fees, title insurance and adjustments. See the closing costs guide for the full list.
Frequently asked questions
What does freehold mean when buying a house in Canada?
Freehold means you own the land and the buildings on it outright, with no expiry date. You take title in your name, and no landlord retains the ground beneath the home. Most detached houses, semi-detached homes and many townhouses in Canada are sold as freehold, as opposed to leasehold or condominium ownership.
Is freehold better than leasehold for getting a mortgage?
Freehold is usually simpler to finance because the land itself is the lender's security and there is no lease term to run out. With leasehold, lenders review the remaining lease term, renewal options and lease restrictions, and may limit how much they will advance. The outcome depends on your file and the specific property, so confirm details with your lender.
Does a freehold townhouse include the land?
Yes. A freehold townhouse normally includes ownership of the lot and the unit, even though the walls may be shared with neighbours. That is different from a condominium townhouse, where you own the unit and share common elements through a condominium corporation, and different again from a leasehold townhouse, where the land is rented.
Sources
Related terms
- Leasehold — Leasehold is ownership of a building or unit for a fixed term on land that someone else owns.
- Title — Title is the legal ownership of a property, recorded in the provincial land registry that identifies the owner and any registered claims against the land.
- Strata — A strata is a legal ownership structure where each owner holds title to an individual unit and shares ownership of common property with the other owners.
- Land Transfer Tax — A provincial tax on transferring property title, paid by the buyer at closing and calculated as a percentage of the purchase price.
- Condominium Corporation — A condominium corporation is the legal entity created on registration of a condo plan that owns and manages the building's common elements.