The Concept of Life Lease
Life Lease housing developments have been around for many years in Ontario and Canada and more recently have become increasingly popular with the quickly expanding seniors population.
Today’s Life Lease housing developments are meeting the challenges faced by a great number of seniors. The home in which they raised their family is now too large. Interior and exterior maintenance is beginning to be too much to manage. The two storey design is no longer suited to their present physical needs with stairs up and stairs down. Although the property where they raised their family once perfectly suited their needs, it is now becoming a burden and a constant source of frustration. Another challenge is the changes which may have taken place in the neighbourhood; good friends and family have moved away, there is less companionship and fewer neighbours to rely on in case of a problem or an emergency. Given these social and economic realities, seniors are looking for a housing option which reduces their worries and offers security, social interaction, and piece of mind within a community of shared values and lifestyles.
For many, Life Lease housing developments have come to their rescue. Statistics indicate that seniors move an average of 3.2 times during their retirement years. Senior households over the age of 50 face a move from a single family home to a condominium or apartment, and finally to a retirement or nursing home. Life Lease is ideally suited to provide housing to our aging population who may be quite independent today but may eventually require support services to live independently tomorrow.
Life Lease developments offer the owner a leasehold form of ownership versus condominiums or single family homes freehold ownership. Properly structured, both forms of ownership offer similar protection for the owners. For example, Life Leases can be registered on title to the property the same as a deed can be registered on a condominium or detached home. This registration protects the interests of the leaseholder. Life Leases permit the leaseholder more control than in a traditional condominium since the future sale or transfer of the life interest must be approved by the governing Board of Directors. This control is especially important in a mature adult community where leaseholders prefer to live with people of their own age and who share common interests.
The owner of a Life Lease has the exclusive right to occupy their unit and to use the common facilities of the development for as long as they desire or are able. These owners purchase their lease, normally at market value, similar to the purchase of a home or condominium. Once the owner takes possession of their unit, they pay a monthly fee, similar to a condo fee, which represents the owner’s share of the common costs including building common utilities, interior and exterior maintenance of common areas, management, and insurance.
When the owner, or their estate, wishes to sell or transfer their lease, they receive the market value of their unit, similar to a condominium or detached home. Therefore, it is the “market” that determines what the leasehold ownership or life lease is worth. Life Lease projects look like condominium projects, with similar unit sizes, features and monthly fees, however, there is only one owner registered on title to the property. In most cases, this owner is a not-for-profit or charitable organization which continues to own and manage the project to ensure that the life lease owners’ interests are maintained. These organizations are referred to as the sponsor. Sponsors of Life Lease developments have included churches, multi-cultural groups, nursing and retirement home operators, service clubs and municipalities. Actual ownership and title of the Life Lease development remains in the name and protection of these nonprofit organizations. With no motivation of profit, the organization can concentrate on high quality management and long-term maintenance.
Life Lease can be closely compared to condominium ownership in terms of investment return, security of tenure, and resident participation in the management of the project. However, Life Lease projects have the added benefit of greater control over membership.
The organizational structure of Life Lease projects allows residents to have input into the management and operation of the building. Life Lease housing gives you the convenience and freedom of private independent living in an adult lifestyle socially