Life-lease residences are another form of ownership, or housing tenure. They too can be considered a lifestyle choice - primarily for older adults.
They are Independent Living. Terminology varies and includes life tenure, equity lease, life estates, lifecare.
Many of such projects offer amenities for residents to enjoy common social interaction - a billiards room, multi-purpose activities room, café, hair salon and the like. Aside from a café, congregate dining or meal services are often not available. They may however have relationships with a community that also offers programs that may provide a continuum support, including care. As a result, they attract an older demographic looking for social interaction and common interests.
They are a form of ownership, based on the market value of comparable housing when purchased. A life lease is an arrangement whereby an individual purchases the right to occupy a dwelling unit for the rest of their life (or until no longer capable of living in the unit). In some cases, the agreement may be for a term of 49 or 99 years.
A lack of consistent legal, financial and governance structures for life lease projects can pose significant challenges for purchasers, legal and real estate professionals involved in life lease transactions. Life lease developers, sponsors, residents, real estate and legal communities generally agree that some form of enhanced consumer protection would help to protect purchasers and support the development of a viable healthy life lease sector.
Residents pay property taxes and monthly maintenance fees for building services and utilities. These fees cover maintenance, reserve funds, administration, building Insurance, landscaping., etc. and range from approximately $100 to $1,000 per month.
The sponsor is traditionally a not-for-profit or charitable organization, although we have seen a number of for profit developments, the most notable being Statesman Lifecare Centres in Calgary, Alberta. The reason for the not-for-profit affiliation is primarily founded in the belief that such organizations will be in existence for the long term, maintain the value and safety of their investment and will treat their residents well.
Resales to new purchasers are usually at market, but check out the details: The resident’s proceeds will differ from market. Owners are typically required to pay a portion of the resale value of their unit when it is sold - from 5% to 10%, to cover administration and unit refurbishment costs, which is in addition to any real estate commission and legal costs incurred by the resident.
Residents are responsible for the maintenance and repair of their units during occupancy; and, as in traditional home ownership, units are usually resold in an 'as-is' condition.
In some instances sponsors use a declining balance method, a guaranteed percentage of their original purchase price or other ways of determining a resident’s net proceeds. Check these details before you buy!