Life Lease is a form of real estate tenure that has been popular throughout North America and Europe for many years. There are now over 135 Life Lease projects operating in Ontario. The lease being used has no termination date and the Life Lease interest can pass to a resident’s family upon death. The family may then elect to retain the unit or sell it at market value.
What are the benefits of Life Lease Housing?
The benefit of the Life Lease model is that projects can be controlled by the non-profit or charitable sponsor to ensure an age-exclusive, mature adult community. Life Lease projects are designed for active adults with similar interests and backgrounds to fully enjoy their retirement years without the headaches associated with maintaining a single family home, and to purchase a place to live in communities designed to meet their changing needs.
Life Lease buildings have more extensive amenity areas to create a stronger sense of community. As residents age, support services can also be provided allowing them to maintain their independence for a longer period. It is also designed to enhance the resident’s quality of life through facilities such as 24-hour emergency response system, fitness centre and easy-living features such as wider doorways, walk-in shower stalls with moulded seats and grab bars.
Under a Life Lease arrangement, residents have exclusive use of their units, an opportunity for market value return, and many of the same benefits as traditional home ownership. The Life Lease interest also provides a resident with shared use, in common with other residents, of all common areas and building amenities.
Do Life Lease projects come under the Condominium Act?
No. However, the project has incorporated many provisions outlined under the Act into the Life Lease Occupancy Agreement. The Ontario Ministry of Municipal Affairs and Housing has been monitoring the Life Lease housing industry and reported at the Ontario Bar Association in May 2003, that the industry is deemed to be self-regulating. A way to protect your investment is to register a ‘Notice of Agreement’ on title to the property. Registration will ensure that your interest in the project is formally acknowledged on title and, once registered, you will receive notice of any future easements, encumbrances, liens, financing, etc. which might affect the property. Therefore, registration will protect your investment similar to registering a deed on title to a house or condominium.
Who can live in a Life Lease project?
The established age requirement for Vintage Garden is 55 years of age or older. In cases where one spouse or co-owner is not yet of age but is above 25, he or she is able to reside in the unit as caregiver. This occupancy restriction is intended to maintain a harmonious environment for mature adults and create a stronger, more supportive community.
Who sponsors and finances Vintage Garden?
St. John’s McNicoll Centre (SJMC) develops the project, provides the necessary equity and financing, and continues to own and manage the project. SJMC creates the vision and incurs the financial risks involved with development. Once the purchasers/residents have taken occupancy of their units, they own the Life Lease Interest that includes the right to exclusive occupation of the unit, and an opportunity for market value return.
What happens if SJMC gives up the ownership and management right of Vintage Garden?
SJMC will establish each component of its campus as a separate property. Once all life lease apartments at Vintage Garden 1 are sold and occupied, there will be no financing or other encumbrances placed against this portion of the property by SJMC. Therefore, if SJMC gives up the ownership and management right of Vintage Garden 1, the property can simply be turned-over to the residents who may form a non-profit corporation to continue to own and operate the building. A specific clause, paragraph 29.5, has been included into the Life Lease Occupancy Agreement to address this issue.
How is my deposit protected?
Each purchaser’s deposit is held in trust by SJMC until the project proceeds to construction. Only after a number of specific conditions are met can this deposit be utilized. These conditions are contained under paragraph 13.4 of the Life Lease Occupancy Agreement.
Do I have to pay Land Transfer Tax on closing?
Pursuant to the provisions of Ontario Regulation 88/04, filed April 2 2004, purchasers of Life Lease interests are now exempt from the payment of land transfer tax, provided that the Life Lease corporation is a non-profit corporation or a registered charity, and the purchaser is acquiring the Life Lease interest for the purpose of his or her occupancy of the unit as his or her principal residence or the principal residence of his or her spouse, parent or co-owner. Life Lease units acquired for investment, to be leased to other individuals, are not exempt.
Can I purchase a unit in the names of my children?
Yes, you can note any family member you wish on your Occupancy Agreement as the ‘Purchaser’, however, only those noted ‘Residents’ can occupy your unit. Whoever is noted as ‘Resident’ must also meet the age requirement of 55 years or older and be approved by the Board of Directors. You may wish to place the Occupancy Agreement in the names of your children with yourselves as the ‘Residents’ thereby avoiding the Ontario estate administration tax (‘probate fee’). It is important to note that the savings that a purchaser attempts to realize in reduced probate fees by adding their children as joint tenant purchasers may be outweighed by adverse income tax consequences to the children unless appropriate legal structures are put into place. Please consult with your Lawyer or Accountant if you wish to pursue this option.
What happens to our Life Lease interest upon death?
Upon death, your market value Life Lease interest transfers to your estate, which may decide to retain your interest and unit, or transfer or sell it to another party at the market value. St. John’s McNicoll Centre will maintain a waiting list of interested buyers and will assist in every way possible to find a suitable purchaser for your Life Lease interest when you wish to sell.
How much does my estate or I have to pay on sale or transfer?
Purchasers may sell or transfer their Life Lease interest at any time at a selling price established by them. Paragraph 35.5 of the Life Lease Occupancy Agreement stipulates that St. John’s McNicoll Centre will receive a 5% administrative and transfer fee.
This fee, which is similar to a real estate commission, will provide funds to coordinate the transfer, and deal with the purchaser and/or their Lawyer to ensure all documentation is provided, as well as funds for ongoing marketing of the project. Any surplus portion of the administration and transfer fee becomes an asset of the sponsor and can be expended on the facilities and services for seniors as dictated by its mandate.
Can I rent my unit?
Yes, subject to the written approval of St. John’s McNicoll Centre and the resident meeting all of the admission criteria for Vintage Garden.
Who is responsible for management and maintenance and what is the monthly occupancy fee?
St. John’s McNicoll Centre oversees the management and maintenance of the building. Each purchaser pays a monthly occupancy fee based on the size of their selected apartment unit. The monthly occupancy fees paid by each purchaser covers 24 hours concierge & emergency response, care management & services coordination, free community programs membership, housing coordination & superintendent on site, basic cable with Fairchild TV channel, reserved fund, and utilities except hydro, etc.
Will the monthly fees increase every year?
The monthly occupancy fees are set at the break-even cost of operating the project, which are reviewed annually by the Management Committee. With assistance from residents, the goal is to keep the monthly costs as low as possible so that future increases can be minimized.
Does the Tarion Warranty program apply to Vintage Garden?
No, the Ontario New Home Warranty Program or Tarion only applies to freehold and condominium homes. However, the project will require that the general contractor and sub-trades supply a two year warranty, as well as warranties of up to 5 years on major components such as roofing, services, etc. to provide protection for purchasers.
Who is responsible for repairs within my unit?
Purchasers and residents are responsible for all repairs and maintenance within their unit, except those components that are common to the building (i.e. exterior doors, windows, fan-coil units and plumbing systems, etc.). A Replacement Reserve Fund has been established within your Occupancy Fee to cover the replacement cost of all common building components.
Are pets permitted?
St. John’s McNicoll Centre has adopted a no pet policy. With the exception of guide dogs, no pets are permitted in any unit.
What is the smoking policy?
Given that Vintage Garden 1 will be occupied by mature adults and seniors, many of whom have breathing difficulties, and the documented risks of smoking, St. John’s McNicoll Centre has adopted a no smoking policy. No purchaser, resident or guest can smoke in any part of Vintage Garden 1, including the resident’s unit, or on the grounds.