Market Value Life Lease is a form of real estate tenancy that has been in existence throughout North America and Europe for many years, and in Canada for nearly 50 years. There are an estimated 150 Life Lease projects now operating in Ontario, representing some 12,000 residential units. All of these communities are geared to mature adults 55+.
Under a Market Value Life Lease Plan, there is a single owner of the property who is responsible for operating and maintaining the development in accordance with an agreement signed with the purchasers and residents. The residents purchase an exclusive interest in the unit of their choice from these owners, and have the right to sell or transfer this interest when they wish to vacate their unit. This is similar to purchasing a unit within a condominium; however, the resident is acquiring a Life Lease interest as opposed to a freehold interest. Also similar to a condominium, residents share in the use and operating costs associated with the common areas and amenities. At the heart of every Market Value Life Lease community is an agreement or contract with the property owner which governs how the residential units are acquired, subsequently sold or transferred, and governs the ongoing relationship and responsibilities of both the owner and the residents.
In Ontario, there are three primary Life Lease structures, the most common and popular model being based on the market value of the residential unit. Under this model, residents acquire their exclusive interest based on market value, and sell or transfer this interest at the market value when they wish to sell, similar to buying a single family home or condominium. The Life Lease agreement used at The Village at St. Elizabeth Mills is based on market value, has no termination date, and the interest can pass to a resident’s family upon death. Therefore, residents are able to protect their investment and earn a return similar to the equity growth in their home or condominium.
For mature adults and seniors, there are numerous benefits of living in a Life Lease community. The most important benefit is that residents retain the equity in their home – unlike typical “retirement” communities where residents pay a monthly rent with no opportunity to preserve their equity. When the property is sold, the equity (the appreciated value of the property) belongs to the resident or their estate. In addition, the Life Lease structure ensures residents that the community will remain an age-exclusive and focused on mature adults and seniors. Life Lease is more about creating a community of people with shared interests and values than it is bricks and mortar. Communities are designed for active adults and seniors with similar interests and backgrounds to fully enjoy their retirement years without the headaches associated with maintaining a single family home.
Life Lease developments also have more extensive amenity areas to create a stronger sense of community and provide age-specific programs and activities for residents. As residents age, support services can be provided allowing them to maintain their independence for a longer period. These communities are designed to enhance the resident’s quality of life through facilities such as wellness and fitness centres and easy-living features such as wider doorways, walk-in shower stalls with moulded seats and grab bars.
Under a Market Value Life Lease arrangement, residents have exclusive use of their unit, an opportunity for market value return, and many of the same benefits as traditional home ownership. Market Value Life Lease enables adults 55+ to purchase a place to live in communities designed to meet their present and future needs.
The actual age criteria may differ slightly between communities, however, most are geared to individuals 55 years of age and older. This is the age requirement for The Village at St. Elizabeth Mills. There are no medical assessments or other criteria which restrict the purchase of units. In cases where one spouse or partner is not yet of age, the spouse of the partner is able to reside in the unit. However, he or she can only appear on the Life Lease Agreement as a “Purchaser” at the age of 55 years. This occupancy restriction is intended to maintain a harmonious environment for mature adults and create a stronger, more supportive community. Children may also purchase a residential unit for their parents; however, they may not occupy it until they reach the prescribed age.
No. The name Life Lease is misleading but this was the name given to this form of tenancy when it arrived in Canada from Europe where the leases were based on the resident’s lifetime in the unit. When the model was introduced in Ontario, it was modeled after condominiums. The Market Value Life Lease model selected for The Village at St. Elizabeth Mills has no termination date within the agreement. The interest can, therefore, extend in perpetuity. Upon the death of one spouse or partner, the Market Value Life Lease interest automatically transfers to the surviving spouse or partner, at no cost. Upon death of the second spouse or partner, the Life Lease interest automatically transfers to his or her estate. The resident’s Will may then prescribe the devolution of the unit. The beneficiary may retain the unit as an investment, and lease to another whose age qualifies the person for residency until the beneficiary’s retirement, when the beneficiary may decide to take up residency or, may sell their Market Value Life Lease interest immediately at the current market value.
Life Lease owners or “sponsors” have included churches, cultural organizations, nursing and retirement home operators, hospitals, private developers and municipalities. These owners develop the communities and provide the necessary equity and financing, and, in most cases, continue to own and manage the community. The financing for construction and subsequent operation ultimately comes from the people who purchase Life Lease interests in the community. However, it is the sponsor, in this case ZEST Communities Inc., that creates the vision and incurs the financial risks involved with development.
ZEST Communities is a for-profit corporation which actually owns the property, however, it has devolved responsibility for the day-to-day operation of The Village at St. Elizabeth Mills to a not-for-profit corporation called NovaCare Retirement Communities Association. It is NovaCare’s responsibility to administer the Life Lease arrangement and operate and maintain the common areas, grounds and overall building.
Yes, in fact, ZEST Communities and NovaCare encourages purchasers to register a “Notice of Agreement” on title to the property. Registration will ensure that your interest in the community 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.
No, the Tarion Warranty Program (formerly the Ontario New Home Warranty Program) only applies to freehold and condominium homes. The reason for this is that, unlike a condominium, ZEST Communities and NovaCare are not selling their interest in the unit or property, and they have an ongoing contractual responsibility to maintain the property at the highest possible standards. Therefore, it is in their best interest to ensure that a quality product is constructed and that the property is well-maintained and properly managed. ZEST Communities and NovaCare will ensure that only top-notch general contractors and sub-trades are used for the construction of The Village at St. Elizabeth Mills, and that these companies supply an unlimited two (2) year warranty on all building components, as well as extended warranties of up to 5 years on major components such as roofing, services, windows etc. to provide additional protection for both them and the residents. Unlike a condominium where the developer has no involvement after the community is turned-over to the residents, The Village at St. Elizabeth Mills will continue to be owned by ZEST Communities and managed by NovaCare. It is in their best interest to ensure that St. Elizabeth Mills is built to the best quality standards to ensure longevity.
No. However, The Village at St. Elizabeth Mills has incorporated many provisions outlined under the Condominium Act into its Market Value Life Lease Agreement. In addition, the Ontario Ministry of Municipal Affairs and Housing recently published a Life Lease Resource Guide (February 2014) and these best practices have also been incorporated into the agreements used for St. Elizabeth Mills. The Life Lease Agreement being utilized for St. Elizabeth Mills is now being utilized by the majority of the communities in Ontario and incorporates the disclosure and protection provisions recommended by the Ministry of Municipal Affairs and Housing.
ZEST Communities Inc. is a for-profit corporation which acquired St. Elizabeth Village from St. Elizabeth Home Society (Hamilton) in February 2014. NOVACARE Retirement Communities Association is a not-for-profit corporation which, under a formal agreement with ZEST, has ongoing responsibility for the management and operation of The Village at St. Elizabeth Mills.
ZEST Communities brings innovation and energy to 55+ community development; providing a bright new vision to the retirement residence experience through holistic, comprehensive community building, integrating major lifestyle components into each community and providing purchasers with the peace of mind of an appreciating real estate value. ZEST’S goal is to redevelop St. Elizabeth Village and to create Ontario’s first 55+ resort-style community, which it can introduce to other communities across the province.
ZEST Communities will establish each new phase at The Village at St. Elizabeth Mills as a separate property. Once all Life Lease suites at Upper Mill Pond are sold and occupied, there will be no financing or other encumbrances registered against this portion of the property. Therefore, should ZEST Communities ever become insolvent; ownership of Upper Mill Pond can be assumed or transferred without impacting the residents’ agreements or exclusive rights to occupy their suite.
The intent of ZEST Communities is to develop The Village at St. Elizabeth Mills as a model for other communities across Ontario. However, should ZEST ever convey or sell its ownership or fee simple title in the property, the Market Value Life Lease agreement stipulates that residents must first be provided with formal written notice of such transfer, and any transferee would be required to agree to abide by the terms and conditions contained within this agreement.
Each purchaser’s deposit is held in trust by ZEST Communities until the start of construction of Upper Mill Pond. Only after all construction and development requirements are in place, as described in the Market Value Life Lease agreement, will your deposit be utilized. ZEST is only collecting a small, $5,000.00 deposit to reserve a suite and no further deposit will be collected until construction does commence. Therefore, you will be able to maintain and invest your funds until the development proceeds, and will forfeit very little potential interest income.
Upper Mill Pond offers only premium finishes and specifications so that purchasers will not have to upgrade to achieve quality. Based on its experience in renovating its existing garden homes, ZEST has learned that purchasers do not wish to be burdened by being offered low-level finishes and forced to pay additional up-charges to achieve the quality that they desire. Therefore, ZEST’S finish selection packages have been set at the highest possible standard. Shortly before construction commences, each purchaser will be provided with a selection of quality carpet, hardwood flooring, cabinetry, flooring and paint colours to choose from. Purchasers will also have the opportunity to select from a wide range of upgrades to these finishes; however, we believe upgrading is a personal preference, not a necessity at Upper Mill Pond.
Since acquiring the property in 2014, ZEST Communities and NovaCare have assembled a comprehensive development team comprised of leading experts in planning, engineering, architecture, design, and housing. Collectively, this team has worked diligently with the owners to create a new vision for St. Elizabeth Village and “retirement” housing in Ontario. The rebranded campus is called The Village at St. Elizabeth Mills and it will be the first resort-style 55+ community in Ontario.
The primary firms retained by ZEST Communities include: Zock & Associates (1994) Inc. – Project Manager and Life Lease Consultant; FORREC Ltd. – Architects; Maple Reinders Constructions Ltd. – Construction Manager; Reinders + Rieder Ltd. – Architects & Engineers; T. Johns Consulting Group Ltd. – Planners; 52 Pick-Up Inc. – Marketing Consultant; and, Figure3 Inc. – Interior Designers.
Yes. When real estate is bought and sold in Ontario, the buyer is required to pay a provincial “land transfer tax” to the Ministry of Finance. This requirement also applies to the purchase of a Market Value Life Lease interest at The Village at St. Elizabeth Mills.
Upon death of one spouse or partner, the Life Lease interest automatically passes to the surviving spouse or partner. Upon the death of both spouses or partners, your Market Value Life Lease interest transfers to your estate, which may decide to retain your interest and suite, or transfer or sell it to another party at the current market value. It is up to your estate to establish the selling price and negotiate the final transfer price, the same as owning a home or condominium. ZEST Communities will maintain a waiting list of interested buyers and their sales coordinator will assist in every way possible to find a suitable purchaser for your Market Value Life Lease interest when you wish to sell.
Yes, you can note any family member you wish on your Life Lease Agreement as the “Purchaser”, however, only those noted as “Residents” can occupy your suite. Whoever is noted as “Resident” must meet the age requirement of 55 years or older and be approved by ZEST Communities.
You may wish to place your Life Lease interest and agreement in the names of your children with yourselves as the “Residents” thereby avoiding the Ontario estate administration tax (“probate fees”). A Market Value Life Lease suite qualifies as a principal residence for capital gains purposes under the Income Tax Act and, for that reason, purchasers should consult their estate planning advisors before adding the names of children to their occupancy agreements.
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.
Purchasers may sell or transfer their Market Value Life Lease interest at any time at a selling price established by them. The Life Lease Agreement stipulates that ZEST Communities receives an administration fee equal to 5% of the sale or transfer price, if the Unit is transferred within five (5) years, increasing by one percent (1%) per year after the fifth year to a maximum of ten percent (10%). This fee, which is similar to a real estate commission, will provide funds to ZEST to coordinate the transfer, including legal fees, as well as funds for ongoing marketing of Upper Mill Pond. This fee is paid from the closing proceeds received by the selling resident who retains the remaining 90% to 95%, as applicable. Unlike a typical real estate transaction, it is the owner that must coordinate the transfer of the Market Value Life Lease interest on behalf of the seller, and deal with the new purchaser and/or their lawyer to ensure all documentation is provided. Any surplus portion of the administration and transfer fee becomes an asset of ZEST Communities and can be expended on other facilities and services for mature adults and seniors as dictated by its mandate.
ZEST Communities and NovaCare have adopted a pet policy that permits pets to be housed on floors 1, 2 and 3 at Upper Mill Pond, with floors 4, 5 and 6 being pet-free. This is to ensure that those who wish to house a pet are located on the lower floors with easier access to the exterior, while those who have allergies or disapprove of pets can be housed on the upper floors. The only exception to this policy is service animals used by those with a visual or other impairment. Any resident wishing to house a pet should ask to review a copy of this pet policy.
Each resident pays a Monthly Occupancy Fee based on the size of their selected suite. These monthly fees are fixed for the 1st year of operation and will be confirmed prior to completion of Upper Mill Pond. The Monthly Occupancy Fees include H.S.T.
The Monthly Occupancy Fees are set at the break-even cost of operating Upper Mill Pond. The actual operating costs are reviewed annually by NovaCare Retirement Communities Association, with the goal of maintaining the monthly fees as low as possible while responding to cost-of-living increases. With assistance from residents, the goal is to keep the monthly costs as low as possible so that future increases can be minimized.
The Monthly Occupancy Fee paid by each resident covers the cost of administration and maintenance which will be overseen by a not-for-profit corporation called NovaCare Retirement Communities Association. A Replacement Reserve Fund is also established within the Occupancy Fee to cover the replacement of major capital building components at Upper Mill Pond. Repairs, maintenance and replacement of finishes and fixtures within each suite are the responsibility of the resident. The Monthly Occupancy Fee for the first year of operation will be confirmed and locked-in upon completion.
Similar to a condominium corporation, purchasers and residents are responsible for all repairs and maintenance within their individual suite, except those components that are common to the building (i.e. exterior doors, windows, fan-coil/heat pump 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.
Although quality appliances are included in the price of your Life Lease suite, residents are responsible for repairs and maintenance associated with these appliances. All appliances are owned by the purchaser and can be transferred or sold with the suite or upgraded at the purchaser’s discretion.
Given that Upper Mill Pond will be occupied by mature adults (some whom have breathing difficulties) and the documented risks associated with smoking, Upper Mill Pond has adopted a no smoking policy. No purchaser, resident or guest can smoke in any part of Upper Mill Pond, including the resident’s suite, or on the grounds. Designated smoking areas will be identified on the exterior of the building.
Yes, subject to the written approval of NovaCare Retirement Communities Association and the renter meeting all of the eligibility and admission criteria for Upper Mill Pond.
The heating and cooling source for each suite will be a central, high-efficiency, natural gas boiler and chiller system located on the roof. The utility costs associated with this central system are included as part of the Monthly Occupancy Fee for each suite. Each suite has its own independent thermostat to control the desired temperature through a fan-coil unit located in the suite. This fan-coil unit is like a forced-air furnace that distributes the heating or cooling throughout your suite through a network of air ducts located along the perimeter walls. There is no switchover date for this modern system so you can have heat or cooling 12 months a year. Annual maintenance of the fan-coil unit is included in the Monthly Occupancy Fee for each suite.
The parking for residents of Upper Mill Pond will be secure and separate from that of other buildings and residents. When entering the garage, residents must utilize a remote transmitter, which is similar to a garage door opener. The garage door will close immediately after your car has traveled into the garage. The parking garage will meet or exceed municipal standards for underground parking with surveillance cameras and security access system to the lower lobbies for maximum security. Anyone wishing to enter the building from the parking level must either have a FOB or building pass card or must gain access from a resident by using the security-controlled entrance phone system in the main lobby. The main building access doors will also be equipped with power door openers for the residents’ convenience. There is also additional lighting provided in the underground parking to ensure a safe and well-lite environment for residents.
Any resident who does not have a vehicle and wishes to rent their space to another resident of Upper Mill Pond are free to do so, subject to approval by NovaCare and execution of a parking space rental agreement. Underground parking spaces cannot be rented or otherwise used by non-residents.