What is Life Lease Housing?
Life Lease is a form of real estate tenure (conditions under which a land or building are held or occupied) 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. These communities are geared to mature adults and seniors.
Under a Life Lease arrangement, there is a single owner of the property who is responsible for operating and maintaining the property and buildings 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 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 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 Life Lease interest based on the market value of the unit, and sell or transfer this interest at the market value when they wish to sell, like 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 can protect their investment and earn a return similar to the equity growth in a home or condominium.
What are the benefits of Life Lease Housing?
There are numerous benefits of living in a Life Lease community. The most important benefit is that residents retain the equity in their home or unit – unlike typical ‘retirement’ communities where residents pay a monthly rent with no opportunity to preserve their equity. When the unit 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 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 about bricks and mortar. Life Lease communities are designed for active adults with similar interests and backgrounds enabling them 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 than condominium projects which creates a stronger sense of community and provides more age-specific programs and activities for residents. As residents age, support services may also be provided allowing residents 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 centers and easy-living features such as wider doorways, walk-in shower stalls with molded seats and grab bars.
In summary, under a 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. Life Lease enables active adults and seniors to acquire a unit and live in communities designed to meet their changing needs.
Who can live in a Life Lease community?
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. In cases where one spouse or partner is not yet of the required age, the spouse of the partner is still able to reside in the unit. However, he or she can only appear on the Life Lease Agreement as a “Purchaser” until attaining the age of 55 years. This occupancy restriction is intended to maintain a harmonious environment for mature adults and seniors, and create a stronger, more supportive community. Children may also purchase a Life Lease interest for their parent’s; however, they may not occupy it until they reach the prescribed age.
Does Life Lease really mean for “life”?
No. The name Life Lease is misleading but this was the name given to this form of tenure when it arrived in Canada from Europe where the leases were based on the resident’s lifetime in a unit. When the concept 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, and this interest can be sold. Upon the death of one spouse or partner, the 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 then describes how the Life Lease interest or unit is to be disposed of or held by the beneficiaries. The beneficiary may retain the unit as an investment, and lease to individuals who qualify for residency until the beneficiary’s retirement, when the beneficiary may decide to take up residency or, may sell the Life Lease interest at the current market value.
Who sponsors and finances a Life Lease community?
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 for the benefit of all parties. 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.
Who owns and operates the community?
ZEST Communities Inc. is a for profit corporation which owns title to The Village at St. Elizabeth Mills, however, it has assigned responsibility for the day-to-day operation 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 building(s), common areas, and overall St. Elizabeth Mills campus.
Can I register my Life Lease Agreement on title?
Yes, in fact, ZEST and NovaCare encourage purchasers to register a ‘Notice of Agreement’ or ‘Notice of Lease’ 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 like registering a deed on title to a house or condominium. It is also important to note that title to the individual development phases at The Village at St. Elizabeth Mills will be held separately so that the purchasers and residents of one project will not be impacted by another.
Does the Tarion Warranty Program apply to Life Lease?
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 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 and NovaCare will ensure that only quality general contractors and sub-trades are used for the construction of The Village at St. Elizabeth Mills, and that these companies supply sufficient warranties on all building components to provide protection for both them and the residents. Unlike a condominium where the developer is not involved after the project is turned-over to the residents, The Village at St. Elizabeth Mills will continue to be owned by ZEST and managed by NovaCare. Therefore, it is in their best interest to ensure that St. Elizabeth Mills is built to the best quality standards to ensure longevity.
Do Life Lease communities come under the Condominium Act?
No. However, The Village at St. Elizabeth Mills has incorporated many provisions outlined under the Condominium Act into its Life Lease Agreement. In addition, the Ontario Ministry of Municipal Affairs and Housing 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 used by most communities in Ontario and incorporates the disclosure and protection provisions recommended by the Ministry of Municipal Affairs and Housing.
Who are ZEST Communities and NovaCare Retirement Communities?
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.
What is ZEST Communities’ mandate?
ZEST Communities brings innovation and energy to 55+ communities; 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 resort-style community, which it can introduce to other communities across the province.
What happens if ZEST becomes insolvent or declares bankruptcy?
ZEST will establish each new residential building or phase at The Village at St. Elizabeth Mills as a separate property. Once all Life Lease units at Upper Mill Pond are sold and occupied, there will be no financing registered against this portion of the property. Therefore, should ZEST ever become insolvent; ownership of Upper Mill Pond can be assumed or transferred without impacting the resident’s agreement or exclusive right to occupy their unit.
What happens to my Life Lease interest if ZEST sells the property?
The intent of ZEST 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 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 the terms and conditions contained within this Agreement.
How is my deposit protected?
Each purchaser’s deposit is held in trust by a legal firm which will have a deposit trust agreement with ZEST. These deposit funds cannot be utilized by ZEST until conditions prescribed in the Life Lease Agreement are met and construction of Upper Mill Pond commences. Only after all construction and development requirements are in place, will your deposit be utilized. ZEST is only collecting a small 5% deposit to reserve a unit and no further deposits will be collected until construction does commence. Therefore, you will be able to maintain and invest your funds until the development proceeds, and purchasers will forfeit very little potential interest income.
Can I customize my unit?
Upper Mill Pond offers only premium finishes so that purchasers will not have to upgrade to achieve quality. Based on ZEST’s experience in renovating existing homes, ZEST understands that purchasers do not appreciate being offered low-level finishes with additional up-charges in order to achieve a desired quality. Therefore, ZEST’s finish selection packages have been set at the highest possible standard. Before construction starts, purchasers will be provided with a selection of quality flooring, cabinetry and paint colours to choose from.
Purchasers can also select from a range of upgrades to these finishes; however, ZEST believes upgrading is a personal preference, and is not a necessity.
What firms are involved with the development of Upper Mill Pond?
Since acquiring the property in 2014, ZEST and NovaCare have assembled a comprehensive development team comprised of leading experts in planning, engineering, architecture, design, and seniors’ 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 mature adults’ community in Ontario.
The primary firms retained by ZEST include: Zock & Associates (1994) Inc. – Life Lease Consultant & Project Manager; 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.
Do I have to pay Land Transfer Tax on closing?
Yes. When real estate is purchased in Ontario, the buyer is required to pay a provincial “land transfer tax” to the Ministry of Finance. This requirement relates to any transfer of beneficial interest in property, whether this be freehold or condominium ownership, or Life Lease tenure. Therefore, this requirement applies to your purchase of a Life Lease interest at The Village at St. Elizabeth Mills.
What happens to our Life Lease interest upon death?
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 in accordance with your Will. Your beneficiaries may decide to retain the Life Lease interest and unit, or transfer or sell this 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 establishing an asking price for a home or condominium. ZEST will maintain a waiting list of interested buyers and their sales team will assist in every way possible to find a suitable purchaser for your Life Lease interest when you wish to sell.
Can I purchase a unit in the names of my children?
Yes, you can note any family member you wish on your Life Lease Agreement as the ‘Purchaser’ or owner of the Life Lease interest, however, only those noted as ‘Residents’ can occupy your unit. Whoever is noted as ‘Resident’ must meet the age requirement of 55 years or older and be approved by ZEST.
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 Life Lease unit qualifies as a principal residence for capital gains purposes under the Income Tax Act and, for that reason, purchasers should consult their estate planning advisers 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 your lawyer or accountant if you wish to pursue this option.
How much does my estate or I pay on sale or transfer?
Purchasers may sell or transfer their Life Lease interest at any time at an asking or selling price established by them. This asking or selling price is based on the market value of the unit at the time of sale or transfer. The Life Lease Agreement stipulates that ZEST 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 like a real estate commission, will provide funds to ZEST to co-ordinate the sale or transfer of the Life Lease interest and unit, as well as funds for the ongoing marketing of Upper Mill Pond. This fee is paid from the closing proceeds received from the new purchaser, with the selling resident retaining the remaining 90% to 95%, as applicable.
Unlike a typical real estate transaction, it is ZEST, the owner that must co-ordinate the transfer of the Life Lease interest on behalf of the resident, 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.
Are pets permitted?
ZEST 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 and 5 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 dislike 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.
What is the Monthly Occupancy Fee and is H.S.T. included?
Each resident pays a Monthly Occupancy Fee based on the size of their selected unit. 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. and this is calculated in the same manner as a condominium fee. The Monthly Occupancy Fee for Upper Mill Pond includes: interior and exterior common area cleaning, repair and maintenance; common area hydro, gas and water; gas and both hot and cold water for your unit; insurance on the building and property; management and administration; and, a reserve fund for future capital improvements. NovaCare has also arranged for bulk service contracts, at very favorable rates, for basic television, internet and telephone service (currently with Source Cable), and for the rental, repair, maintenance and replacement of heat pumps and mechanical systems (currently with Reliance Home Comfort). Although these bulk service packages are paid by the residents, these bulk service contracts help reduce the overall monthly operating costs and fees. The items not covered under the Monthly Occupancy Fee and paid separately by residents of Upper Mill Pond include: hydro for the unit; content and liability insurance; and, property taxes.
What happens to my Monthly Fees when operating costs increase?
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, in conjunction with the executive committee comprised of residents of Upper Mill Pond, 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.
Who is responsible for management and maintenance?
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 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 unit are the responsibility of the resident. The Monthly Occupancy Fee for the first year of operation will be confirmed and locked-in upon completion of construction.
Who is responsible for repairs within my unit?
Similar to a condominium corporation, purchasers and residents are responsible for all repairs and maintenance within their individual unit, except those components that are common to the building (i.e. exterior doors, windows, heat pump units and mechanical systems etc.). A Replacement Reserve Fund has been established within the Occupancy Fee to cover the replacement cost of these common components to the building.
Who is responsible for repair and replacement of appliances?
Six (6) quality appliances are included in the purchase price of each Life Lease unit at Upper Mill Pond. Once residents take possession of their unit, they are responsible for repairs and maintenance associated with these appliances. All appliances are owned by the purchasers/residents and can be transferred or sold with the unit or upgraded at the purchaser’s/resident’s discretion.
What is the smoking policy?
Given that Upper Mill Pond will be occupied by mature adults and seniors, some whom may have breathing difficulties, in addition to 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 unit. Outdoor designated smoking areas will be identified on the site.
Can I rent my Unit?
Yes, subject to the written approval of NovaCare Retirement Communities Association and the renter meeting all eligibility and admission criteria for Upper Mill Pond. The renter and the ‘Purchaser’ of the unit would enter into a rental lease agreement and are considered to have a landlord/tenant relationship as described under the Residential Tenancies Act of Ontario. ZEST and NovaCare will require the renter to enter into a separate agreement or execute the Life Lease Agreement as ‘Resident’.
What type of heating/air-conditioning system will be installed?
The heating and cooling source for each unit 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 unit. Each unit has its own independent thermostat to control the desired temperature through a heat pump located in each unit. This heat pump is like a forced-air furnace that distributes the heating or cooling throughout your unit through a network of air ducts located along the perimeter walls. There is no switch over date for this modern, energy efficient system so you can have heat or cooling 12 months a year. Annual maintenance of the heat pump and other mechanical systems is included in the Monthly Occupancy Fee for each unit, or part of the bulk service contract with a third-party supplier such as Reliance Home Comfort.
Is there security for Upper Mill Pond and the underground parking area?
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 like a garage door opener. The garage door will close immediately after your car is in the garage. The parking garage will meet or exceed municipal standards for underground parking with surveillance cameras and security access systems 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 secure environment for residents.
Can I rent my underground parking space and what if I have two cars?
Yes. Any resident who does not have a vehicle and wishes to rent their space to another resident of Upper Mill Pond is 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, and cannot be sold separately. Residents who have two vehicles may be able to rent a second space from other residents of Upper Mill Pond or find surface parking elsewhere on the Upper Mill Pond or St. Elizabeth Village property.
Are there storage lockers outside of my unit and what are the sizes?
Each unit at Upper Mill Pond includes a storage locker which, in most cases, will be located on the same floor as your unit. Some lockers may have to be located on the basement/underground parking level based on the final building design and space restrictions. These lockers will be numbered and will be assigned to each unit by ZEST. The locker sizes may vary; however, the approximate size is 4 feet wide, 6 feet deep and 8 feet tall. The locker rooms will be keyed for resident access only, and each resident can place their own lock on their individual locker cage.
How are underground parking spaces assigned and can I reserve a space?
Residents will be allowed to select their underground parking space in the order in which they purchased their unit at Upper Mill Pond. These spaces are assigned based on three (3) categories of parking: a) handicapped spaces for physically handicapped residents requiring a wheelchair; b) mobility impaired spaces for those residents who have difficulty walking; and, c) regular parking spaces. However, residents do not own their parking space and these may be reassigned by NovaCare from time-to-time for the benefit of all residents. For example, if a resident was assigned a handicapped parking space and no longer has a car, it is only reasonable to reassign this space to another resident who requires such as space. Despite the assignment and reassignment of underground parking spaces, each unit and resident is assured of an indoor parking stall.
What if I have a motorcycle?
Motorcycles are treated the same as passenger vehicles. Residents must use their underground parking space, rent another underground parking space, or locate surface parking on the St. Elizabeth Mills property for motorcycles. There may be space within the underground parking garage which cannot accommodate a full-size vehicle, however, this cannot be guaranteed.
Will there be electrical plug-ins provided in the underground parking garage for electric cars?
Yes, some electrical plug-ins (220 volt) are proposed for the underground parking garage, as well as infrastructure included to add additional plug-ins as electric cars become more prevalent. The number of plug-ins installed will depend on the initial demand for electric cars, and separate spaces will be assigned for these vehicles. Usage charges for those with electric cars may be either on a flat monthly rate or metered, depending on which is most cost-effective, and the building engineers are currently studding these options.
What resident amenity areas are included at Upper Mill Pond and is the Health Club to be used by all residents of St. Elizabeth Mills?
There will be amenity areas designed for residents of Upper Mill Pond. These areas include a spacious entrance lobby, lounge and library, various activity rooms, storage lockers (in most cases immediately in front of the resident’s parking space), move-in rooms, and guest suite. In addition, residents of Upper Mill Pond have the advantage of the best proximity to the new 10,000 square foot Health & Wellness Club, which will be located on the lower level of Upper Mill Pond. This Club will include: a 20 x 40 – foot indoor pool; a hot tub; women’s, men’s and co-ed change rooms with saunas; exercise gym; dance/movement studio; spa and treatment rooms; special activity room; and, a spacious outdoor terrace with barbecues overlooking the ponds. The Health Club is for use by all residents of St. Elizabeth Mills, and other facilities are planned through-out the property as the community grows. In addition, residents of Upper Mill Pond will have access to all amenities, commercial/retail offerings and services offered on The Village of St. Elizabeth Mills campus.
Is the lobby at Upper Mill Pond intended for only residents?
Yes, the main floor, two-storey entrance lobby, including lounge, café/juice bar, library and business centre is intended exclusively for the residents of Upper Mill Pond. Only the lower level Health Club and guest suites are intended for use by other residents of St. Elizabeth Village.
What if I decide to purchase a garden home after I have made my deposit on Upper Mill Pond?
Purchasers who close and take possession of a suite at Upper Mill Pond will be given priority to transfer to a garden home anytime up to two years after they move into their suite, without deduction or penalty. ZEST Communities has no plans to add additional garden homes to its campus and all future units will be apartment form only.
When is the Town Square to be built?
ZEST Communities is currently working on the plans and approvals for the Town Square. It is currently anticipated that the first phase of the Square will commence construction within the next two years, prior to completion of Upper Mill Pond. Other phases of the Town Square will follow with the goal of having all completed within the next five years.