Bill 155, introduced in the Ontario Legislature on September 20, 2017, proposes a new law to regulate, so-called, 'life leases', a type of lease arrangement that lasts for no less than 50 years.
Life leases are a form of leasing arrangement that has become increasingly popular in Ontario thanks to a rapidly growing seniors population. A life lease is similar in concept to condominium ownership, whereby a group of people own units in a community or building and pay fees for the use of common areas and maintenance. Unlike a condominium however, a life lease does not confer an ownership stake in the property; rather, the lessee owns an 'interest' in the property that allows them the right to live in the unit.
A prospective lessee typically enters into a life-lease by paying a lump-sum up front followed by monthly fees for amenities and maintenance. This is an attractive arrangement for seniors, who can still live independently but are not able to maintain a single family home.
The Bill proposes certain payments in respect of life leases and requires the disclosure of information relating to life leases. Under the proposed rules, the landlord is required to disclose to a prospective tenant the estimated entrance fee, the projected completion date, information regarding governance and management of the residential complex, the estimated amount of other fees, including monthly occupancy fees, and the estimated refund that a tenant would receive upon termination of the lease.
Landlords are also required to maintain a reserve fund to pay for any unforeseen major repair to or replacement of assets of the complex, and to hold adequate insurance for such.
It is unclear what effect the rules this will have on the life lease market, but new regulations could well increase costs that are ultimately passed on to seniors. The Bill's sponsor, MPP Ann Hoggarth, said: "This bill provides that life leases be given protection, similar to renters and condo owners, by providing clear disclosure to leaseholders and improving communication with their sponsors".
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