Overview
A life lease is a written agreement involving an entrance fee paid by a leaseholder to a lease operator in exchange for exclusive access to a residential premises for life or until cancelled by the leaseholder or operator.
An entrance fee is a lump-sum payment made up front. The leaseholder will then make monthly payments to cover the costs of management, operations, and maintenance. Sometimes additional services, such as food or laundry, may be added to the agreement.
Duration
A life lease agreement is usually set to last for the remainder of the leaseholder’s life, or until the life lease is terminated.
Individual agreements may be subject to different termination conditions.
Requirements
As set out in the Consumer Protection Act, life lease agreements must address the following:
- the collection, use and return of entrance fees
- a minimum 10-day cancellation period, and the terms and notice requirements
- any termination rights, and the terms and notice requirements
- the amount to be paid for occupancy fees, including how often they will increase and notice requirements, and
- lease operator and leaseholder obligations
Protections
As of May 16, 2024, there are new requirements for life lease agreements in Alberta.
The legislation:
- protects consumers by providing a consistent approach to life lease agreements and a timeline for the repayment of entrance fees once the life lease is terminated
- allows the Government of Alberta to establish additional protections in the future if necessary
- provides consistent agreement terms for life leaseholders
- maintains flexibility for operators to help ensure life leases remain an available housing option, especially for Alberta seniors.
Before signing an agreement
Before entering into a life lease agreement, you should decide what services meet your needs and ensure they are addressed in your contract.
You should get legal advice prior to signing a life lease agreement. If you do not have a lawyer, you can find one at Find a Lawyer - Law Society of Alberta.
Entrance fees
As of May 16, 2024, life lease operators must refund entrance fees within a maximum of 180 days from the termination of the agreement.
If the entrance fee is not returned
If the refund, or any portion of it, is not returned within 180 days, the lease operator must make monthly interest payments to the former leaseholder on the non-refunded amount.
Note that the 180-day entrance fee return timeline applies only to life leases terminated on or after May 16, 2024. It does not apply retroactively to life leases that ended before May 16, 2024.
Interest rates
Under the Life Leases Interest Rate Regulation, the interest rate on unreturned amounts is 9% on an annual percentage rate (APR) basis. Interest is calculated on the last day of the month and must be paid within 5 business days. Interest will accrue daily on any entrance fees owing. Where an operator repays the entrance fee part way through the month, they must pay any accrued interest that had accrued for that month within five business days of the final payment.
Simple interest (calculated on the original amount) and not compound interest (interest on interest owing) is used to calculate monthly payments.
If an operator does not comply
Life lease operators may be subject to enforcement provisions under the Consumer Protection Act (CPA) if they do not comply with life lease contract requirements. Enforcement provisions under the CPA include prosecution through the courts and penalties of up to 2 years in jail and/or a fine of $300,000. The CPA also contains administrative enforcement actions, such as:
- Director’s Orders
- undertakings
- administrative penalties per contravention, to a maximum of $100,000 per contravention
If you feel a life lease operator has committed an offence, you may file a complaint with the Consumer Investigations Unit.