Financing a Life Lease Home

An Ontario senior who went looking for affordable housing got more than she bargained for when she signed up for a life lease home. 

Kayla (name changed to protect her identity), a successful businesswoman, knew a bit about buying real estate and planning home renovations when she agreed to a life lease home agreement. “She was by no means a neophyte,” Ontario Superior Court of Justice records show. 

Her story is worth reading if you’re wondering if signing a life lease agreement is a good idea. Kayla’s experience could happen to almost anyone.

Quick Read

Is life lease a good idea?

What’s the purpose of a life lease?

How does a life lease work in Ontario?

Can you sell a lifetime lease property?

Kayla’s story

Mortgages and life lease homes in Ontario

Can you customize life lease homes?

What happens if the agreement is terminated

Breaking the agreement for a life lease home

Why a Life Lease Can Be a Good Idea

A life lease home can be a good value for seniors. 

Unlike rentals, you pay property taxes and upkeep. On the upside, you can stay as long as you want without worrying about being evicted, or making mortgage payments and passing mortgage renewal stress tests. Personal care or housekeeping services can usually be had, as an all-inclusive package or for a fee. 

Best of all, life leases are no more expensive than a condo. 

Purpose of a Life Lease

Kayla understood the purpose of a life lease home is to give seniors a comfortable, affordable retirement home, with social and recreational programs and onsite services as they age. Life lease home projects are owned and operated by nonprofit or charitable groups. They give buyers a life interest in a unit they can occupy as long as they desire. Buyers pay no land transfer taxes, and have no property rights. What to know about Ontario law and life lease homes

Selling a Lifetime Lease Interest

While life lease home buyers are not on title to the property, they can sell their life lease interest, or leave it to beneficiaries in a Will. It’s up to the sponsor whether beneficiaries can occupy your unit, but including it in your estate gives beneficiaries or your estate trustee the option to sell your life lease home interest. Why you need a Will lawyer in Ontario.  

Finding an Affordable Retirement Home

When Kayla decided to retire from her bed and breakfast business, she listed her Meaford home for sale and made a deposit on a charming life lease home at Maple Meadow Homes. The four- and six-plex brick townhouses sit on 16 acres of mature trees and wildflowers. Web promos emphasize their easy access to the Georgian Trail for hiking, cycling, and cross-country skiing. Golfing, boating, and fishing are nearby. It sounds like nirvana. What happens when the life lease home term expires

Making a Deposit for a Life Lease Unit

When Kayla discovered the Meaford life lease project, construction of the phase one townhouses was about to start. She was offered a 21-year, fixed term life lease plan. She signed up for the basic unit at $144,900 and was advised upgrades and associated taxes were extra. Her life lease reservation agreement came with a $5,000 deposit and the opportunity to move in when construction was complete. Buying a pre-construction home

Hiring a Mortgage Broker

The former business owner expected her bed and breakfast to sell quickly so she could pay the balance owed when she signed the life lease occupancy agreement. Kayla hired a mortgage consultant to find financing. The Bank of Montreal and Toronto-Dominion Bank both turned her down. Mortgage financing was quite simply not available for life lease homes. What some life lease purchasers had were personal loans, for up to 20 years, for a maximum of 65 per cent of the purchase price. 

What to Do If Your Mortgage Stalls

Kayla carried on and made the mistake that would cost her and Maple Meadows Home financial and legal grief. Talking to her sales representative, she revealed she had hit a roadblock finding mortgage financing. He offered to return her $5,000 deposit. That would relieve her of liability for the 25% deposit the occupancy agreement required. She declined. She was sure her Meaford house would sell in time to close the transaction.

Remortgaging Your Home Before it Sells 

So it was that, a month later, Kayla agreed to sign a life lease occupancy agreement. She gave Maple Meadow Homes a $31,225 deposit and committed to pay the balance within two months. She had gotten the money by placing a second mortgage on her Meaford home. Are second mortgages secure? 

Find a virtual second mortgage settlement lawyer. 

Customizing Your Life Lease Home  

Kayla was a decorator at heart and upgrading her new home was exciting. She ordered custom made kitchen cupboards, countertops and fireplace, planned a dining island, and finished the basement. Closets were deleted, storage added, and a second bath installed. By the time she was done, the 50-something business whiz had created a home only the owner could love. Make your home easier to get around as you age. 

Avoid home contractor fraud scams. 

When Financing Falls Through

Kayla now had a custom home and no mortgage loan. Adding another $10,000 to her debt, she negotiated a five-week extension to take possession. The extension was timed to coincide with the closing date for the sale of her bed and breakfast. Duly, Maple Meadow Homes sent her an adjusted statement that included the custom upgrades and taxes. She now owed $126,535.53, above and beyond her $36,225 deposits.

Custom Changes Tip the Balance

The bill was the domino that set the court action in motion. Kayla had only made $33,018.50 from the sale of her home and her broker had been unable to find a mortgage. Maple Meadow Homes terminated her lease, as the occupancy agreement gave them the right. They kept the deposits and charged her GST. Who qualifies for a private mortgage

Extending a Life Lease Agreement

Again, Kayla persisted. She pressed her mortgage consultant to find financing. The broker reassured Maple Meadow Homes a mortgage wasn’t far off. The developer had both Kayla’s deposits and a custom unit unsuited to older lease holders and difficult to resell. Again, they agreed to a new closing date six weeks away. Read a guide to life lease housing

Breaking a Life Lease Contract

It was too little, too late. With no financing in place, Kayla and Maple Meadow Homes met in court. The judge found Kayla had committed to buying a unit she couldn’t afford. The lost deposits were reasonable compensation for the delays and being left with a unit so unique that 18 months later it still hadn’t sold. Maple Meadow Homes had little hope of recovering their development costs or a profit. Kayla, who thought a life lease was her retirement dream, was out two homes and legal costs. Losing a deposit on a house purchase. 

Affordable Real Estate Lawyers, Anywhere You Are

Access lawyers for less in Greater Toronto Area, Ottawa, or anywhere in Ontario  when you buy, sell, or transfer property. Axess Law’s flat fee real estate lawyers are affordable, and our rates are all inclusive (excluding taxes, disbursements, and third-party charges). Axess Law offers you only the legal services you absolutely need. Your final invoice includes no surprises or hidden charges. Your itemized statement of adjustments is explained when we deliver it, and we answer any questions you have about it.

Find a virtual real estate lawyer near you.

Finalize Financing for Life Lease Housing

Axess Law Ontario real estate lawyers finalize your mortgage financing for a life lease property. Make an online video call from anywhere in Ontario, 7 days a week. Use our online booking form to find appointment times that work for your schedule, or dial 647-479-0118 in Toronto, toll free to 1-877-552-9377.Meet in person at any of our conveniently located Greater Toronto Area or Ottawa law offices

Click here to learn more about Axess Law’s real estate law services.

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