Alberta intends to boost consumer protection for seniors entering life leases
The Alberta government is introducing new regulations on life-lease housing for seniors to address what they call “serious gaps” in protections for leaseholders.
The legislation comes after a growing group of people raised vocal concerns about long wait times — some stretching to two years or more — for an Edmonton developer to repay hundreds of thousands of dollars to former retirement home residents.
The new rules will apply only to life-lease contracts signed after the bill gets royal assent, meaning it won’t help the estimated 170 seniors and their families waiting for money they put into life leases with Christenson Group of Companies.
Service Alberta and Red Tape Reduction Minister Dale Nally said Monday he asked for life-lease protections to be included in his mandate letter specifically because of that issue.
“Recently, we have [been] made aware of some serious gaps in protections for life-lease holders and their families,” he said.
Nally added that he consulted with life-lease operators and residents, and he heard a need for change from former Christenson Group building residents and family members.
“They all agreed that there needs to be protections put in place so this doesn’t happen again, and we heard you. We’re responding.”
A life lease is like a blend of owning and renting. Residents pay an upfront lump sum — often from the proceeds of selling their home — for the right to occupy a unit for life, or as long as they’re able to stay. They also make monthly payments to cover operating costs but the monthly amount is typically less than renting.
When residents die or move out, their initial investment is returned minus a percentage that the housing operator keeps and puts toward refurbishing the unit for the next occupant.
Bill 12, tabled Monday, brings life leases under the authority of the Consumer Protection Act. The legislation mandates that money owed to residents when the life lease ends must be repaid within 180 days.
After that period, interest can accrue and life-lease operators could face consumer enforcement penalties, including court action that comes with fines of up to $300,000 or two years in prison.
There will also be a mandatory 10-day “cooling-off period” after a life-lease contract is signed, to give prospective residents a chance to change their minds.
The legislation doesn’t set specific requirements for what operators must do with leaseholders’ entry fees, but Nally said the government could set that up.
It would not be an option to ask for the money to be held in trust, he said, because life-lease operators said that would damage affordability too much. Surety bonds are another possibility, but Nally said there aren’t currently any available on the market designed for life leases.
If that changes, the legislation could, too, he said.
“There’s going to be transparency and disclosure that doesn’t exist today,” he said.
“We believe that this will find the balance between protecting Albertans and not killing the industry.”
Third province with life-lease legislation
The life-lease model has been used for decades across Canada, mostly for seniors’ housing. Alberta will join Saskatchewan and Manitoba as the third province with specific life-lease legislation.
Life leases are most often offered by non-profit organizations, and that’s the case in Alberta too. According to the government, there are 22 life-lease providers in the province but only five are for-profit companies.
The five include the Christenson Group, which is pulling away from the model. The company’s nine retirement homes in Edmonton and central Alberta that include life leasing are being converted to rental-only buildings, including remortgaging to repay those waiting for their money.
Former life-lease residents in Christenson Group retirement homes should have received their initial payment back, minus an eight per cent cut, shortly after terminating their lease.
But their contracts also say that if life-lease unit vacancy exceeds six per cent, residents are put in a queue to wait for repayment.
Christenson Group president Greg Christenson has previously told CBC News that the queue started to grow out of control because they couldn’t move new residents in during the COVID-19 pandemic.
Nally said he can’t comment specifically on the Christenson situation because an active investigation is underway through Alberta’s consumer protection unit.
View original article here Source