Alberta bill to mandate return of life lease funds, but families waiting for millions feel left out

March 18, 2024 Canuck

After several Alberta seniors sounded the alarm about having their life savings locked up in life leases, the provincial government said it is taking steps to protect consumers who sign up for that housing model.

However, those who’ve been fighting with operators for years to get their money back say the government bill tabled in the legislature on Monday doesn’t go far enough and needs to be retroactive — otherwise, it won’t help them.

A life lease is a property investment, usually made by seniors who are downsizing.

It’s a form of housing where a leaseholder signs a contract to occupy a unit for life, or until the agreement is terminated, or they choose to leave. The agreements usually require a large payment or “entrance fee” up front.

Similar to a condo, the leaseholder buys into the unit, pays property taxes and monthly maintenance fees. When the contract is terminated, the owner is supposed to get their money back, minus a pre-set percentage.

Story continues below advertisement

The arrangement is supposed to provide long-term, affordable and stable housing to support independent living.

But some life lease purchasers and their loved ones are frustrated, unable to get their money back — in some instances for as long as three years — after the leaseholder leaves the property or dies. In some cases, they claim their loved one’s unit is being rented to someone new without the previous tenant’s money being released.

While in some situations the lease is ended because of a death, in others it’s because the leaseholders’ health has declined and they need to move from independent living — the facilities that offer life leases — to more costly long-term care. Those people are then left without money to pay for that additional care.

Click to play video: 'Affordability form issues cost Alberta senior'

2:26 Affordability form issues cost Alberta senior

The province said Bill 12, the Consumer Protection (Life Lease Protection) Amendment Act, would mandate the entrance fees be returned within 180 days of contract termination and that any money owing beyond that date would accrue interest penalties.

Story continues below advertisement

There would also be a new 10-day cooling-off period after a life lease is signed, allowing consumers time to back out if they change their minds.

“Life leases can be valuable for affordable, quality, supportive living when managed appropriately,” Michelle Charlesworth, the senior director of operations for Covenant Care & Covenant Living, said in a statement.

Financial news and insights delivered to your email every Saturday.

“If not properly secured, they can be risky and potentially devastating to a senior’s financial well-being. We applaud the government for protecting seniors in our province.”

The province said the bill also would establish that non-compliance with the new requirements would be deemed offences and subject to enforcement under the Consumer Protection Act’s existing framework.

“Bill 12 takes a balanced approach, protecting vulnerable seniors and their families from ambiguous contacts that could keep them from accessing money when their life lease ends, while ensuring life leases remain a viable and affordable option for housing,” said Service Alberta Minister Dale Nally.

Click to play video: 'Elder abuse on the rise in Alberta, shelter at capacity'

1:56 Elder abuse on the rise in Alberta, shelter at capacity

A consumer protection unit is investigating problems with the Christenson Group of Companies.

Story continues below advertisement

The company has about a dozen retirement living developments in several Alberta communities, mostly in the Edmonton area.

Christenson previously told Global News they pay out terminated life leases when new people buy into them.

The Alberta Life Lease Protection Society (ALLPS) and Opposition NDP say Bill 12 should be retroactive to help those who have already had trouble.

ALLPS, run by volunteers, is advocating for up to 2,000 life lease holders across the province. They say nearly $55 million is owed to 161 families in terminated Christenson life leases and some have been waiting years to be paid back.

“These seniors loaned these operators, in many cases, their life savings — $300,000, $400,000, $500,000. And that was in agreement that they would live rent-free in those facilities until they could no longer live there independently, at which time they would vacate and their loan would be repaid,” said Alberta Life Lease Protection Society vice president Jim Carey.

Click to play video: 'Alberta residents rally over life lease repayment delays to former tenants of Christenson Communities'

2:24 Alberta residents rally over life lease repayment delays to former tenants of Christenson Communities

Carey said the seniors believed their money would be held in trust, but instead, the funds were lent to a securities corporation.

Story continues below advertisement

“The securities corporation took out a mortgage on the property, and then moved all of those seniors’ loans below the mortgage so they’re not secured,” Carey said.

To prevent this from happening, ALLPS said the government needed to insist that the funds be held in trust.

The province said the legislation does give the government the ability to force life lease operators to hold the entrance fees in trust in the future — but that is not currently being enforced.

More on Lifestyle

The society said it had met with the province last year about the legislation and said it was led to believe ALLPS would be involved in the process of crafting it — but only found last week a bill was being created without their input and on Monday morning, was surprised to learn it was being tabled that afternoon.

“Who’s better to speak to the interest of seniors than the very people representing the families who have been so grievously harmed by this current life lease scenarios?” Carey asked.

Instead, Carey said he was told by Minister Nally the government met with various operators who said putting the funds in a trust would make their businesses unviable.

“What legislation would not protect the seniors? They listened to the operators. They met with the operators. They have not met with the seniors. Something to me is very wrong with their business model,” Carey said.

Story continues below advertisement

The province also said it held three town halls on the subject. ALLPS said it is very disappointed in how the government has handled the whole process.

“To have this blindsided on us like this is utterly disgusting, actually, from our Alberta government — they are supposed to be here to serve the people of Alberta, here to ensure the protection of these seniors,” ALLPS president Karin Dowling said.

“Apparently the operator’s information and their suggestions are more important. That’s a very big slap in the face to these seniors and families.”

After reading the bill, Dowling said it doesn’t go nearly far enough and the language is vague. The lack of retroactive action is devastating to hundreds of people waiting for their funds to be returned, the organization said.

“There’s people who actually took out loans to put their parents into life lease housing,” Dowling said. “Their parents have passed on. But guess what? They’re still paying the loan, which is absolutely ridiculous.

“That money should have been back in their hands.”

The society believes only non-profits should be able to sell life leases. Five out of 22 sellers in Alberta are currently for-profit companies.

“It’s too easy for for-profit organizations to, as you can see, not think about what’s going on behind the scenes with the seniors, but just go for the money,” Dowling said.

Story continues below advertisement

The government said by adding life leases to Alberta’s legislation, the province will join Saskatchewan and Manitoba as the only provinces to regulate them.