Life lease residents pay a fee each month for the provision of certain services. Sponsors may refer to these fees by names such as:

  • maintenance fee
  • common fee
  • occupancy fee
  • occupant charge
  • monthly operating expense

These will vary from project to project. It is a good idea to ask a sponsor for a written statement of what the monthly fees cover and do not cover.

What is usually covered

  • reserve fund contributions (to repair or replace common elements)
  • regular reserve fund studies
  • property management (for example, garbage disposal, lawn mowing and snow shoveling)
  • cleaning and maintenance of common areas and common elements (for example, hallways, parking lots, offices, street lights, pool or worship space, etc.)
  • insurance on the life lease project’s common elements
  • services such as recreational activities, chaplain services and health and wellness programs

What is usually not covered

  • property taxes
  • personal contents insurance
  • cable television and internet
  • utilities used in your suite or townhouse (for example, heat, electricity, water and air conditioning)
  • services such as housekeeping, personal support and bus trips to local shopping centres
  • repairs, renovations, or replacements of specific elements of your home (for example, fixing appliances, paint, installing a grab bar, or replacing the refrigerator)

Calculating monthly fees

The monthly fee is typically based on an annual operating budget that establishes the break-even cost of operating the project.

The amount of the monthly fee is determined by three main factors:

  • size of the home: a life lease sponsor will often calculate the cost of each resident’s monthly fee by charging a certain amount per square foot
  • expenses related to the common areas: the costs associated with the common areas are normally distributed among all units
  • number of support services and operating expenses included: the monthly fee will be higher or lower depending on whether:
    • services are included or optional (for example, daily meals and housekeeping services)
    • expenses are included or billed separately (for example, utilities and property taxes)

Fee increases

Unlike rental housing, there is no law in Ontario that limits how much a life lease project can charge for monthly fees.

Most life lease sponsors are non-profit organizations whose goal is to maintain a stable, happy, and healthy community, and raising fees dramatically would work against this goal.

Like rental housing or condominium housing, monthly fees in life lease projects are usually raised by a small amount each year to pass along the increased costs of operation.

The sponsor usually gives residents advance notice of an increase in the monthly fee.

On rare occasions, the monthly fee is raised by a more substantial amount to cover significant increases in costs of operation or to cover new or unexpected costs, such as major repair work.

Cost of support services and activities

Some life lease projects provide many support services and recreational activities, others provide only a few and some provide no support services. Some of these services and activities are included in the monthly fee and others the resident pays for if they choose to use them.

Some programs are a blend of these two types. For example, a life lease project may include a certain number of meals in the monthly fee but give the resident the option of buying additional meals if they wish.

The sponsor will usually provide a brochure that lists the kinds of programs and services a resident can expect if they move in.

Reserve fund

Like the reserve fund of a condominium corporation, the reserve fund of a life lease corporation is an account set aside by the life lease sponsor for future capital repairs and replacements to the building.

Most common elements of a building can be expected to wear out and require replacement over time. To ensure they have the money to pay for these capital projects, most organizations put money into a reserve fund each month.

The sponsor works to keep the reserve fund at a level that can cover expected replacements, with some additional money to cover unexpected repairs.

Reserve fund study

To determine how much money needs to be put aside each year, many organizations hire a professional to carry out a reserve fund study.

Reserve fund studies are usually prepared after three to five years of occupancy and then updated every three to five years.

While condominiums are required by law to conduct regular reserve fund studies, life lease sponsors are not required to conduct reserve fund studies—though many sponsors do conduct such studies.