A life lease allows a buyer the right to occupy a unit for a period of time, often for their lifetime. In life lease housing, the buyer does not own the property but owns the right to occupy the unit. When the owner of the life lease passes away, their inheritor receives the life lease interest (but not necessarily the right to occupy the unit). The inheritor can then benefit from the sale of the life lease or apply to move into the life lease unit themselves.
Life lease buyers are usually seniors who are looking to downsize and benefit from the affordability of a life lease, fewer maintenance responsibilities, access to social programs and a sense of community (e.g., senior, religious or cultural groups). In some life lease units, care and/or meal services are provided.
Life leases are usually owned by a non-profit or charitable housing provider, a seniors’ organization, a church or faith group, a service club or an ethnic association.
Some elements of a life lease are similar to condo ownership including the payment of monthly fees and the existence of a reserve fund. Monthly fees include a range of expenses including repairs, landscaping, snow removal, building insurance, and sometimes meal plans. The reserve fund is a savings fund used to pay for larger expenses such as roof and HVAC replacement.
The exact terms of each life lease agreement will vary and a lawyer’s review is always recommended to ensure a buyer understands the terms of the agreement clearly.
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