Book 1 - Appraisal Institute of Canada

Life lease holders have the right to occupytheir unit and may have his life lease interestregistered on title. However, a study done forCMHC found that, although some residents hadbeen advised by their lawyer to register theirinterest, most had not done so because of thetime and expense involved (GGA ManagementConsultants 2007).The sponsor has the right to review the purchaserto ensure they fit the criteria for the building.There is always an age restriction (55+ or65+), but some residences also cater to a specificethnic or religious group. While it is not legal todiscriminate on this basis, prospective purchasersare discouraged from buying on the basis thatthey would not feel comfortable in the building.This type of targeting of the building reduces thepool of potential purchasers for each unit. It maylengthen the time on the market and could affectthe price achievable relative to a comparablecondo unit with no market restrictions.The absence of legislation specific to lifeleases which would protect and clarify bothconsumer and sponsor rights can lead tovalue implications for the resident. There is nolegislated requirement in Ontario for life leasedevelopments to maintain a capital reserve,for example. Part of the due diligence a condopurchaser undertakes is to examine the healthof the reserves by looking at the most recentreserve fund study. This information is onlyavailable to the purchaser of a life lease unit ifthe owner has done a study and is willing torelease the information. As well, life lease unitsare not protected under the Tarion New HomeWarranty program because they are consideredmulti-family properties. This reduces the value ofthe unit relative to a new condominium unit withwarranty coverage. It also means the purchaser’sdeposit is not protected.To date, there have been few issues with lifelease developments. However, given their hybridtenure nature and the lack of legislation coveringthis form of housing, the possibility of a negativevalue impact for a life lease owner is there. Thatsaid, the 2007 CMHC study by GGA ManagementConsultants found a very high level of satisfactionwith life lease housing and the feeling of communityin these developments. It is likely to be aform of tenure that continues to grow.ReferencesGGA Management Consultants, 2007, An Examinationof Life Lease Housing Issues. CMHC.Lumina Services Inc. 2003 Life Lease Housing inCanada: preliminary exploration of some consumerissues, CMHC External Research Program.Manitoba Life leases Act, http://web2.gov.mb.ca/laws/statutes/ccsm/l130e.phpSimmons, L. J., 1999 Life Lease Value Analysisand Review, Prepared for Housing Policy Branch,Ontario Ministry of Municipal Affairs and HousingNOTE:This is the condensed version of the article. Toread the article in its entirety, please visithttp://www.aicanada.ca/cmsPage.aspx?id=168Interactive edition ofCanadian Property VALUATIONWith print and electronic communication operating hand-in-handmore than ever before, we are more than happy to advise you thatCanadian Property Valuation magazine is available online in a highlyinteractive format.A user-friendly, interactive Media Rich PDF format that includes:Active hyper-links to all websites ande-mails contained in the publicationActive links to the specific stories fromthe front cover and contents pageActive links to advertiser websites from their adsPlease check out the interactive Canadian Property Valuation at www.aicanada.caclick here to return to table of contentsCanadian Property Valuation Volume 54 | book 1 | 2010 Évaluation Immobilière au Canada 41