Worries are brewing among a group of Alberta residents involved in life-lease contracts with retirement homes, citing difficulties in accessing their funds worth hundreds of thousands of dollars. The life-lease concept enables individuals to essentially loan a substantial amount to a company, contributing towards the building’s mortgage in return for a place in an assisted-living facility which sometimes involves zero costs.
This arrangement works in a way that for every hundred thousand dollars contributed towards a life lease, the monthly rent reduces – potentially to zero, as experienced by Karin Dowling’s mother-in-law who lived at Christenson Developments’ Devonshire Village until two years ago. According to Dowling, this seemed to be a safe investment for her, working with a reputable company. Dowling’s sentiments mirror Steve Mackenzie’s, who also opted for life-leases with Christenson’s Royal Oak development when his mother required downsizing.
However, difficulties arise when individuals attempt to withdraw their funds from these arrangements, often encountering obstacles in accessing their money. This frustration is currently being felt by Dowling, Mackenzie, and other concerned Albertans who allege that Christenson owes over a hundred families with no clear indication of when these funds will be repaid. When a resident decides to move or after their demise, Christenson holds back a portion for refurbishing and re-listing, returning the rest to the family.
The struggle to retrieve these funds has resulted in stalled estates, unresolved taxes, and additional stress to families. Many residents are content with their living conditions but are wary they may not access their money for an extended period if they choose to leave. They dread they could be left holding the bag.
Dowling’s family has been waiting on repayment since December 2021, owed approximately $400,000 of which they have received a mere 10%. A letter from Christenson reveals there are 44 loans worth $15 million queued at the Devonshire Village.
Greg Christenson, President of Christenson Developments, affirms that repayment occurs when the vacant unit is refilled. However, the COVID-19 pandemic inhibited normal turnover, causing a backlog. The life-lease contract contains a clause that protects the company, indicating that residents must wait for their payouts until Christenson has sufficient funds.
Christenson emphasises the complexity of these contracts and encourages potential participants to consult with a lawyer or an accountant. Unlike regular perception that the money is held in trust and easily accessible, this fund is actually used in the construction of facilities and forms part of the property’s mortgage.
While schemes like this work well for some, Roberto Noce, a real estate lawyer, cautions his clients against them due to their inherent flaws and lack of legislation to govern life leases in Alberta. He believes that unless Christenson breaches the contract, families awaiting their pay will have to keep waiting.
Emphasising the vastness of this issue, Dowling insists she is not the only one with this problem. Over a hundred individuals have similar concerns centralising around Christenson’s schemes and need more than just legal advice. She along with the afflicted families are hopeful for a resolution, following consultations on life leases by the Alberta government.
The province’s Minister of Service Alberta and red tape reduction, Dale Nally, acknowledged the need for protections for Albertans in his statement. However, Noce anticipates no immediate or retroactive solutions, suggesting that energies would be better spent lobbying the government to implement future legislation for consumer protection. He advises individuals to take cues from the current situation as a means to protect future consumers. Indeed, this ongoing episode illustrates the stark need for protective measures in the life-lease domain.
