Assignment of a Life Lease
What does it mean to assign a life lease?
An assignment is when a tenant gives all obligations and rights under a life lease agreement to another person. That includes the current tenant’s right, if any, to a future refund of the entrance fee. In an assignment, the assignee (new tenant) pays the current tenant directly for any right to a future refund of the entrance fee. In an assignment, the current tenant will not return to the life lease unit, giving up all right to occupy the life lease unit.
Can any tenant assign their life lease to someone else?
It depends on what the life lease agreement says.
A life lease agreement may:
- require the tenant to assign their life lease to get back their entrance fee;
- not allow the tenant to assign; in those cases, for new life lease complexes the landlord will owe the tenant at least 95% refund of their entrance fee;
- allow the tenant to decide whether to give notice or assign.
Why would a life lease tenant assign their lease instead of simply giving notice of termination to the landlord?
A life lease tenant may chose to assign their life lease agreement because:
- in some cases, it is the only way the tenant can get their entrance fee back;
- the tenant may need to move out sooner than the end of the required notice period; or
- if the life lease agreement doesn’t prohibit it, the tenant may be able to get more entrance fee from a new tenant than they are entitled to receive from the landlord.
Before a life lease is assigned, is the new tenant supposed to get any information?
Before the tenant assigns the lease and before the landlord consents to the assignment, the landlord must give the assignee the same information the tenant received when they entered into the life lease. The landlord must tell the assignee:
- that the assignee has the right to cancel the assignment of the life lease within seven days of giving the landlord the signed document;
- the term of the lease; the term may be for the assignee’s life or for a specific time period;
- the name of the trustee holding the refund fund and mortgage and the balance in the fund (only if the entrance fee is refundable);
- how the assignee will get the entrance fee back at the end of the tenancy;
- about the assignee’s risk of losing their entrance fee;
- the balance in any reserve fund, if the landlord is non-profit;
- that the landlord must have annual meetings with the tenants to give them financial information on the complex;
- whether or not the annual rent increase guideline applies or will apply to the complex;
- the reasons why the landlord may raise or lower the rent (only if the landlord is non-profit);
- that if the landlord increases the rent:
- tenants in non-profit life lease complexes have the right to ask the Residential Tenancies Branch to review the rent;
- tenants in other life lease complexes have the right to object to any rent increase unless the complex is exempt from the annual rent increase guideline.
The specific form required depends on certain circumstances of the complex. Following is the criteria:
New life lease complex (non-profit) Schedule F
New life lease complex (for profit) Schedule G
Existing life lease complex Schedule J
Is it true that the new tenant (assignee) doesn’t have to pay the current tenant their entrance fee until their cancellation period ends?
The Life Leases Act says an assignee can hold back all or part of their payment to the assignor until the seven day cooling-off period is over. This is allowed because it might be difficult for them to recover the entrance fee, if they decide to cancel.
Can a tenant accept more money from the assignee than the tenant originally paid as an entrance fee?
Yes, unless the life lease agreement doesn’t allow it, the current tenant and the assignee can agree to a larger amount. Even if the assignee pays the current tenant a larger amount, the assignee will still only be entitled to the same refund as the landlord would have paid the current tenant.
When the term of a lease is “for life” does the assignee get the same term?
Yes, unless the current tenant, landlord and assignee agree to some other term. If all three parties don’t agree to change the term, it will automatically be for the life of the assignee.<
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