Before a Tenant Rents
What does the tenant have to pay to enter into a life lease?
The landlord will probably require the tenant to pay an entrance fee. If the complex is still in the planning or building stage, the landlord may ask the tenant to pay a pre-lease payment in addition to the entrance fee. A tenant may also have to pay a security deposit.
What is important to know about a pre-lease payment?
If a landlord is thinking of building a life lease complex, they’ll want to see if there are enough interested tenants. The landlord may ask prospective tenants to pay some money to show they’re interested. The money is called a pre-lease payment or “an expression of interest”. The landlord can’t accept more than $1000 for a pre-lease payment. If the prospective tenant enters into a life lease later, the landlord will either return the pre-lease payment or apply it to the entrance fee.
A pre-lease payment is not a deposit. It doesn’t guarantee that the landlord will offer the prospective tenant a life lease. The landlord must hold the money in trust until they offer the prospective tenant a life lease. The landlord may have a trustee hold pre-lease payments.
If the landlord doesn’t offer the prospective tenant a life lease on a unit or type of unit the prospective tenant expressed interest in by the date the unit is supposed to be ready, the landlord must give back the pre-lease payment. The landlord must return the money within 14 days of the date the unit was supposed to be ready.
A landlord can only collect pre-lease payments while the complex is in the planning or construction stages. Once there are tenants living in the building, the landlord can only ask for an entrance fee.
Can a landlord ask a tenant to pay a security deposit as well as an entrance fee?
Yes, the landlord can ask a tenant to pay a security deposit. The landlord can collect a deposit that is equal to one half of the first month’s rent that would be payable by a tenant who pays the minimum entrance fee. For example, if the tenant pays the minimum entrance fee, the rent is $800 per month.
The landlord can collect up to $400 for a security deposit. If the tenant pays a larger entrance fee, the rent might be $650. The landlord can base the amount of the security deposit on the rent of $800; the landlord can collect up to $400 for a deposit even if the tenant’s rent is less than $800.
Does the landlord have to give the tenant a receipt for these payments?
Yes. The landlord must give the tenant a written receipt for a pre-lease payment, entrance fee and security deposit. The receipt must show:
- how much the tenant paid the landlord
- the date the money was paid
- the reason for the payment – for example, “entrance fee”
- if available, the address of the rental unit the tenant is going to rent
How does a landlord decide how much the entrance fee will be?
When the landlord is planning a complex, they determine how much it will cost them to build it. They usually figure out the cost for each type of unit. They approach a lender, like a bank or credit union, to see how much financing they can get. Once they know how much money the lender will give them, they know how much more they will need to build the complex. The landlord usually sets the entrance fees for the first tenants based on the difference between the construction costs and the amount of financing available from the lender.
A tenant may ask the landlord to upgrade or change something in the rental unit. For example: better carpeting or larger appliances. If the landlord agrees to make the change, they may ask the tenant to pay an extra amount. When the tenant moves out, the “extra” stays in the unit. The tenant is generally not entitled to a refund of the money they pay for an “extra”. Some landlords do allow tenants to recover part of the cost of “extras” when they move out. If the tenant is allowed to assign their life lease, they may be able to recover the money they paid for the “extra” from the person who takes over the lease. However, the assignee needs to realize that they may not be able to recover the additional amount they pay when they decide to leave.
What must the landlord tell the tenant before accepting an entrance fee?
Before accepting an entrance fee, the landlord must give the tenant an Entrance Fee Information Form that applies to the specific type of rental unit the tenant is interested in renting. The forms are part of the Life Leases Regulation and are all slightly different to take into account the different legal requirements for each type of life lease complex. However, in all cases, the landlord must advise the tenant:
- that the tenant has the right to cancel the life lease within seven days of giving the landlord the signed lease; this is called the “cooling-off” period;
- about the term of the lease;
- how the tenant will get their entrance fee back at the end of their tenancy;
- about the tenant’s risk of losing their entrance fee;
- that the landlord must hold annual meetings with all the tenants to give the tenants financial information about the complex;
- whether or not the rent increase guideline applies or will apply to the complex.
The rest of the information on the form depends on whether the complex is new non-profit or for profit or existing. For example, if the entrance fee is refundable, the landlord must tell the tenant the name of the trustee holding the refund fund and the amount in the fund. If the complex is non-profit, the landlord must advise the tenant how much is in the reserve fund.
The complete forms are available from the Branch or on the Branch’s website.
For New life lease complexes (non-profit), refer to Schedule F
For New life lease complexes (for profit), refer to Schedule G
For Existing life lease complexes (for both profit and non-profit), refer to Schedule J
Is there additional information the landlord must give the tenant when construction of the life lease complex is not yet completed?
If the landlord accepts the tenant’s entrance fee before the occupancy date of the complex, the landlord must also give the tenant a Schedule H. Schedule H includes information about:
- when the tenant will be able to move in;
- the tenant’s right to cancel the life lease if their unit isn’t ready to occupy within 30 days of the date the landlord said it would be;
- the name of the trustee holding the entrance fees;
- the minimum amount the landlord will place in the refund fund;
- how much the tenant’s monthly rent will probably be for the first year and whether or not the rent increase guideline will apply;
- what amenities are included in the rent – for example: parking, heat, water, laundry facilities;
- if there will be a manager or caretaker at the complex, and if so, when they will be available.
The landlord must give the tenant a floor plan of the tenant’s unit and a building floor plan for each floor of the complex. The landlord must also tell the tenant:
- what features the tenant’s unit will have – for example: air conditioning, frost-free fridge, self-cleaning oven, balcony, the type of flooring in each room;
- what features the complex will have – for example: security system, laundry facilities, storage lockers, sauna, guestroom.
Does the tenant need to see a lawyer before signing the lease?
The Life Leases Act requires a landlord to give the tenant certain information before the tenant signs the life lease. While this information is in plain language and fairly straightforward, the actual life lease agreement may be quite complicated. The tenant may want to have a lawyer review the information before signing anything.
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