Humber/Ontario Real Estate Course 1 Exam Practice

Which statement accurately describes a life lease?

1. The occupant owns the unit and is responsible for maintenance and insurance.

2. Life lease communities are mainly managed by for-profit organizations.

3. A life lease and a timeshare are the same.

4. The occupant pays to live in the unit for life but does not own it.

5. Life lease communities are governed by government entities.

6. The occupant can sell the unit at any time for profit.

The correct answer is: The occupant pays to live in the unit for life but does not own it.

The statement that the occupant pays to live in the unit for life but does not own it accurately describes a life lease. In a life lease arrangement, individuals pay a lump sum or a series of payments that allow them to occupy a unit for life, enjoying the benefits of residency without the implications of ownership. Ownership of the unit, in the traditional sense, does not transfer to the occupant, distinguishing it from outright purchasing a real estate property. This structure appeals to many, especially seniors, as it provides stability and security in housing while allowing them to live independently. In contrast, other statements do not accurately depict the nature of a life lease. For instance, ownership and responsibilities for maintenance typically do not rest with the occupant. Life lease communities are not primarily managed by for-profit organizations; many are nonprofit or community-based. A life lease is distinctly different from a timeshare, where ownership for a specific period of time is granted rather than a lifetime residency. Additionally, life lease arrangements often include restrictions on selling the right to occupy, preventing occupants from profiteering from their unit. Lastly, governance in life lease communities can vary, and it is not exclusively overseen by government entities.