Retirement Concepts, a large company that runs private seniors' residences, is under fire from relatives forced to pay $1,000 monthly fees long after their loved ones have died or moved out.
Last year, Jack Harris was asked to move out of his independent living complex by the company, which runs the building, because his dementia had caused him to start wandering.
"He cannot live there, because they have told him so and because his health doesn't allow him to, but he must continue to pay," said his sister Rose Rohaly.
The company runs several retirement homes in B.C. and one in Quebec. It normally rents retirement suites to seniors, but in this case it also manages several individual suites purchased by residents before the company took over the building.
Its industry-standard contract requires seniors like Harris to vacate when their "personal care or supervision needs" become unmanageable. Because of that, he is now in long-term care.
Move out, keep paying
However, the company also requires owners like him to continue to pay hefty monthly fees, which cover residents' meals, housekeeping, recreation and other services, even after their unit is vacant. The fees are over and above the owners' strata (condo) fees.
"[Jack] is being charged a thousand dollars a month — and getting nothing," said Rohaly, who wants to warn seniors and their families. "We cannot fight it. It's a legal agreement."
After he moved out last year, the company gave Harris a $200 per month break on its $1,200 fee, because he is no longer eating there, but refused to reduce it any more. The $200 to $300 rebate is also standard for vacant units.
Harris was already suffering from Parkinson's disease when he bought a two-bedroom unit for $175,000, 3½ years ago, in Chilliwack, B.C.
His sister said Harris firmly believed he would live there for the rest of his days.
"It was, 'Sign here for your meals,' which he did," said Rohaly.
At the time, she said, the original building owner planned to add an assisted living wing, which could have helped her brother later, but that didn't materialize.
Retirement Concepts then bought the majority of suites in the building and took over the service agreements with 17 other individual owners.
"I think it's a big racket," said Harris. "They've got you over a barrel."
"It is written right into the contract," said Rowena Rizzotti, vice-president of operations for Retirement Concepts, who said every owner must pay, no matter what, to keep up the services.
Fees won't change, company says
"If we broke the contract, we would have to break the contract for all, Rizzotti said. "And one thing that is written into the bylaws is to maintain the integrity of that [service] model."
Rohaly now has power of attorney over her brother's affairs. She said the fees eat up more than a third of his entire annual net income, while the B.C. government subsidizes his long-term care.
"Taxpayers are getting ripped off too," she said.
She's tried to sell the condo at a reduced price, but said buyers are scared off by the hefty fees.
Brad MacLagan, another relative saddled with the monthly burden, is also unable to find a buyer. "We've reduced the price now twice, and we are just looking at another reduction," he said.
His father, Dave, died a year ago. Even though it was his dad who initially bought the unit and signed the service contract, MacLagan must keep paying more than $900 per month until it's sold.
He can't live there, even if he wanted to, because he is too young for the over-55 age requirement.
'Handcuff' stays on after dad's death
"It is a handcuff," he said. "You are basically stuck with those fees, no matter what."
MacLagan has borrowed $15,000 from a line of credit to pay the fees since his dad passed. He understands bills must be paid, but thinks owners of vacant suites are charged far too much.
"I just want it to be reasonable," said MacLagan. "It's sad that nobody is focusing on what is right. I'm not saying no fees — just apply the right fees to it."
Retirement Concepts won't budge. It said it is also having a hard time renting out the units it owns in the building. It also said it is not willing to buy the suites from the beleaguered families.
"Currently we wouldn't have anyone to put in there. We have vacancies ourselves at that particular property," said Rizzotti.
There is a glut of privately owned retirement suites across the country, particularly in smaller communities, because developers overestimated the demand.
"I think there's a bit too much commercial greed going on here," said Susan Eng, of the Canadian Association of Retired Persons, or CARP.
"You should let people out when their circumstances change and not lock them in and take their money when they don't need the services anymore."
Rent, don't buy, experts advise
Eng said there are laws, at least in Ontario, to help retirement-home tenants get out of contractual obligations. However, she said there are no specific provincial laws to protect owners in these circumstances.
"We just have to push back as consumers, or we have to lobby for a law that prohibits that kind of continuation of a contract after you no longer need the services," she said.
Retirement Concepts stressed it has tried to help owners like Harris and MacLagan find tenants. Rizzotti said she also believes buying a suite like this, as opposed to renting, is a bad idea.
"Rental reduces the burden. Particularly at a time in your life where there are stresses and there are changes, the last thing you want to see is this additional stress on a senior," said Rizzotti.
"As a company, we don't subscribe to this [resident owner] model."
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