Common use of Lease Acquisition Costs Clause in Contracts

Lease Acquisition Costs. No rent is paid for the Lease. Instead, the Resident lends to the Lessor a "Loan" free of any interest, for the duration of the Lease. Where the Residence is leased for the first time under the Village Scheme, the Loan you pay is more or less equal to the freehold market value of the Residence in the Retirement Village setting. Whilst you don’t own a freehold estate in your residence under the terms of your Lease, if the value of your residence rises so that the New Loan paid by your replacement resident is higher than the Loan you paid, you are entitled to the repayment of your Loan and also the amount by which the New Loan exceeds your Loan, called the “Loan Growth Sum”. This payment is called the “Loan Repayment Sum”. If the value of your residence falls you are only entitled to have your Loan repaid to the extent of a Loan Repayment Sum equal to the lower New Loan. In this way you enjoy the benefit of any value growth in the Residence and bear the burden of any decline in the value of the Residence in the same way as does an owner of a freehold home on re- sale.