Retirement Villages

What You Need to Know

As the country’s population ages, retirement villages have become an ever-increasing accommodation option for older Australians looking for a community of like-minded people who are offered appealing facilities and an enjoyable lifestyle.

However, to become a resident at a retirement village you will have to enter into some form of contractual relationship with the owner. The terms of the relationship will be set out in a Retirement Village Contract which will include:

• the ingoing contribution you will have to make;
• the ongoing fees you will have to pay;
• the type of ownership or occupancy arrangement for your residence;
• additional services that are available; and
• the exit fee you will have to pay when the relationship ends.

In New South Wales all retirement villages are governed by the Retirement Villages Act 1999.

Before making a final decision on such a major lifestyle change, it would be wise to seek both legal and financial advice so you can enjoy your golden years without any headaches!

The First Steps

Initially, check out various retirement villages in areas where you would like to live to get a feel for what they offer in terms of atmosphere, facilities and accommodation. When you make an enquiry, the retirement village operator is required to give you a General Enquiry Document within 14 days which sets out basic information about the retirement village which will help you decide if you want to proceed further.

Once you have decided on a particular retirement village, inform that village that you would like to receive all the necessary documentation to secure your place including:

• a Disclosure Statement which gives specific details about the retirement village and your selected residence in it including fees and charges that will be payable;
• a Retirement Village Contract which sets out the terms of the agreement between the village and you as resident;
• the Village Rules that you will be bound by; and
• a document relating to your ownership or occupancy arrangement such a lease or contract for the purchase of a property.

Accommodation Options

There are various options by which you can be entitled to reside at a retirement village including:

• A lease under which the owner of the village leases the premises to you for up to 99 years;
• Ownership of a strata or community title property noting this involves your having to pay transfer duty; and
• Shares in a company title village giving you the right to occupy a property.

What Happens Next?

Once you have received the Disclosure Statement, the Village Contract and other documents, that is when you should obtain legal advice about your rights and obligations (including the Village Rules) and financial advice about whether the fees (such as the Ingoing Contribution and the Departure Fee) and charges (such as the recurrent monthly charges) payable suit your financial circumstances.

You are not obliged to proceed until such time as you sign and return documents to the village operator including the Disclosure Statement, Village Contract and any lease or contract to purchase a property.

What If You Change Your Mind?

Even if you sign and return a Village Contract you have the benefit of a 7-business day cooling off period during which you can rescind the Contract by notice in writing to the other party and the village operator. And any money paid must be refunded.

Beyond that there is a 90-day settling-in period so that, if within that period after moving in you leave for any reason, you only have to pay:

• fair market rent for the time in occupation;
• the cost of any repairs for damage caused by you;
• a reasonable administration fee; and
• the reasonable costs incurred in adding, removing or altering any fixtures or fittings or making any renovations to your property at your request.

No Departure Fee will be payable and, the Initial Contribution will be refunded.

What Are The Fees and Charges?

In order to enter and stay in a retirement village there are fees and charges that are payable and even fees and charges when you leave.

Firstly, there is an entry payment to the operator called and Ingoing Contribution. You or your estate will get it back when you leave the village or pass away less a departure fee and some administrative charges giving you an exit entitlement.

Secondly, once your occupation commences, you will have Recurrent Charges which go towards the upkeep of the village and its operating costs. You would also have to pay for additional optional services such as meals, cleaning, laundry and personal care assistance.

Thirdly, when you permanently vacate the village, you will have to pay a Departure Fee which is usually deducted from your Ingoing Contribution before the exit entitlement is paid.

Fourthly, if you purchase a property in a strata or community scheme, levies will be payable to the owners corporation or community association.

All theses fees and charges and how they are calculated, if appropriate, will be set out in the Village Contract and Disclosure Statement.

Village Rules

Normally, a retirement village will have Village Rules which govern the use, control and management of the village. A copy of the Rules will be attached to the Village Contract and should be read through carefully.

Village Rules cover matters such as visitors and guests, noise, pets, car parking, use of services and facilities and the external appearance of a resident’s premises.

The Rules can be changed by way of a written request to the village operator by the residents committee or a group of residents (5 residents or 10% of them whichever is the greater).

Also, a resident has the right to challenge a Rule in the NSW Civil and Administrative Tribunal if that resident considers it to be unjust, unconscionable, harsh or oppressive. The Tribunal has the power to set aside or modify the Rule.

For instance, in one retirement village a Rule banned all pets. The resident applied to the Tribunal to modify the Rule to allow him to have two budgies in a cage. The resident was successful despite fierce opposition from the village operator.

In the case of a property in strata or community scheme, there will be no Village Rules but instead by-laws which cover similar topics as those in Village Rules.

Conclusion

It is important that you make an informed decision about moving into a retirement village and take advantage of an experienced lawyer’s advice to not only unravel the complexities of the Village Contract but to make you aware of any hidden costs, excessive Departure Fees or other unfair terms.