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Retirement Village Contracts – Look before you leap!

Dominic Cookman

19 Oct 2020

Topics

  • Consumer Law
  • Elder Law
  • Property

Many older Australians opt to move to retirement villages as a way to take advantage of specialised amenities and community, yet also maintaining their independence.

But buying and moving into a unit in a retirement village has some peculiarities that set it apart from an ordinary residential purchase.

This article touches upon some brief things to bear in mind when considering the contractual documentation:

1) You do not get title to your unit.

When you move into a unit in a retirement village, the “purchase price” (often termed an ‘ingoing contribution’) you pay secures you a right of occupation, sometimes called a lease, sometimes called a licence, but does not give you title to your unit. When you leave the retirement village, ownership of the unit remains with the retirement village provider. This means that you cannot sell the unit or bequeath it under a will.

2) The contract is governed by specific legislation

In the ACT, every retirement village contract is subject to the Retirement Villages Act 2012 and the associated Retirement Villages Regulation 2013. Neither you nor the operator can contract out of this legislation. The legislation sets minimum standards that Retirement Villages have to meet, and sets parameters about what can (and cannot) be included in a contract. Amongst other things, the legislation also enshrined the right to apply to the ACT Civil and Administrative Tribunal (ACAT) in the event of a dispute.

3) Do not sign until you understand the charges in full

You are usually entitled to receive back your Ingoing Contribution, less any ‘Departure Fee’ when you surrender occupation of your retirement village unit (usually because you move somewhere else, or you move to a different type of care within the complex or you die) the lease comes to an end. A retirement village lease typically has a complex formula for how the Departure fee will be calculated. For example, the Contract may say the refund at the conclusion of the lease is

“equal to the Ingoing Contribution LESS the Departure Fee, with the Departure Fee being calculated on a sliding percentage scale for each six months you spend in the village, but capped at 30% of the Ingoing contribution.”

As can be seen from the above, determining the price of a stay in a retirement village is not always straightforward. Obviously you should not sign any lease documentation unless and until you understand exactly how much you can expect to be charged under the contract. The documentation and terms can often be confusing and lengthy, and seeking specialised legal assistance before committing to signing can often be worthwhile.

How can we help?

Snedden Hall & Gallop has had a long history of advising clients who are residing or planning to reside in retirement villages and we are available to assist in this area.

Contact the team on 02 6285 8000 or by email.