Make an informed choice

Like any legal document, retirement village contracts are complex. Take the time to understand the detail in these contracts before you sign on the dotted line and consider getting your own independent legal advice.

KEY THINGS TO CONSIDER

Legislation is different in every state and territory in Australia. Therefore, contracts will also be different depending upon the location of the village you’re buying into.
What type of legal tenure do you want over your home? Will you be an owner? Will you be a lessee or a renter?
Different operators have different information and legal requirements.
Your contract will include a section on residents’ rights and responsibilities. You need to be satisfied with these before you sign any agreement.
Is the community you want to move to signed up to the Retirement Living Code of Conduct? Is it accredited under ARVAS?
Does your legal adviser have specific experience in retirement village contacts?
There are different contracts for different types of homes and villages. Check and double check that you are very clear on the details of your specific contract.
Feel free to talk with village operators and negotiate a contract that meets your specific needs and circumstances.

DOING YOUR HOMEWORK

Legal advice

Buying a home for your retirement is a major financial commitment and, like any other decision of this scale, you should seek legal advice beforehand.

It’s important to find a solicitor experienced with retirement village contracts. There are different types of contracts depending on the type of accommodation you choose, so it’s not a run-of-the-mill property purchase. Make sure you find someone who is experienced in this area to advise you.

They can help you to identify exactly what’s involved in your contract, so you know what to expect and can hopefully prevent any surprises. Most importantly, it helps to provide peace of mind for you and your family that what you are signing up for is exactly what you want, and need.

Retirement village contracts

If you want to live in a retirement village, you enter into a contract with the village operator. The contract will address things like:

the start and end dates of any cooling-off period
your right to withdraw from the contract before the cooling-off period ends
the entry payment amount
costs for general services and when they are due
costs for personal services that you might opt for (e.g. help with laundry, meals & cleaning) and when they are due
costs of the maintenance reserve or sinking fund and when they are due
any other costs that you will need to pay
any conditions on living in the village that you need be aware of and agree to
how much it costs to leave the village (the amount you pay after your unit is sold)
your rights when your unit is sold (the amount the operator must pay you)
whether you can re-sell your right to live in the unit
your right to see the village’s financial statements
the dispute resolution process
the operator’s and your rights to terminate the contract.

What to expect before you sign

TYPES OF CONTRACTS AND AGREEMENTS

Lorem ipsum dolor sit amet, consectetur adipiscing elit. Ut elit tellus, luctus nec ullamcorper mattis, pulvinar dapibus leo.

Leasehold

A leasehold arrangement is where the village operator owns the units and each resident signs a lease. Leases in retirement villages are commonly for 99 years or more.

The amount you pay as your entry payment can depend upon the market at the time at the time you pay it. You’ll also pay the regular service charge for general management and maintenance of the village and use of the facilities.

Depending on the terms of your contract, on your departure from the village you may also have to pay the operator:

reinstatement
a share of any capital gains
other charges deducted from your exit entitlement (e.g. marketing costs).

Strata title/freehold

Strata-title in retirement villages is similar to regular strata-title schemes where the property is divided into units. You pay the agreed entry payment for your unit, are registered on the title deed and become a member of the owners’ corporation.

However, unlike regular strata, the retirement village operator may have to approve you as a resident, you must sign a management contract with the village owner which covers the provision of services and amenities, and you will usually need to pay a deferred payment fee when you sell your unit.

You will also have to pay owner’s corporation fees while you own the unit, as well as paying the maintenance fee. However, these two amounts are sometimes merged into one regular payment.

You will also need to pay the local council rates for your unit as these will not be covered in the maintenance fee.

Licence arrangement

Licence arrangements grant you the right to live in your unit, but you don’t own it or have any registered legal interest in it.

As in the case of leasehold arrangements, you will still pay an entry payment to the village operator, as well as the ongoing service charge to cover maintenance and access to community facilities and services.

Upon your departure, a deferred payment fee also applies, the amount of which will depend on your initial entry payment.

Rental units

This is similar to rental agreements in private accommodation. You will sign a rental agreement with the village operator, and your tenancy will operate from rental period to rental period. In some cases, you may also pay an ingoing contribution, some or all of which is refundable when you leave the village, much in the same way that you would pay bond in private rental.

Your rent covers your accommodation and access to communal services and facilities within the village.

Company title

Buying under a company title is rare in retirement villages, but it does occur. Under a company title or company share arrangement:

You buy shares in a company that owns a retirement village. The shares give you the right to occupy a particular unit in the village
A Board of Directors, appointed by the shareholders, operates the retirement village and you are required to comply with the company’s constitution
If you leave the retirement village, you will be entitled to receive the sale price of the shares at settlement, less any outgoing deductions.

Company title is a complex area of law that was not designed for private residential accommodation. It is important to understand that, under this arrangement, you are not actually buying property, but shares in a company.

Unit title

This arrangement is similar to a company title, except that you buy a unit in a trust that carries an entitlement to occupy the unit. The retirement village is legally owned by the trustee, who holds it for the benefit of the unit holders in keeping with the terms of the trust.

As with company title, if you leave the retirement village, you will be entitled to receive the sale price of the unit in the trust at settlement, less any outgoing deductions. Again, this is a less common arrangement.

SECURITY OF RESIDENCE

When you’re used to owning a house and the land around it, it’s perfectly natural to be concerned about the different legal tenure arrangements which relate to retirement villages.

The sort of questions which usually cross people’s minds are:

What happens if the village changes hands? Do I still own my home?
What happens if I pass away and my partner is the only one in the home?
Can the operator force me to move or force me out if they want to renovate the village?

These are all very reasonable questions.

Depending on your type of tenure, you may not own the freehold title to your retirement village. You may live there under a lease or licence arrangement. Regardless, your state or territory’s Retirement Villages Act and/or the land title legislation in your state or territory will contain provisions designed to give you security of your right to live in the village, or your right to your exit entitlement, or both.

Exactly how this works in your particular case differs depending on your type of tenure and the state or territory in which you are located.

Couples or singles

In the case of a couple, if both people are named on the agreement and one person moves out, the other person can remain in the village.

However, where your partner is named in the agreement and you are not, you should seek advice about your rights in this situation.

Refurbishments or substantial damage

Depending on the age of your village, substantial refurbishment may need to take place. Or significant damage might occur that makes your home temporarily unliveable. What happens to you then?

This will usually be spelled out in detail in your residence agreement, but usually, the village seeks to temporarily move you (with your consent), either within the village or elsewhere until the situation can be rectified.

Can I be forced to leave the village?

n most cases, you can only be forced to leave the village if you are in breach of your contract, your health needs deteriorate to a level that you require a higher level of care than the village can provide, or some other serious matter occurs. If you breach your contract, the operator is within their rights to issue a breach notice and request that you either fix or stop committing the breach. If you don’t remedy the situation, they can issue you with a notice to vacate the village.

While it is possible under the Retirement Villages Act to force a resident to leave, it is never a decision taken lightly by any village operator. In some states and territories, the operator can’t require you to leave without first obtaining the permission of the tribunal that hears retirement village disputes in that jurisdiction, giving you an extra layer of protection.

What if I need to leave the village for personal reasons?

Sometimes your personal circumstances can also change and it is no longer the best or even the safest option for you to remain living in your home. However, any situation like this would involve careful discussion with you, your family and your doctor, if appropriate. You will also need to consider how any obligations under your contract might be impacted by your departure.

These are usually difficult circumstances for everyone involved where careful and sensitive discussion is needed.

VILLAGE GOVERNANCE

Accreditation

Two former industry accreditation schemes, Lifemark and IRCAS, have recently been merged and retirement villages can now become accredited under the Australian Retirement Village Accreditation Scheme (ARVAS).

ARVAS is an entirely independent, third party assessed compliance standard, which will work in conjunction with the Retirement Living Code of Conduct. Village operators can apply to be assessed for compliance against ARVAS, however they must first have self-assessed and become certified as compliant to the Code of Conduct. Click here to download the ARVAS standards or visit QIP’s retirement village and aged care accreditation for more information.

Government regulator

Retirement villages are regulated by state and territory governments. See the Legislation section for the relevant government agency in your state or territory.

Resident associations

The Retirement Living Council (RLC) works closely with state associations which represent people living in retirement communities.

The RLC also works alongside retirement village resident associations which exist in many states and territories. These groups are terrific advocates for retirement village residents and can help with information and also promote the rights of retirement village residents to all levels of government.

These associations can be a good source of information and guidance for people considering the move to a retirement village.

Village management

One of the most important relationships you will have in your village is with your village manager. These people oversee the day-to-day running of the village, act as the conduit to the village operators and essentially are your ‘go to’ for pretty much any issue that might arise.

A good village manager makes a big difference to life in the village, and a good relationship with the village manager makes the biggest difference of all. While they might work for your village operator, their job is to make your life as easy and enjoyable as possible. So, if something does go wrong, just remember that a good village manager is working with you, not against you.

There are also some aspects of village governance which you can choose to be involved with directly.

Residents’ committees

To promote and protect the interests of residents, residents’ committees are an integral group at retirement villages.
Committee members are elected by other residents to hold office usually for a term of one year but can be re-elected.
While participation is optional, residents’ committees offer the opportunity to further contribute to village life and support the best outcomes for village residents.

Finance committees

Retirement villages can also have finance committees, as the operator is often required to undertake consultation with a residents’ committee on a number of issues. This includes items such as the preparation of an annual budget for the village.

DISPUTES AND COMPLAINTS

The national Retirement Living Code of Conduct is now operational as a self-regulation measure for the retirement village industry.

This is an initiative of the three peak bodies representing retirement living across Australia – the Retirement Living Council and Leading Aged Services Australia.

The intent of the Code of Conduct is to set and maintain the highest standards relating to the marketing, selling and operation of retirement communities, including complaints and dispute management procedures for operators and residents.

Operators that subscribe to the Code of Conduct commit to specific standards around handling of disputes and complaints, and to actions to resolve them. Should an operator fail to uphold elements of the Code relating to complaints handling and resolution, a formal complaint may be lodged with the Code Administrator. Full details are available in the Code of Conduct document or by emailing complaints@rlcode.com.au.

Disputes and complaints

Try as we might, it’s hard to be happy all of the time. There are things that irritate and frustrate, and things that happen that are just plain wrong. So, how do retirement villages handle disputes, whether between residents or between a resident and the village operator?

Often the village manager will seek cooperation from all parties to discuss and resolve the issue. Sometimes the simple ways are the best.

But when something more formal is called for, most villages will have a dispute resolution process which can be activated.

In the case of a dispute between a resident or residents and the village, the legislation sets out the formal process.

Where there is a dispute between residents, an independent mediator can be engaged to facilitate a resolution. There are a number of publicly-funded mediation services around Australia or a private mediator can be engaged for a fee.

LEGISLATION

Retirement villages legislation

The legislation for your state and territory Retirement Villages Act can be found via the links below:

ACT: Retirement Villages Act 2012 and Regulations
NSW: Retirement Villages Act 1999 and Regulations
NT: Retirement Villages Act 1995 and Regulations
QLD: Retirement Villages Act 1999 and Regulations
SA: Retirement Villages Act 2016 and Regulations
TAS: Retirement Villages Act 2004 and Regulations
VIC: Retirement Villages Act 1986 and Regulations 1, 2, 3 & 4
WA: Retirement Villages Act 1992 and Regulations 1, 2 & 3

Links to other useful legislation: