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Retirement Village Contracts

We're experts in advising purchasers on retirement village contracts.

Demand for aged care and retirement living services is increasing as a result of Australia’s ageing population. Nevertheless, the aged care and retirement village sector remains complex and most people do not understand exactly how it works.

Be aware that retirement villages offer various different contractual arrangements: these are not the same as ordinary residential property contracts. The most common types of contracts for retirement villages are long-term leases or licences and strata titles, but company titles, unit trusts and periodic tenancy contracts are also available.

Entering into one of these retirement village contracts can be risky unless you understand exactly what you are signing. Most people do not. These contracts can be confusing and poorly drafted, and are often written in favour of the village owner. Also, each state has different retirement village regulations, with different rules about disclosing the true costs of living in the village – or trying to leave it.

We cannot stress enough how essential it is to have your retirement home village documents reviewed by an experienced lawyer. Otherwise, you may find yourself locked into ongoing fees and charges – and in some cases, these may not only be payable by you, but also by the beneficiaries under your will.

  • What should I be aware of before signing a retirement village contract?

    A retirement village contract is not a standard property contract. It sets out your rights and responsibilities as a retirement home village resident and usually involves a contract of sale between you and the retirement village owner, as well as a management contract between you and the retirement village manager.

    You should be aware of the following:

    • Over 90% of retirement village contracts are in fact long-term leases, where the operator retains ownership of the unit and the resident buys the right to occupy the home.
    • It is not unusual for different residents in the same village to be under different contracts. For this reason, you must engage an experienced lawyer who understands this area and knows what terms can be negotiated, as well as the implications of those terms.
    • Do not assume that you or your family will have full rights to capital gains made on the property at sale. Most contracts will split capital gains between the operator and the resident, and in some instances you might not be entitled to capital gains at all.
    • Living in a retirement village does not automatically entitle you to aged care facilities. Although some retirement villages have aged care facilities adjoining them (owned and run by the same operator), the two services are covered by different legislation. Aged care facilities fall under federal law and retirement villages under state law.
    • There are usually significant costs when you leave a retirement village. Your lawyer will be able to review these with you and make sure that you understand what is involved.
    • Your operator may also be operating as your agent when you leave, meaning that your home could sit on the market uninhabited while you or your family is forced to pay ongoing maintenance fees.
  • What is the process?

    Legislation requires retirement village operators to do various things before you sign a contract, including:

    • Provide an information factsheet (in the approved form) to prospective residents
    • Allow prospective residents to inspect particular documents held by the operator (eg the site plan of the village)
    • Provide an expanded pre-contract disclosure statement (in the approved form) to those intending to sign a contract, to help them understand the costs of moving into, living in and leaving their unit
    • Use standard content and layout in retirement village contracts to make them easier to understand and compare.

    The factsheet and disclosure statement will help you understand the financial obligations associated with retirement village living. You should seek legal advice on each document.

    The retirement village operator must also give you other documents, including:

    • Any contract relating to services the operator will provide
    • Any other agreement about payment of an ongoing contribution or a recurring charge for goods and services
    • Disclosure statement
    • Rules or by-laws of the village and any agreement to abide by them

    When you evaluate the documents, check what extra charges may apply. You might be charged for services that you are not going to use (eg a pool). Again, your lawyer may be able to negotiate these terms for you.

  • What should I consider?

    There are many important things to consider before you enter a retirement village. You will know whether the village and facilities suit your lifestyle, but it is also worth finding out whether:

    • The village provides any nursing care or similar facilities
    • You can be moved from the village or within the village without your consent (and if so, under what circumstances)
    • Your long term occupancy at the village is secure
    • Any restrictions exist on the persons to whom you may sell your unit
    • Any restrictions exist on your use of your unit and of the village facilities generally
    • Any systems are in place for resolving disputes, and if so, what these are
    • The residents are actively involved in decisions concerning the level of maintenance and services provided (and the cost of those services).

    You should also ask when you get access to your money after you leave the village.

    Your lawyer will know what documents and other information to ask for. These items will largely depend on what kind of contract you are signing (eg a long-term lease or licence). Your lawyer can review these with you and make sure that you understand the kind of arrangement you are entering into, as well as its implications.

Why choose Slater and Gordon?

We are experienced in this field of law and can help you find the village that’s best for you. We will guide you through the process and ensure that you understand your risks and ongoing costs, and we will protect your interests throughout – including after departure. Our aim is to help make the process as stress free as possible.

By choosing us, we promise to:

  • Guide you through the process
  • Minimise stress
  • Ensure your interests are protected and your risks minimised, as much as possible
  • Negotiate on your behalf
  • Ensure you understand exactly what you are signing and what it means in practice