The new Retirement Village Contract Regime commenced on 1 February 2019.
The new regime is designed to provide greater certainty and clarity for prospective Retirement Village Purchasers.
In essence there are two parts to any Retirement Village Contract:
- The Compulsory Section under the Retirement Village Act;
- The Individual Contract for the particular Retirement Village.
The Compulsory Section under the Act has two main parts:
- The Village Comparison Document;
- The Prospective Costs Document.
Each Village is required to complete the standard clauses in the Compulsory Section with their individual information.
The Village Comparison Document requires the Retirement Village set out such things as:
- The formalities of Ownership and Operator of the Village;
- Any applicable age rules for occupants;
- The type of tenure (e.g. lease, licence, ownership);
- Disability accessibility, and parking;
- Whether there are plans for further construction or expansion on the site;
- What facilities are available, including any co-located Aged Care Facility;
- What services are available for residents (included, or at additional cost);
- Security, and Emergency assistance;
- Estimated Incoming costs;
- Estimated Ongoing costs;
- Whether there is an Exit Fee, and how it is calculated;
- What happens with Reinstatement and Renovation Costs;
- What happens with Capital Gains, or Losses, on resale;
- How and when the Exit Entitlement is paid;
- Financial Management of the Village;
- What are the insurance responsibilities;
- Whether there’s a trial/settling in period, and what are the rules with pets;
- The Accreditation Status of the Retirement Village;
- Whether there’s a waiting period.
Each Village fills in the required information in the statutory form based on their individual circumstances.
The Prospective Costs Document gives details about:
- The costs of entering that Retirement Village;
- The estimated ongoing costs of living in that Village;
- The estimated costs paid if a purchaser leaves after 1,2,5 or 10 years;
- The estimated exit payment that would be received after 1,2,5 or 10 years.
Both the Village Comparison Document, and the Prospective Costs Document are supposed to be provided at least 21 days prior to signing any contract, though that period can be waived by the purchaser in certain cases.
Under the Retirement Village Act there is a 14 day cooling off period after signing a contract (though some operators, such as Aveo, offer an additional 7 days cooling off).
As specified in the Village Comparison Document itself a purchaser should
“Seek independent legal advice about the retirement village contract – there are different types of contracts, and they can be complex.”