Retirement Village Conveyancing is very specialized and is very different to the usual conveyancing involved in buying and selling a house. The fundamental difference is that the rights created with Retirement Village Contracts are not the same as ownership of land, and the monies payable at the start, and at the end, are very different from the normal buy/sell proposition people have experienced throughout their lives.
In many respects the rights are more akin to being a tenant for an indefinite period, rather than an owner.
These contracts have long-term financial consequences in that they normally involve substantial exit charges when the person leaves the Retirement Village. The industry says the trade-off is essentially this – the cost going in is lower, but the cost going out is much higher. That way people can afford to go into a Retirement Home or Village because the entry price is reduced to more affordable levels, but they pay extra on the way out.
The rights for “purchasers” vary across contracts and villages – some are leases, some are licences. Some allow for capital gain, but most do not. The exit fee percentages vary, as does the timing of how they accumulate.
The new Retirement Village Contract Regime commenced on 1 February 2019.
In essence there are two parts to any Retirement Village Contract:
- The Compulsory Information under the Retirement Village Act;
- The Residence Contract for the particular Retirement Village.
Each Village is required to complete the standard clauses in the Compulsory Section with their specific 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.
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.
Then the Village will provide its individual Residence Contract, which sets out its unique clauses, requirements and obligations.
Both the Village Comparison Document, and the Prospective Costs Document are supposed to be provided at least 21 days prior to signing any Residence Contract.
Under the Retirement Village Act there is a 14 day cooling off period after signing a Residence Contract.
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.”
Sunshine Coast Elder Law are experts in Retirement Village Contracts.
We deal with many Retirement Village Contracts and Operators. In acting for purchasers we have identified “teething” problems with the application of the new regime across the industry and have negotiated with Retirement Village operators (and pointed out errors) to ensure best individualised outcomes for our purchaser clients in accordance with the new rules.
Contact us on 1800 961 622 or visit www.sunshinecoastelderlaw.com.au