Your agreement - Retirement village contracts
If moving into a retirement village, you will be presented with several documents. These can be lengthy and quite daunting. It is critical you read and understand the documents – especially the contract. If you decide to enter into the contract, it will generally be legally binding for both you and the operator.
A "residence contract" is a consumer contract that confers a right to occupy particular residential premises in a retirement village. It is, arguably, the most important document you will sign when entering a retirement village.
Consider getting legal advice to ensure your interests are protected. Retirement villages are a specialised area of law, so try to find a lawyer who has experience with retirement village contracts. You should also consider getting independent advice from an accountant or licensed financial planner on the financial consequences of moving into and exiting a village.
It is important you understand the risks and consequences that could flow from a need to exit the village or from an insolvency of a village operator. Always do your homework and seek independent, expert advice before signing a contract. Ensure any verbal agreements or claims made are written into the contract.
The terms of a residence contract are subject to requirements in the Retirement Villages Act 1992 (RV Act), Retirement Villages Regulations 1992 (RV Regulations) and the Retirement Villages Code made under the Fair Trading Act 2010 (FTA).The Australian Consumer Law (WA) (also made under the FTA) also contains provisions applicable to consumer contracts.
The residence contract should cover things like:
- the legal basis upon which you are entitled to occupy residential premises in the retirement village (for example, whether you are leasing or buying the premises);
- details about the payment of entry costs (including a ‘premium’) and ongoing fees and charges, including the method by which any of these fees and charges are calculated. Some fees are subject to prohibitions under section 25 of the RV Act and regulation 11 of the RV Regulations;
- the length of time you can reside in the village;
- the circumstances in which you can be transferred or relocated to other accommodation in the village, and the financial arrangements that would apply to such relocation;
- the types of amenities and services you will receive while living in the village, and any restrictions on access to, or the use of these amenities and services;
- details of any fees you must pay if you decide to leave the village, including on-going fees if your unit is not immediately resold, re-leased or reoccupied. The ongoing fees are subject to time caps applying under the RV Act and RV Regulations. The time caps apply to all residence contracts regardless of when the contract was signed;
- details of any contribution you must make to a village reserve fund to meet the cost of improvements and maintenance to the village, including details of the method of calculating your contribution;
- who is responsible for maintenance and replacement of fixtures and fittings;
- your right to a refund to the whole or part of the amount you paid on entry after the residence contract is terminated including how this is calculated;
- a copy of the termination schedule and
- where the village is under construction, plans showing the location, floor plan and facilities allocated to you.
Retirement village legislation:
Share this page: