Retirement Village Contracts
Retirement village residence contracts may appear unnecessarily complex to the prospective buyer. Start here for a plain English explanation and interpretation of retirement village contracts!
Buying into a retirement village is very different to buying a standard residential property (read about the main differences here). Unlike residential sale agreements which only deal with the purchase of the property, retirement village contracts have to deal with the initial purchase, as well as cover what happens while you are living in the village and what happens when you leave. In addition, retirement villages legislation is very much concerned with consumer protection, which results in more disclosure than would otherwise be required. Our lawmakers see this as a good outcome, but it does make retirement village contracts exhaustively long, extensive and seemingly complex.
It is important to understand your residence contract however, as this document forms the basis of your relationship with the village operator from the moment you sign until well after your exit.
Retirement village contracts can be split into three sections:
- The process and terms around your purchase of the unit;
- Rules and regulations applicable while you are living in the unit; and
- The process and terms for when you exit the unit.
Purchase
The first part of the contract deals with your purchase of the unit – what needs to happen to get to settlement of your unit so you can move in. The retirement villages legislation in your state or territory prescribes the sales process and outlines the various consumer protection measures such as cooling off periods.
The purchase of a unit is typically finalised once you have paid the full settlement amount and the cooling off period has expired.
Did you know? Some retirement village operators offer a money-back guarantee. Basically, if you move into your unit and find out that community living is just not for you, they will allow you to exit the village with a full refund of your purchase amount. The money-back guarantee is usually limited to the first six or twelve months of your occupation.
Living
A fair chunk of your contract is dedicated to rules and regulations around your living in the village. This can essentially be boiled down to Your Obligations and the Village Operators Obligations. These terms are typically high-level and often just a regurgitation of the legislation, with more detailed conditions outlined in the village rules or by-laws that are attached to, and forming part of, the residence contract.
This section of the contract explains obligations around:
- Alterations to your unit;
- Access;
- Behaviour;
- Security;
- Visitors and guests;
- Absences; and
- Repairs and maintenance.
There should also be a detailed explanation of what is included in your regular village fees and how they are calculated.
Exit
When you move into a retirement village you are buying a “right to occupy” in the form of a lease or licence. It is completely different to a residential sale/purchase with the process of exiting the retirement village prescribed by the state retirement villages legislation and the residence contract.
The lease or licence will exist into perpetuity to ensure the tenure rights of the resident. It is terminated only if one of three events occur:
- The resident passes away;
- The right to occupy is terminated by the village operator for a material breach of the agreement (outlined in the residence contract and the retirement villages legislation for your state or territory); or
- The resident provides written notice of termination.
The termination of the right to occupy triggers a process of exiting that is outlined in the residence agreement. There are specific timings and processes prescribed by the retirement villages legislation that must be adhered to by the exiting resident and the village operator.
Essentially, the exit process follows the flowchart below:
- Termination
- Agreement of scope of works and resale value
- Reinstatement of the unit
- Right to occupy the unit is resold
- Exited resident receives their exit entitlement.
Make sure you read our section on exiting a retirement village to learn more about negotiating this event.
More information
In each state and territory there is a dedicated government department responsible for administration of the retirement villages legislation and regulation of retirement village operators. These departments usually have some terrific resources available on their websites for potential residents to research state-specific retirement village issues:
There is also a residents’ association (like a union) that is also a great resource for information from people living in retirement villages. Each state has its own chapter and is run by volunteers from retirement villages.