As Australia’s population continues to age, more and more people may seek to sell their current property and move into a Retirement Village. This may enable them to build greater friendship groups, have a greater level of care available to them on a daily basis or provide them with the opportunity to live closer to family. However, before signing any documents, it is very important that these are thoroughly reviewed by a legal practitioner.
Common Structure of Retirement Village Documents
If you are interested in entering into a Retirement Village, you will initially receive the following documents:
- The proposed Residency and Management Contract;
- The Disclosure Statement; and
- A Factsheet.
For certain types of Villages, you may also receive a proposed Contract of Sale and Vendor’s Statement and other miscellaneous Deeds (depending on the specific Village). You will not be permitted to sign any Contracts until at least 21 days after you receive the documents (per the Retirement Villages Act 1986 (Vic)) and hence, this is perfect opportunity for you to have them reviewed by a legal practitioner.
Different Types of Retirement Village Arrangements
Typically, the majority of Retirement Villages will operate on the basis of one of the following options:
- You would purchase the unit as if you were buying a regular property and become the registered proprietor of the unit;
- You would pay the Village a sum of money, usually called “an ingoing contribution”, to secure your right to reside at the Village. However, you will not be registered Title;
- The Village may offer shares which you would buy to secure your residency rights; or
- The Village may offer a combination of these options (ie: you purchase your unit and pay a smaller ongoing contribution).
It is important to note that each option has both positive and negative aspects which must be considered before executing any documents, and to ensure you are comfortable with the requirements. For example, some options will result in stamp duty being payable whereas some options will not result in you owning your property. If you have any concerns about these ownership rights, you should consult a legal practitioner. You should also obtain financial advice before entering into any Retirement Village contract.
What else will my Residency and Management Contact include?
In Victoria, the Retirement Villages (Contractual Arrangements) Regulations 2017 (Vic) (along with the Retirement Villages Act 1986 (Vic) currently govern what must be included in Residency and Management Contracts. This includes, but is not limited to, the following:
- Ongoing fees that may be payable during your occupation in the Village;
- What fees may be payable upon your departure from the Village (noting that many Villages include a significant “deferred management fee”);
- Any restrictions on what you can do at your property (ie: can you keep pets, are you allowed to paint your walls etc); and
- How the contract can be terminated by either the resident or owner/manager.
We would strongly recommend that these clauses are carefully reviewed by a lawyer as they can be drafted in a complex manner. Not all contracts and agreements for Retirement Villages are the same.
What is a Disclosure Statement and the Factsheet?
The Disclosure Statement and Factsheet will be documents that are provided to you prior to executing any documents. These documents will provide further specific information about your proposed property but also the Village as a whole. They should also be reviewed prior to executing any contract.
How can we assist at Sharrock Pitman Legal?
At Sharrock Pitman Legal, we will be able to provide timely, concise advice concerning your proposed retirement village documents. We will ensure that you understand which type of arrangement the Village is offering and that you understand all the costs that may be associated, both initially and during the course of the time when you will be living in the Retirement Village.
The information contained in this article is intended to be of a general nature only and should not be relied upon as legal advice. Any legal matters should be discussed specifically with one of our lawyers.
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For further information contact
Benjamin is a Legal Practitioner at Sharrock Pitman Legal.
He deals with Property law. For further information, contact Benjamin Drinkwater on his direct line (03) 8561 3328.