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Retirement Village Contracts
Retirement Villages have many different ownership structures and types of Contracts. We can assist you to navigate through them for your own and your family’s peace of mind.
As the population of Australia ages, the need for suitable accommodation like Retirement Villages has become a very important part of the retirement planning process, as has a thorough understanding of the Contracts that go along with them. In order to ensure that the rights of the Resident are respected, it is important for all involved to understand what is included in the Contract.
The most important part of any Retirement Village Contract is the terms of the agreement between the Village and the Resident. These terms will include the monthly recurrent fees that the Resident is required to pay, the length of the Contract, the type of ‘Ownership’ of the premises, any additional services that the Village may provide and importantly the Departure Fee payable to the Village upon exit. Additional services may include meal and activity planning, housekeeping, transportation, and health care. It is important to ensure that all of these terms are clearly stated in the Contract so that there are no misunderstandings in the future.
The Contract should also include information about the Village’s policies and procedures such as their policy on the keeping of pets. These policies and procedures will also outline how the Village will handle any disputes, how it will handle payment of fees, and what rights and obligations the Resident has in regards to the premises.
retirement VILLAGE contracts
How We Can Assist With Your Retirement Village Contract
A Solicitor is a vital part of the process when it comes to Retirement Village Contracts. While some may feel that these documents can be signed on their own, there are many legal considerations that must be taken into account when it comes to Retirement Village Contracts. We can provide invaluable assistance in these matters and help to ensure that your rights and interests are protected.
We can explain simply the terms and conditions of what often appears to be a very confusing Contract. We will explain your rights, the financial obligations and any potential risks associated with the Contract. This information is invaluable in helping you to make an informed decision about yours or your loved one’s Retirement Village Contract.
Learn more ABOUT RETIREMENT VILLAGE CONTRACTS
Frequently Asked Questions
Retirement Village vary from village to village in their occupancy and ownership arrangements. The more typical options are:
1. Leasehold Arrangement
Leasehold arrangements are becoming the more common structure for occupancy in a Retirement Village. The Village is the owner of the premises but grants you a long-term Lease, for up to 99 years.
If your Lease is for a term over 50 years and you are entitled to at least 50% of the Capital Gain then you are considered a ‘registered interest holder’ and if your Lease is under 50 years then you are considered a ‘non-registered interest holder’ with both having varying obligations between yourself and the village.
You do not pay Transfer Duty (Stamp Duty) on this arrangement.
2. Freehold – Strata or Community Title
With this arrangement you purchase the premises under a Contract for Sale, usually from the previous resident, and are registered as the Owner. You are considered a ‘registered interest holder’.
You also enter into a separate Village Contract with the Operator of the village which deals with obligations, services and financials.
You will be liable to pay Transfer Duty (Stamp Duty) to Revenue NSW on this arrangement.
3. Company Title
There are a small number of villages that operate under a Company Title structure. The Company owns the village and you acquire shares in the company which entitles you to a right of residence.
You are considered a ‘registered interest holder’ and will be liable to pay Transfer Duty (Stamp Duty) to Revenue NSW on the acquisition cost of the shares.
A Departure Fee, which is also known as an ‘exit fee’ or ‘deferred management fee’ is the amount you pay to the village when you permanently vacate. It is usually deducted from the refund by the village of your Ingoing Contribution.
The percentage and structure of the Departure Fee varies from village to village. It can either be calculated on your ingoing contribution or the sale price of your premises. A thorough review of your Contract will detail the structure of the Departure Fee in your village.
Recurrent Charges is the ongoing fee that you pay to cover the operating costs of the village such as Council and Water Rates, Building Insurance, Home Maintenance, Gardening and upkeep of any shared facilities.
Recurrent Charges are usually paid fortnightly or monthly and varied from time to time in accordance with the Contract. Generally, there is an increase in the amount of Recurrent Charges once every 12 months in accordance with CPI or the Age Pension.
If you are in a Strata or Community Scheme, you may also pay levies to the Owners Corporation.
While we are Southern Highlands based, we can assist you with your retirement home contract review anywhere in New South Wales. We’ve done so for clients in The Southern Highlands including Bowral, Mittagong, Moss Vale and Bundanoon and areas around Macarthur, Campbelltown and Picton and further afield around NSW.
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