Are you or a loved one are looking at moving into a retirement village? While it may seem like a straightforward process, the documentation is complex, and the process can be confusing.
Retirement village transactions are covered by multiple pieces of complicated legislation. As a result, the documentation is lengthy and complex.
It is important before you enter into a retirement village contract, that you understand what it is that you buy. Buying into a retirement village is not the same as buying an investment property. Whilst there are many ways in which the operators of retirement villages structure their offerings from a legal perspective’ more often than not, contracts relating to retirement villages are for the sale of the right to reside in the unit by way of a lease agreement, that rather purchasing the real property.
As well as the initial one-off ‘ingoing contribution’, there are multiple additional fees and charges you need to be aware of. An ongoing general services charge is payable to cover the cost of maintenance, recreational facilities and management and administration. Any optional services that such as meals, cleaning and laundry services are often charged for separately and called personal services charges.
Most retirement villages charge what is called an ‘exit fee’ when you move out. The exit fee can be calculated a number of ways. Commonly it is based on a proportion of either the ingoing contribution paid or the price you sell it for. The retirement village operator may take a share of any capital gain made and the cost of reinstating the unit and other selling costs are all deducted as part of the exit fee.
Often times the exit fee is not paid immediately when you vacate the unit, but is instead paid when the new resident moves in or after a certain amount of time (for example 6 months). It is important to be aware of this particularly if you are relying on this money to form part of an accommodation bond at another facility.
It is important to understand what type of care the retirement village can offer. Your interest in a unit may be affected by long absences from the village due to illness. Also, if your health care needs change and you are no longer able to live independently (i.e. you require a higher level of care) you can be forced to undergo medical assessments and ultimately be required to leave the village if your needs cannot be met.
It is also important to be aware that once you sign the Public Information Document provided to you by the operator at the beginning of the negotiation process, it may trigger the beginning of the cooling off period. Once this expires, you may not be entitled to a refund of any moneys paid.
It is essential that you are aware of what you are purchasing and that this type of transaction is not an investment but a lifestyle choice.
If you or a loved one is contemplating moving a retirement village, please contact us on 07 5443 9988 or [email protected] and we would be happy to assist you in understanding the documentation and guiding you through the process.
Argon Law is a Sunshine Coast law firm based in Maroochydore. We are commercial lawyers with many years of experience in advising on all kinds of property related contracts as well as wills, enduring powers of attorney and estate planning. We are eager to assist you in any way we can.
Always ensure you seek professional advice for your specific circumstances. The above is not advice and is intended to be general in nature only.
