Retirement Villages: Know the Process
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Retirement Villages may seem like a really good idea as we get older; someone else to take care of a lot of the day to day chores outside of our home, people of similar stages of life living nearby, quite often close and immediate help if we need it. There are many factors that are quite enticing about a Retirement Village. Of course, everything in life that looks good (and even is good) comes with certain catches, and Retirement Villages are no different.
Currently, the law states that certain documentation must be given to you before you sign up. You need to be sure you understand this documentation or you could be in for a nasty shock later.
You must be given three documents at the least, and these are a Village Comparison Document, a Prospective Costs Document, a Residence Contract. There are sometimes other documents too, but we won’t worry about these here.
The Village Comparison Document sets out details of that particular Village, so that if you line up a couple of these documents, you can compare “apples with apples”.
The next document is the Prospective Costs Document. This gives you information on your actual unit – what is provided to you, how much is the Ingoing Contribution, what type of arrangement you’re entering into, and the estimate of exit fees.
The third document, and ultimately the most important but probably the most difficult to understand, is the actual Residence Contract. Now these Residence Contracts vary depending on the Village and depending on the arrangement. Regardless, you must have all these documents for 21 days before you are able to sign them, or you must get a Lawyer to go through them with you and sign a waiver.
Once you have signed these documents, there is also a 14 day “Cooling Off Period” that cannot be reduced. If you need to sell your house and go into the Retirement Village, make sure you have your lawyer check this has been dealt with correctly in the documentation, and this is a critical aspect because if this isn’t dealt with properly, you may find that you have to pay the Ingoing Contribution before you’ve sold your house.
In the documentation will be the obligations of you as the Resident and the obligations of the Scheme Operator and also details of the exit fee, or Deferred Management Fee. There is no upper limit on the exit fees that a Retirement Village may charge, but most exit fees fall somewhere between 30 and 40% (maximum) of your Ingoing Contribution.
Other ongoing fees have to be considered, and these are the General Services Charge and the Maintenance Reserve Fund Contribution. These are usually paid on a monthly or fortnightly basis.
What happens if you go into a Village and you decide it’s not for you – can you leave? Yes, you can always leave, but it will cost you. You must give one month’s notice and the Residence Contract will state the various steps that will then be taken, but there will be an Exit Fee. There are some Operators at the moment that give you approximately 6 months to decide if you can settle in, but you need to check your Contracts carefully to ascertain if the Village you’re going into is one of these.
Can the Operator get rid of YOU? or ask YOU to leave? Well yes, but generally only if you do something substantially wrong.
Most times there is also a clause that states that if you are assessed as needing care that the Village can’t provide, then you will be asked to move to another Scheme that can provide such extra care. If you are eventually assessed as needing higher care, your unit is still dealt with as we have discussed i.e. the Exit Fee applies, and it could be as high as 40%. This may take a very big chunk of what you have to offer an aged care facility.
Some Villages also offer aged care, and state that the exit entitlement will be sufficient to cover the Refundable Accommodation Deposit. However, you can’t assume you can be automatically moved into aged care from the village. Access to aged care is assessed on a needs basis, rather than if you are an existing resident of the village.
The most important thing to do before you make such an important decision of moving into a Retirement Village, is to review the documentation, compare them to other Villages, and get qualified advice. Please note this is general advice only. Should you have specific questions, please contact MMLaw.
The information in this document represents general information and should not be relied on for your specific circumstances. If you require legal advice and assistance on the matters contained or associated in this document you should contact MMLaw.
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The content published in this Blog is in the form of academic papers and the opinions expressed herein are generalised. The information provided is for educational purposes, not specific legal advice.
The application of any principles referred to can alter from case to case and accordingly you should seek independent legal advice in respect of your individual circumstances.