Last updated 31 October 2022
When a person has found a village where they want to live, depending on the type of tenure in the village, the operator must give them a:
- Village Comparison Document (VCD), which is designed to give you an extensive array of information about the village to enable a person to compare it to other villages
- Prospective Costs Document (PCD), which discloses all relevant information about what a person will be charged in moving into the village, living in the village and leaving the village
- residence contract, which sets out the rights and responsibilities of the operator and the resident in the village
- village by-laws being the internal house rules for living in the village
- other documents (see below).
The operator must provide the VCD and the PCD to a prospective resident at least 21 days before the resident signs the residence contract.
The residence contract may be called a licence agreement or a lease. The intending resident may also receive an application for residence document, which requires them to complete personal details.
If purchasing a new or yet to be completed unit in a village, a person may also receive another document which might be called an agreement to lease. This is simply a document whereby the person agrees to take up residence of the unit when it is completed and to sign the relevant residence contract at that time.
The most important document is the VCD (s 74 Retirement Villages Act). This document sets out the essential details about the village and the resident’s rights and obligations, and should be read carefully. While it can contain lots of information, it should contain a copy of:
- the residence contract
- any service agreement (i.e. to provide personal services to the resident)
- any by-laws applying in the village
- a budget for the operating costs of the village
- the certificate of registration of the village
- a pool safety certificate if the village has a pool
- details of how bulk electricity is on-sold to residents and how the system works if applicable.
Particular notice should be taken of the:
- communal facilities available for use in the village
- ingoing contribution (purchase price)
- maintenance and capital replacement funds maintained by the operator
- insurance the operator has in place and what insurance obligations rest with the resident
- weekly fees
- village’s dispute resolution process.
It is highly advisable to obtain legal and financial advice on all documents provided by the operator of the retirement village scheme. There may well be, for example, implications for Centrelink pension entitlements when moving into a retirement village. This is also important in case special conditions need to be inserted into the documents such as making the residence agreement subject to the sale of the resident’s existing home outside the village.
Apart from getting appropriate advice in relation to the documents, it may also be wise to take the time to talk to other residents in the village to get a feel for the village and to see how well the village is run, as well as answering the crucial question of ‘Could I live here?’
Under the Retirement Villages Act, a person has a 14-day cooling-off period starting from the day that the residence contract is signed or, if the residence contract is subject to a later event happening or another contract being entered into (e.g. the sale of the resident’s home), the day the later event happens or the other contract is entered into. Once the residence contract has been signed, an intending resident can terminate the contract at any time during the cooling-off period.
No reasons are required for terminating the contract, and a person is entitled to be refunded all the money they may have already paid to the operator. It is important that an intending resident ensures that they are aware when the 14-day period starts and finishes, and how to give notice of the termination if they wish to terminate the contract during the cooling-off period.
Payment of monies in a retirement village
There are various financial obligations on both parties when they enter into a residence contract. These obligations arise at various times but particularly on signing the contract, on moving in and while living in the village.
Signing the contract and moving into the village
When a person moves into a village, they will be asked to pay an ingoing contribution, which is the price for purchasing the interest in the unit (s 14 Retirement Villages Act).
When a person initially signs the residence contract, they will probably pay a deposit which will represent part of the ingoing contribution. This deposit must be held in a solicitor’s or real estate agent’s trust account until the cooling-off period has expired or when any special conditions in the residence agreement have been satisfied. It can then be paid to the operator.
There is no law in relation to how much the ingoing contribution should be. This is very much a matter of the price being set by the operator and how much a person is prepared to pay to purchase the right to live in the unit. The price will of course be determined by the standard of the units, the location and the facilities available within the village.
In some retirement villages, a resident can also be asked to pay the operator’s legal costs when a resident moves into the retirement village. For leasehold schemes, residents may also be asked to pay the cost of a surveyor to prepare a survey plan of the unit being purchased and to register the lease with Titles Queensland. Stamp duty is not normally payable on a resident’s contract.
If a resident wishes to make any changes or additions to the unit before moving in, those changes should be discussed with the operator and an agreement should be reached on the changes as well as who will pay for the costs of the changes. Given the obligations placed on the resident to reinstate the unit on departure from the village, it can be important to take an inventory of its condition when the resident first moves in.