Changes to Retirement Villages Laws

New retirement village laws to benefit residents came into effect on 1 March 2010. There was a 12 month transition period. The NSW Office of Fair Trading is still running education sessions in relation to the changes. For further information about the new laws and how they impact on you and your village, feel free to phone TARS. Or, click here to obtain more information and brochures on the NSW Office of Fair Trading website. That site also has links to the legislation so that you can download and read it for free.

Entry requirements

Prior to moving into a village, the prospective residents will be provided with a Disclosure Statement by the operator. The residents should be given this document 14 days before they sign their village contract or lease. The Disclosure Statement contains information relating to the ownership, conduct and financial affairs of the village. It is essential that prospective resident/s fully understand the information provided.

Prior to entry, the operator will require the incoming resident/s to sign a contract and a personal services agreement.

If the village is strata or company titled, the prospective resident/s will enter a contract for the purchase of the property or shares, and on settlement, in the case of strata units, their title will be registered, a providing legal title. As a condition of purchase, the incoming resident/s will be required to execute a service agreement.

Apart from strata and company title, the majority of villages offer either a lease of the premises, or a loan/license agreement, which provides a right of occupancy, in consideration of making a 'loan' of the 'ingoing contribution'.

The money paid under a lease or loan/license agreement, is referred to as the 'ingoing contribution'. In the majority of contracts, there will be a term that a certain percentage per annum will be deducted from the entry contribution when the resident/s move from the village, or on payment of funds to the executor of their estate. This is referred to as a 'departure fee'. The percentage can vary from village to village, but generally, it is 2.5 percent per annum for a period of 10 years.

The daily operation of a retirement village is resident funded; there is no subsidy. Fees are paid on either a fortnightly or monthly basis; they are referred to as 'recurrent charges'. Residents are called upon to approve an annual statement of proposed expenditure. The amount of monthly recurrent charges levied, is based on the terms of the contract; it can be a fixed percentage, either of the aged pension or CPI; based on floor area or number of bedrooms of each villa/unit, or apportionment of the proposed expenditure.

There are legislative provisions relating to the process that must be followed when an operator seeks the residents' approval of a statement of proposed expenditure (budget).

Attached to the resident's contract will be a copy of the Village Rules. The Rules regulate such things as noise, pets, visitors, car-parking, garbage disposal and other matters essential to the good management of the village communal lifestyle.

The Aged-care Rights Service Inc. recommends that prospective residents seek independent legal advice in relation to the village contract. This service assists residents of villages with the ongoing application of their contract and any difficulties they may have associated with the village.

NSW Consumer, Trader and Tenancy Tribunal

The Tribunal has a Retirement Villages division and residents can make an application to the Tribunal to seek orders to resolve a dispute with a village operator. Residents can represent themselves or they can seek leave to be legally represented. Residents' Committees can also file an application. Phone TARS if you have any questions about this process or need help. Click here to find out more about the Tribunal.