Selecting a retirement village for yourself or someone you care about can be one of the most significant, emotional and confusing choices to make.

Retirement village’s usually contract with their residents via a loan/lease agreement and a residence and management contract. These are often very detailed and confusing contracts.

Accordingly, it is paramount that you understand the type of agreement that you are entering into with the village and how this will affect you and/or your estate when your agreement with the village comes to an end.

How does the contract work? 

Your agreement with the village usually takes the form of a loan/lease agreement.  By way of summary, you loan the village owner a large sum of money in exchange for a long term, (usually rent free) lease of your residence.  Your loan is then repayable by the village, without any interest when you decide to leave the village.  The village is entitled to deduct certain costs from your loan amount before it repays you (or your estate). These amounts differ depending on the particular village and how you long you stay at the village.

In addition to the loan/lease agreement, you will also have a residence and management contract with the village operator.  This contract sets out the rules of the village, as well as the obligations and services that the village operator must provide to you throughout your residency at the village.

Do I own my residence?

Under most retirement village contracts, you do no hold title to your residence and therefore do not own it.  Under most retirement village contracts, you are simply renting your residence from the village owner under a long term lease.

Residents often get confused with this arrangement due to the significant sum of money payable when you enter the village.  However, as described above this sum is usually a loan to the village in exchange for your right to lease their premises.

Can I sell my residence?

Some villages allow you to sell your leasehold interest. This means that you are selling your right to live in the residence. Essentially, you are selling your lease.

However, some villages do not allow you to sell your leasehold interest and instead have strict procedures for ending your contract with the village.

How long do I have before I have to sign the Contracts?

Under current legislation, the owner of the village must provide you with certain documents at least 21 days before you enter into a contract with them. Accordingly, you cannot sign a retirement village contract unless 21 days has passed since you received the required documents.  These documents include a copy of the contracts (with you named as resident), a disclosure statement and village factsheet.  This 21 day period is not a deadline and therefore the contracts can be signed at any time after the 21 days has passed.

However, some villages place a deadline on their ‘offer’ which is usually a date that is two to four weeks after the 21 day period has passed.  In these instances it is important to ensure that you make a decision before the deadline in order to avoid your spot being allocated to someone else. 

Can the village end my contract before I die?

Your agreement is a binding contract with the village.  Accordingly, the usual contractual provisions apply. This means that the village can end your contract under certain circumstances where you commit a substantial breach of the contract.

In addition to the above, all villages have the ability to end your contract if you are assessed as requiring a level of care that the village is not able to provide. There are certain legislative requirements that the village must fulfil if it wishes to end your contract on these grounds.  Accordingly, it is important that you obtain legal advice prior to signing any agreements with a retirement village so that you are fully aware of the circumstances in which the village may end its contract with you.

Can I have a pet?

Some villages allow you to keep a pet however this depends on the village rules.  Your village sales manager should be able to explain this to you when you make enquiries with the village.  However, it is important to seek legal advice on the ‘pet’ provisions contained in your contract to ensure that you are fully aware of the village owners ability to request you to remove your pet from the village.

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