Legal questions to ask before moving into a retirement village

If you or your parents are considering moving into a retirement village, you’ll find that there are a few differences to buying a home on the open market. We’ve compiled ten of the most commonly asked legal questions about living in a lifestyle village.

1. What are the different types of village contract?


In Australia, you’ll generally find that villages have one of five types of contract for its residents:

  • loan and license agreements
  • leasehold agreements
  • strata and community schemes
  • rental agreements
  • company title schemes

You can read more about these retirement village contract types in this blog post.

2. What is a departure or deferred management fee?


Different villages have different names for this fee, but departure fees and deferred management fees both refer to the same thing. This fee is set up to cover any expenses (such as maintenance fees) that a village has had to pay during your stay. Each village has its own rate for its departure fee, but whatever it’s set at it’s a good idea to budget for this during your residency.

Find out more about retirement village departure fees here.

3. Who insures the village?


Insurance depends on the type of contract you have (see question one). In most cases, the village operator must have insurance to cover all the properties and in strata arrangements it is up to the owners’ corporation to sort this out.

Fair Trading NSW prohibits village contracts requiring residents to have their own insurance, with the exception of insurance relating to wheelchairs.

4.  How are the residents represented?


In most villages, the residents will have their own committee that acts as a go-between for the operators and the residents. This, however, is not the case in strata villages where general meetings are called for residents.

5. Who pays for maintaining the village?


There are two types of maintenance fees and pools in most villages. Residents generally pay ongoing maintenance fees (e.g. for lawn mowing and cleaning of communal areas) but the operators are also required to have a capital replacement fund that covers any large maintenance fees (such as replacing an old swimming pool).

6. What is the minimum age to join a village?


Retirement and lifestyle villages are able to set their own minimum age for residents. This usually begins at 55, but some villages have a higher minimum age.

7. What responsibilities will be set out in the management agreement?


Your management agreement is a document that states if the operator or the resident is responsible for certain areas of the village. Who is responsible changes from village to village, but the management agreement should always include:

  • service charges
  • refurbishment and capital replacement costs
  • security of tenure
  • credit risk

Details for each will be laid out, but you may want some legal help to clarify anything that you’re unsure of.

8. What will I be required to pay for as a resident of a retirement village?


You should always check the terms and conditions of each retirement village you’re interested in, but as a general rule you should expect to pay:

  • waiting list fee
  • holding deposit
  • contract preparation fees
  • recurrent charges
  • ingoing contribution
  • departure deferred management fee

9. What ownership rights do I have?


As an owner, there is a long list of rights that you have. This includes autonomy in domestic, personal and financial affairs, to have requests for repairs responded to in a reasonable time and to live in a safe and secure setting.

10.  How long is a standard cooling off period?


After signing your contract, you have a minimum cooling off period of seven days, so long as you haven’t moved into the property.

Finalising your retirement living plans


Moving into a retirement village has lots of considerations. Find out more about the entire process by downloading out ebook Downsizing your home: selling and downsizing tips for seniors or by calling 1300 327 826.

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