Retirement Village Contracts
Entering a retirement village is a major financial and lifestyle decision. It is prudent to include your family in the decision to move in to a retirement village.
Retirement villages for the most part offer a fulfilling, communal lifestyle but you need to be aware of some of the key features of the retirement village model, these being;
- You don’t purchase the bricks and mortar of the retirement village unit, you are purchasing a right to occupy the unit by way of an interest-free loan to the retirement village operator;
- You do not receive a certificate of title and you will not be noted on the title (which is held by the retirement village operator);
- You are required to pay an entry fee which is returned to you or your estate less deductions when your tenure comes to an end;
- You still need to pay a regular maintenance fee (either weekly, fortnightly or monthly) whilst you are living in the retirement village; and
- Each retirement village has its own residence rules governing the conduct of the residents.
The financial contribution required to enter a retirement village comprises three categories of fees;
- The ingoing contribution;
- The ongoing contribution (usually described as the “maintenance fees” or “general service charges”); and
- The outgoing contribution (which includes a “Deferred Management Fee” and outstanding charges).
Your solicitor or financial adviser will be able to discuss these fees with you and give you a general idea of how much of your ingoing contribution will be returned to you or your estate once you leave the village. It should be noted that the amount that gets deducted will vary according to the length of your tenure – the longer you stay, the greater the deductions.
The contract and ancillary documents provided to a prospective resident are lengthy and comprehensive and can be quite overwhelming. In South Australia the contract must state in clear terms that it is recommended that you obtain legal and financial advice before entering the contract.
While it is not compulsory it is recommended that a prospective resident obtain independent legal advice before signing the contract. In addition to the financial considerations there are other matters that need to be considered such as;
- The services and facilities that are offered by the retirement village;
- The residence rules and their impact on you;
- Your rights and obligations in the event of a dispute with another resident or the retirement village operator; and
- Your rights and obligations in relation to termination of the contract.
It pays to know where you stand before you sign on the dotted line!
If you are considering moving in to a retirement village please contact Mark Lumley at 360Private Legal for personal and professional legal advice.