Retirement villages offer a number of different contractual arrangements. Below is a brief description of each to provide you with a snapshot of the options available.
The descriptions below are only general definitions of the options available, contractual arrangements can be complicated and it is always important to ask a lot of questions to the village owner, and seek professional advice before you sign if you do not completely understand everything.
Types of Contracts
Strata Title: Under the Strata Title when buying a unit within a retirement village it works very much the same as any other strata title. The main difference begin the sale is conditional on the village operator approving you as a resident and the consequential signing of a retirement village contract with the village owner.
Long Term Lease or License: Is commonly used in Victoria, where you pay an ingoing contribution, which gives you a lease or license to live in that particular village unit for 49-199 years. With this arrangement you will also pay a maintenance charge usually each month or per quarter, which in some villages is a fixed percentage of the age pension.
Company Title: This arrangement sees you buy shares in the company that owns the village, resulting in having the right to occupy a particular unit in the village. When leaving the village you will be entitled to receive the sale price of the shares at settlement, less any outgoing deductions.
Unit Trust: Similar to a Company Title scheme, the Unit Trust is an arrangement where you buy a unit in a trust, which entitles you to occupy that unit. The trustee of the Unit Trust legally owns the village, which holds it for the benefit of the Unit Trust legally owns the village, which holds it for the benefit of the unit holders in accordance with the terms of the trust.
When leaving the village you will be entitled to receive the sale price of the unit in the trust at settlement, less any outgoing deductions. The Unite Trust arrangement as well as the company title option can be a complex legal structure and needs careful consideration before signing.
Periodic Tenancy: This is a lease which can be a written or verbal agreement between the resident and the owner, in which there is no fixed date for the end of the lease, running from rental period to rental period. A resident can sometimes pay an ingoing contribution, which some or the entire amount paid by you may be refundable at the end of the tenancy period.
Good to know: 21 days before you enter into a contract with a retirement village, the operator of the facility is required to provide you with the following documents...
• A contract relating to the provision of services to you by the operator
• An agreement outlining payment of an ongoing contribution or recurring charge
• The disclosure statement
• A list of important information for prospective residents
• The rules or by-laws of the village
Further information outlining all the ongoing and outgoing costs would be beneficial to enquire about, as well as expenditure, account and income statements of the village for the last three years.
You may also wish to ask questions about the current and future developments for the village.
It is also advisable to check the terms of the cooling off period where you have the option to resend the contract by giving a signed notice to the village owner.
Search for retirement living options in:
- Australian Capital Territory
- New South Wales
- Northern Territory
- Queensland
- South Australia
- Tasmania
- Victoria
- Western Australia
Article posted:Jun 20, 2022 Category: Legal Advice
