RETIREMENT VILLAGES

Making Good Decisions on Retirement Villages

Consider the Options

We each have different aspirations about our ideal way of life when we retire. Some of us would opt to be as independent as possible for as long as possible. Of course we are entitled to take this view.

Some of us will be lucky enough to live out our lifestyle dream and even in our 90’s , may well be living fairly independently or may have the assistance of good family support with a firm intention to stick to our own floor.

There is of course the risk to be considered that our health may just not last long enough for us to complete succeeding in our lifestyle dream to live independently. There is also a risk that family relationships may break down and the idea of living more or less independently but in a granny flat which one might even have financed and which might be conveniently attached to the daughters or the sons residence, suddenly becomes a most unattractive idea and even a source of stress.

Consider the Options

Enter the retirement village concept…

There are several different options in relation to retirement villages. Some villages do have residence facilities where one can virtually come and go as one pleases and yet be in close proximity of obtaining reliable assistance for health and personal needs and even, when and if the time comes, obtaining full time care within a nursing home establishment nearby. All these different stages can be within the retirement village complex. If one decides on such a lifestyle option at an early stage in retirement, one has the chance to gain familiarity with the different establishments within the retirement complex.

What are some of the queries which are made when one is considering the retirement village option?

Q. What exactly is a retirement Village?

A. Section 5 of the Retirement Villages Act 1999 (Qld) defines the retirement village as a premises where older members of the community or retired persons reside, or are to reside in independent living units or serviced units, under a retirement village scheme.

Q. What is a retirement village scheme?

A. Section 7 of the Retirement Villages Act 1999 (Qld) describes a retirement village scheme as a scheme under which a person.

  1. Enters into a residence contract and
  2. In consideration for paying an ingoing contribution under the residence contract, acquires personally or for someone else a right to reside in a retirement village, however the right accrues; and
  3. On payment of the relevant charge, acquires personally or for someone else a right to receive one or more services in relation to the retirement village

How do I enter into a residence contract and with whom?

A. You enter into a residence contract with the retirement village scheme operator.

The Contract involves obligations and rights which are set out in writing.

Q. What does the residence contract entail?

A. The residence contract is a written contract between the resident and the retirement village scheme operator.

It can give an exclusive right to a person to reside in an accommodation unit at the retirement village or it can provide for obligations relating to a persons residence in the retirement village. It also gives the person rights in common with other residents to use communal facilities. The residence contract will also contain a service agreement and may contain an ancillary agreement or an agreement to enter into an ancillary agreement.

There will be in the residence contract a restriction relating to the way in which the right to reside in the accommodation unit may be disposed of during the resident’s lifetime.

Q. What is the Service Agreement?

A. In a retirement village, general services may be supplied to the resident. Such general services may be management and administration services, gardening and general maintenance service, shopping or other facilities for supplying goods or recreation or entertainment services.

Q. What about personal services?

A. There may be additional optional personal services offered to the resident such as laundry, meals and cleaning of the resident’s accommodation unit.

Q. Where do I stand if I feel I really am not a candidate for community living?

A. You do need to have a degree of flexibility if you are aiming to live in a retirement village. A desire to adapt to changes in life style would help. If you are the type of person who wishes to try to cover all bases for possible future problems in obtaining assistance for your health and other needs, then you may wish to consider investigating whether a particular retirement village structure may still suit you by giving you a certain degree of independence.

It is not essential for you to wait until your mobility deteriorates or until you actually have health problems or until you or your spouse require nursing or assistance, for you to consider the retirement village option. However you need to give the situation careful consideration and familiarise yourself with the village and check that living there will meet your requirements.

Q. How do I familiarize myself with retirement villages?

A. You may make an appointment to see the management of various retirement village establishments and make all your queries directly of the management. You may also talk to some of the residents at the retirement village or the management may give you the opportunity to observe the daily life style. It may be that you need more then just basic assistance .It is necessary for you to identify your present needs as well as try to take into account your future needs. There are different levels of assistance at different villages.

Q. How do I familiarize myself with retirement villages?

A. You may make an appointment to see the management of various retirement village establishments and make all your queries directly of the management. You may also talk to some of the residents at the retirement village or the management may give you the opportunity to observe the daily life style. It may be that you need more then just basic assistance .It is necessary for you to identify your present needs as well as try to take into account your future needs. There are different levels of assistance at different villages.

Q. What about different legal structures?

A. It is essential for you to examine carefully the different implications in the legal structure of each retirement village. The villages are not all the same in this regard.

In Queensland, the applicable legislation is the Retirement Villages Act 1999.

If you are intending to purchase a unit in a retirement village you need to know the basics:

  1. What does the purchase price of the unit entail?
  2. Are there extras that you may need to pay for on top of the purchase price?
  3. What will be the stamp duty and are you responsible for payment of this?
  4. Is GST involved with regard to service charges and levies
  5. Who is responsible for the cost of any refurbishment of the unit and any capital replacement costs
  6. What is the security of tenure?
  7. What happens if the scheme operator may apply to cancel registration of the retirement village?
  8. When and in what circumstances can you terminate your residency at the retirement village?
  9. Upon vacating your unit, what exit fees and expenses are payable by you, and what percentage of your sale price will you recover

Q. I am really concerned about this departure exit fee. Can you explain further?

A. It is advantageous to work out how the departure exit fee is calculated by simply calculating what departure exit fee will actually be achieved if a moderate purchase price is obtained for the unit within a particular time frame. In most cases, if you have forgone capital gain in your arrangements with the retirement village, then effectively any such capital gain becomes incorporated in your exit fees, and you really need to take this matter into account. However the concept of getting into the retirement village involves a package deal. You cannot simply take into consideration one particular aspect on its own, such as the entry contribution price or the service fee structure or indeed the exit fee calculation. All of them need to be considered as part of the package and balanced against the benefits offered to you in particular what would be the costs to you of receiving such benefits outside a retirement village scheme, and what would be the risks involved?

Q. What is this Public Information Document that I hear about in connection with retirement villages?

A. Under the Queensland legislation, the content and form of the Public Information Document must comply with section 74 of the Act. There is quite a bit of disclosure documentation which is required to be given if you are considering the purchase of a unit within a retirement village scheme. Such disclosure entails the provision of information on the accommodation, residents’ contributions, any payment the scheme operator must make to residents, information on the funds and facilities associated with the scheme and information about the land on which the retirement village is situated. The Public Information Document must also state age limits for the residents who apply to the scheme and the resident’s rights and obligations as well as the process for re sale of a unit and if any dispute arises, the process for how that dispute is to be resolved. There are also other requirements which must be set out in the Public Information Document and you need to read it and properly understand it. How often we lawyers are approached by those who are wisely seeking our advices in relation to these documents! Not infrequently, we are told that some representation or assurance has been given verbally. Of course the first advice we can give is that you cannot simply rely on your perception of things that are said verbally. Any representation or assurance, on which you are relying, should be in writing. For example if a cooling off period is to be extended to enable an intending resident to carefully consider whether he or she wishes to in fact commit to purchasing a unit, then that intending resident should get the acknowledgement in writing from the retirement village scheme operator that the cooling off period is extended to a particular date and give a copy to their lawyer.

Remember before you make a commitment, you should carefully examine exactly what you are getting in exchange for that commitment. It is good to read a hand book on the particular retirement village if one is available, and it is essential for you to understand what the paperwork says before you sign.

Our firm is situated in close proximity to a number of retirement villages and we are suitably experienced to explain properly, the documentation presented to you by way of Public Information Documents or any other documents in relation to your becoming a resident at such a village and to ascertain whether you do indeed have a good perception of the commitment you are making and whether you will have enough monies over and above the making of that commitment to meet your own personal requisites for day to day living.

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Wynnum (07) 3893 3388
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