What are the Fees and Charges?
There are many different fees and charges that a Resident may be required to pay when entering a Retirement Village.
The Operator of the Village is required by law to provide information about the entry costs (and ongoing fees throughout the entire time the Resident is to live in the Village) in the Disclosure Statement. The purpose of a Disclosure Statement is to give prospective residents a general understanding of the features and financial arrangements of the Village with the overall purpose being that it will assist the prospective resident to compare that Village with other Villages.
The Disclosure Statement must contain details of the fees and charges that will be payable by the Resident upon entry to the Village and during the time the Resident lives in the Village. Residents cannot enter into a Contract with the Operator until at least 14 days after receiving the Disclosure Statement.
A prospective Resident should obtain independent legal advice about the Village Contracts and Disclosure Statement before signing anything or paying any money to an Operator of a retirement village. The types of fees that may be payable can be summarised as follows (noting this list is not exhaustive):
|TYPE OF FEE||WHEN IS FEE PAYABLE|
|Waiting List Fee||When a prospective Resident wishes to be placed on the waiting list for a village|
|Holding Deposit||When a prospective Resident wishes to reserve a particular premises at a Village|
|Deposit||When a Resident enters into a Village contract|
|Legal Costs||When the Village contract is prepared, the Resident and the Village Operator generally share the costs (usually payable upon entering the Contract), though this will vary from contract to contract|
|Ingoing Contribution||A fee for a long term lease (often 99 years) or license. This is used when a Resident is not going to own the premises. Payable on on entering the premises.|
|Recurrent Charges||Payable by the residents to cover the cost of running the Village, usually payable weekly, fortnightly or monthly throughout the entire course of the Resident’s occupation in the Village.|
|Departure Fee / Deferred Management Fee/ Exit Fee||An amount deducted by the Village from the ingoing contribution fee paid by the resident, payable when the resident vacates. Calculated by reference to a formula contained in the Village contract.|
|Capital Loss/ Capital Gain||If the Retirement Village contract provides, the resident and the operator may share any capital loss or capital gain on the premises at the time the Resident leaves the Village.|
Repairs and Maintenance
The Retirement Village Acts in each State and Territory stipulate who is responsible to repair certain items around a Retirement Village – the Operator of the Retirement Village or the Resident?
Generally, the Operator has an obligation to ensure that all “items of capital” are maintained in a reasonable state of repair having regard to certain factors such as the age of the Village, the amount of ingoing contributions paid by the Village Residents and the amount of money available for maintenance allocated by the Village. If the repair to an item of capital is urgent, the Resident can sometimes arrange repair and the Village must reimburse.
The Resident will be responsible to maintain their respective apartment such as re-painting and carpet cleaning and repair their own items kept in the apartment.
How is the money refunded when a resident leaves?
The Operator of a Retirement Village has an obligation with respect to paying monies to Residents (or their Estate) when the Resident vacates the Village – this is commonly known as the Departure (or Exit) fee.
The release of funds to the Resident (or their Estate) will be dependent on the terms of the Village contract and whether the Resident owns or leases the premises. Further, the Resident may also be entitled to share in the capital gain, subject to the terms of the Contract.
As a general rule of thumb, upon termination of a Retirement Village Contract, the Departure Fee is deducted from the ingoing contribution paid by the Resident and calculated by way of a formula contained in the Retirement Village Contract. The balance is then refunded to the Resident or their Estate. The various state and territory Acts regulating Retirement Villages provide for strict time limits with respect to payment of those amounts.
Residents, their attorneys or legal personal representatives should carefully check the particular terms of their Village contract and make sure that they understand their rights with regard to recovering monies paid to a retirement village Operator when they vacate the premises.
Entering into a retirement village contract can be a daunting task for those considering retirement. It is worth seeking legal assistance to avoid being locked into a contract with unreasonable terms. At LegalVision, we have contract lawyers who can assist in reviewing these contracts and can advise you on your options moving forward.
Contact LegalVision on 1300 544 755 for an obligation-free quote today.