Are you or your parents/grandparents thinking of purchasing a retirement village unit?   There are so many options available, which can make it a confusing time.  The following is a guide as to some of the types of accommodation available.

The Law

Retirement Village law in New South Wales is regulated by the Retirement Villages Act (NSW) 1999 (Act).

When you purchase an interest in a village it will be regulated by a number of documents, including the Retirement Village Contract, which must comply with the Act.  There are a number of different types of contracts – strata ownership, a licence agreement or long term lease.  This article considers the difference between these types of ownership.

Strata Ownership

If you are to purchase a strata interest you will own title to your apartment and purchase this type of interest by entering into a Contract for the Sale of Land with the owner of the unit or the operator of the retirement village.  You are registered as the owner on the title of the lot after purchase.

Whilst the purchase is similar to that of a non-retirement village apartment, during residency you will pay all strata levies and any other village levies to maintain the common area.  The owners corporation (or strata manager) will be in charge of maintaining the common areas of the village.  You will be responsible for maintaining your own unit.

There may be a number of other contracts in place, such as a fee to enter the village and personal services contracts if you have a cleaner or nurse or other services supplied by the village, such as meals.

Licence Agreement

If you occupy a premises under licence, you will be granted a licence to live in the village in exchange for the payment of an Ingoing Contribution fee to the village.  This ingoing contribution is then treated as an interest free loan during your period of occupancy and paid back after you leave the village – less any fees you expend during your residency (known as the departure fee).

You may also be required to pay “recurrent charges” which are the equivalent of rent during your occupancy.

Each licence agreement should carefully spell out the fees payable by you on entry, during your stay and upon your exit, noting a formula as to the departure fee MUST be provided in the licence agreement.

It is a good idea to obtain legal advice as to your rights and obligations under any licence agreement before you sign it.

Long term Lease

Long term leases (usually 99 years) are a very common type of retirement village contract.

Upon entry into the lease, you would sign the lease, a retirement village contract and any other service agreements.  A disclosure document should have been provided to you under the Act prior to your entry into the contract.  In total there will be a lot of paperwork to consider.

The lease will be registered on the title of the Village property and you are considered a registered interest holder.

An ingoing contribution is payable at the time of entry into the property/ lease.  During your residency you will also be required to pay “recurrent” and service charges to the village operator.

Upon termination of the lease, or exit, a departure or exit fee will be payable plus any make good costs for refurbishing or repairing the property.  Each retirement village contract/ lease has detailed provisions spelling out these costs and you should be aware of what these will be before you enter into any Lease.

Each contract will also have provisions about your entitlement to any capital gain on the property during occupancy.  It is desirable to at least share in any capital gain made on the property with the operator, though many contracts specify that the retirement village operator will retain all capital gain on the property.

Legal Advice

It is essential that before entering into a retirement village contract, a prospective resident should seek independent legal advice to ensure they understand their rights, financial obligations and other aspects of the transaction under the retirement village contract and the Act.


At LegalVision we can provide a retirement village contract review and highlight any areas of concern, providing advice in plain English to you.  We can also look at your change in circumstances along with your entire estate planning needs.  Call us on 1300 544 755 today for assistance.

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