Retirement village living
Why Choose a Retirement Village?
Retirement village living offers an accommodation and lifestyle alternative which suits many people in the later years of their lives.
A retirement village is essentially a community for seniors. You don’t have to be retired to enter into a Village — often a misconception!
Entry into a Village is often for those over 55 years of age. However, the average resident’s age is somewhere in the low to mid-70’s with the average entry age being in the mid to high 60’s.
There are normally two forms of retirement village — resident funded and donor funded. The latter is invariably owned and operated by “non-profit” organisations and the former can be operated by a non-profit organisation or the private sector. Both are managed on a commercial basis to produce a “surplus” or profit.
There are at least eight common legal structures for Retirement villages in Australia. These are:
- Long-term lease
- Long-term licence
- Strata title
- Community title
- Company title
- Unit trust
- Manufactured home
- Conventional Lease
The structure adopted by a particular Village will depend on where it is located.
Different structures can have different implications and raise different issues in terms of applicable legislation. Your solicitor can help you “wade” through the maze of legislation applicable to your State or Territory.
Each State and Territory in Australia has enacted specific legislation that regulates the operation of retirement villages, and defines what is and what is not a retirement village — they can all be different. The legislation in the ACT is governed by the Retirement Villages Act 2012.
With each Village there will be a form of Management Agreement to be entered into. These Agreements will include who is responsible for:
- Service charges
- Refurbishment and capital replacement costs
- Security of tenure
- Credit risk
Residents of a retirement village may be required to pay:
- An initial entry fee when they move in;
- Rent and/or recurring service charges during their stay and perhaps beyond;
- A fee called a “departure fee”, deferred management fee or exit fee when you leave.
The above price will depend upon the particular legal structure of the retirement village.
When entering a retirement village and considering the legal documentation, your solicitor will work closely with you and/or your Financial Planner or Accountant to ensure that you can afford the retirement village option of your choice.
Why do you need your solicitor?
Legal documentation is often extensive and complicated and will almost certainly vary from Village to Village.
The documentation will have financial implications that you perhaps had not envisaged and this in itself is very complicated if the processes are not explained effectively. There are different departure fee structures and it is important that you fully understand the consequences upon leaving the Village.
This publication is intended as a simple guide, and is not intended as legal advice. While every care has been taken to ensure the accuracy of the information contained in this publication, the ACT Law Society does not make any representations or warranty as to the accuracy of the material in the publication. The publication has been written according to the applicable laws in Australia relevant to a resident of the Australian Capital Territory as at March 2014.