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Moving into a retirement village is a significant financial and lifestyle decision. Retirement village contracts are not the same as ordinary residential property contracts.
Get independent advice
Before signing any retirement village contract, prospective residents should consider getting advice from:
- A lawyer to explain your rights and obligations, check the contracts against the law, and identify anything unusual. Your lawyer should have experience in retirement village law.
- A financial adviser to explain what you would receive if you need to leave at different points in time, how the deferred management fee or exit entitlement is calculated, and whether the financial arrangements suit your circumstances.
Information that must be provided
The operator must give prospective residents all residence documents relating to the village at least 21 days before they sign a retirement village contract.
Residence documents are:
- Information statement: The standardised disclosure document covering all of the costs on entry, during your stay and on departure, your exit entitlement, and the village's insurance arrangements. Find more about information statements.
- Residence contract: The contract that creates a resident’s legal right to live in the village, setting out how that right can be ended, and entry payments. The residence contract may also set out the deferred management fee and the exit entitlements. Find more information about retirement village contracts.
- Management contract: The contract covering the services the operator provides and the ongoing charges that residents pay, including the rules around when and by how much those charges can be increased. Management contracts may also set out the deferred management fee and the exit entitlements. Find more information about retirement village contracts.
- Village by-laws: The rules governing how residents live in and use the village, covering pets, visitors, noise, and use of shared spaces. Prospective residents should check that the by-laws do not stop them doing anything that they would like to be able to do. For example, having visitors for long periods of time or imposing restrictions on having a pet. Find more information about retirement village by-laws.
- Financial statements from the most recent annual meeting of residents: These cover income and expenditure, capital maintenance fund movements, and proposed charge increases. These documents give residents a picture of how the village is managed financially and how issues are dealt with when they arise.
The information statement
The information statement is the key document to help residents understand the arrangements in the village before they sign up. It must be provided to residents at least 21 days before you sign a contract and must be available on the retirement village website.
It must tell you:
- all the contracts you will be required to sign
- every cost you will pay to move in
- what you will pay on an ongoing basis
- every fee payable when you leave
- exactly how your exit entitlement will be calculated
- the village's insurance cover, including what is covered and any exclusions
- whether the village has any exemptions from the law.
Operators cannot charge fees that were not disclosed in the information statement.
Information statements allow prospective residents to compare different villages before making a decision.
Operators must provide information statements in the approved standard form. The form has been designed to make this comparison straightforward.
Financial information to ask about
Before signing, prospective residents should make sure they know about all the costs, fees and charges that they will have to pay. This information will be in the village’s information statement.
It is important that you understand:
- what fees will be charged when you move in, including any entry payment or contribution
- what ongoing fees will be charged, what they cover, and how often they may change
- the costs of leaving the village, including any deferred management fee or other exit charges
- how exit entitlements will be calculated, and how much you might receive back after different lengths of stay
- whether you could be required to pay for repairs or reinstatement, and whether you can agree to renovate the unit and share in capital gain when you leave the village
- what additional charges may apply, including optional service fees or special levies
- the financial health of the village.
Information about ingoing, ongoing and outgoing costs, including the deferred management fee and how your exit entitlement is calculated, is covered in Fees and charges.
Development plans and future works
If the village is not yet complete, or if the operator says services or facilities will be added in the future, prospective residents should ask to inspect the overall site plan, unit floor plans, and any development consent for future stages.
Any services or facilities that are promised but do not yet exist should be specified in the contract, as verbal promises may not be enforceable. Keep any promotional material that describes services or facilities not yet in place.
What happens when a resident leaves
Before signing, you should ask a financial adviser to walk through the departure process at several scenarios. Ask how much you would receive and how long it would take to be paid if you needed to leave in the first one to 3 years.
Find more information about leaving a retirement village.
Company title and strata title villages
If the village operates under a company title scheme, prospective residents should ask for the company's constitution and replaceable rules. These govern the ownership rights and the obligations that come with holding shares in the company.
If the village is subject to a strata title scheme, prospective residents should ask for:
- the rules of the owners corporation
- an owners corporation certificate
- the minutes of the last annual general meeting of the owners corporation
- any management agreement relating to the owners corporation.