Retirement Villages and the ‘Right to Reside’

Retirement Villages and the ‘Right to Reside’

Retirement Villages and the ‘Right to Reside’

While living in a retirement village has become a popular option for many retired Australians, the arrangements around how a resident holds the title in these complexes are… well, somewhat complex.

In Queensland, for example, a defining concept to understand in the Retirement Villages Act 1999 (Qld) (‘the Act’) is a resident’s ‘right to reside’. This refers to the personal entitlement of each resident to exclusively occupy a residence for a specified period, subject to the terms and conditions set out in the residence contract.

This right is considered to be extinguished when the resident dies or forfeited once the resident exits the unit.

Below, we’ll look at how this right applies in regards to the most common forms of the title held in retirement villages. If you are considering entering a retirement village and are unsure about your rights and obligations under the contract you’ve been presented with, contact Big Law. We have advised many clients on retirement village contracts and can help you make this big decision.

More detail on the ‘the right to reside’

Your right to reside is best thought of as a legal right that is given to you subject to certain conditions. It’s not always an interest in land that can be registered.

The right can’t be transferred nor bequeathed in a will. As mentioned above, the right to reside is extinguished or forfeited once the person in possession of it dies or leaves occupation of the property.

This means the person with the right to reside cannot lease the property to another, nor receive income from the property.

As provided for in the Act, the right to reside must be legally recorded and secured in some way. The most common way operators of retirement villages will do this is through leasehold, freehold, loan-and-licence and, to a lesser extent, rental agreements.

Leasehold: Most leasehold agreements in retirement villages involve purchasing a right to reside, rather than a property interest. In effect, this consists of an ingoing contribution to the operator for the right to reside plus ongoing fees for other services offered as part of the complex.

A resident might sign a lease for a period of 99 years, for example, meaning the lease may be sold or assigned over the years – but not the right to reside.

A lease for a unit in a retirement village is not transferable or available to beneficiaries in a will. A registered lease is legally surrendered or terminated by notifying the Titles Registry, after which the lease will be removed from the title to the retirement village land.

The leaseholder and the scheme operator then agree on a resale value for the right to reside. A new right to reside is then paid for and given to the new resident under their residence contract, and the former leaseholder’s right to reside is terminated along with other rights under the contract.

Freehold: These arrangements in retirement villages operate like strata schemes, with residents wholly owning the unit and land. The resident becomes registered proprietor of the lot within the community title scheme of the village, becoming a member of the body corporate with an interest in and responsibility for the common property of the village.  This is not a very common type of holding in Queensland, and it is unusual because it does in fact mean that the resident owns the unit and land.

Loan & Licence: This is a less secure arrangement than leasehold in that the licence and financial interest of the resident is not registered with the Land Registry although there are some statutory protections for residents with this type of holding.

Instead, the resident makes a cash interest-free loan to the operator (sometimes called an ingoing contribution or ‘refundable accommodation deposit’) in exchange for the right to reside. This provides the resident with a contractual licence to occupy the unit, usually for the life of the occupant.

If the resident dies or leaves, they will usually be entitled to the ingoing contribution they paid, less any ongoing fees owing and an exit fee.

Rental: Residential tenancy arrangement in retirement villages are less common and resemble rental arrangements outside of retirement villages. A bond is usually payable on signing on to a tenancy agreement, with regular rental payments and other costs to be paid on an ongoing basis.

Speak with Big Law

To protect elderly people when they consider moving into a retirement village, the requirements under the Act mean village operators must present prospective residents with a mountain of paperwork to consider. This material can be confusing, particularly about the various ways a resident might hold title in the village and how the right to reside applies.

If you are in this situation and need some advice and guidance on entering, or exiting, a retirement village, please contact Big Law today.

How We Can Help

Big Law Lawyers Strathpine offers you the same comprehensive suite of legal services that you would expect to only find in the city.

We are a successful well-established legal practice based in Strathpine, Brisbane. We have earned a reputation for providing trustworthy, practical legal advice to a diverse range of clients, in both Brisbane and regional Queensland.

Things to Read

What Assets Actually Fall into Your Estate Plan?

In this podcast, Estate Planning Solicitor, Elise Jaques explains what assets actually fall into your estate plan. Elise Jaques Solicitor Make an appointment

How Do I Get an Enduring Power of Attorney in QLD?

Appointing an enduring power of attorney is an important legal step by which someone entrusts another person (the attorney) to make decisions for them during their lifetime. This power can allow the appointed person to make both personal/health and financial decisions for the principal (the person who made the appointment). An enduring power of attorneyRead More »How Do I Get an Enduring Power of Attorney in QLD?

What Happens if I Don’t Have an Enduring Power Of Attorney in QLD?

A person makes an enduring power of attorney (EPOA) to entrust decisions about their personal (including health) and financial affairs to another person when they lose capacity to do so, under the Powers of Attorney Act 1998. The ‘greying’ of Australia, with more people living longer lives, means about one in 10 Australians over theRead More »What Happens if I Don’t Have an Enduring Power Of Attorney in QLD?

Retirement Villages and the ‘Right to Reside’

The role of executor of a person’s Will is one of unique responsibility, and their appointment is one of the most important decisions a person can make when creating this essential legal document.

Podcasts to Listen to

What Assets Actually Fall into Your Estate Plan?

In this podcast, Estate Planning Solicitor, Elise Jaques explains what assets actually fall into your estate plan. Elise Jaques Solicitor Make an appointment

When Should You Update Your Will?

In this podcast, Estate Planning Solicitor, Elise Jaques explains when should you update your Will.

What is Probate and How Do You Apply for it?

In this podcast, Estate Planning Solicitor, Elise Jaques explains what is a Probate and how you can apply for it.

How to Get the Most Out of Your Estate Planning Appointment

In this podcast, Strathpine Estate Planning Lawyer, Mahendra Mohan discusses a very important document that your executor needs to know about.