The role of retirement villages in Australian society are increasingly important given our aging population, ideally providing comfortable and secure living arrangements for seniors. The process of securing a place in a retirement village can be complex, however, and a prospective resident should receive expert legal advice before committing their signature to a contract.
To ensure transparency and protect the rights of residents, there are specific disclosure obligations imposed on retirement village operators, particularly in relation to the financial obligations of residents. Legislation governing the workings of retirement villages is state-based so this article will cover disclosure obligations for Queensland operators, including what happens if they are not complied with.
What retirement village operators must provide prospective residents
Under Queensland’s Retirement Villages Act 1999, retirement village scheme operators must provide prospective residents with certain documents at least 21 days prior to the person entering into a contract with the village. These documents are part of the operator’s disclosure obligations and allow a would-be resident to have clear insight on the village’s contractual obligations and inclusions before committing their money. In Queensland, the documents include the village comparison document (VCD), prospective costs document (PCD), residence contract, village by-laws and any additional documents which might be specific to a particular development.
VCD: This document must be provided to a prospective resident by an operator within seven days of receiving a request, and provides general information about the village’s accommodation, facilities and services, and covers the general costs associated with moving into, living in and leaving the retirement village. The VCD must be up to date and comply with the Retirement Villages Act 1999 (‘the Act’).
PCD: The PCD must also be provided within seven days of a prospective tenant showing interest in a village unit. This document provides more specific information on the financial commitment of the resident to enter and live in the village, including ongoing costs and information on the fees a resident will pay when they leave the unit after a certain number of years in residence.
The PCD should include information about:
- the scheme operator (address, contacts, etc);
- the resident’s initial entry contribution and ongoing costs;
- details of the unit’s layout, including fixtures, fittings and furnishings;
- car parking;
- encumbrances or endorsements on the village land;
- exit costs when you leave the village;
- exit entitlement, including estimated entitlement when the resident exits after one, two, five and 10 years of residence.
The PCD for a unit must be reviewed by the would-be resident for at least 21 days prior to entering into a resident’s contract. Expert legal advice should be sought at this stage. A resident may choose to waive the pre-contractual disclosure period, including provision of the VCD and PCD, but only if they have received legal advice from a lawyer legally entitled to practise in Queensland.
Residence contract: In Queensland the terms of residence contracts may differ depending on the form of village scheme – be it freehold strata, a leasehold or licence scheme, but certain provisions are mandatory under the Act, including:
- cooling-off period start and end dates;
- ingoing contribution amount;
- exit fee;
- exit entitlement
- charges for services, including fee amounts and due dates;
- insurance details, including the coverage required by the resident;
- village rules and regulations;
- resident’s right to resell their right to reside in the unit;
- resident’s entitlement to village financial statements;
- dispute resolution process;
- operator’s and resident’s rights to terminate the contract;
- funds the scheme operator is required to keep;
- retirement village facilities and land;
- whether the operator and resident are to share in any capital gain or loss, and how it is to be shared;
- any other matters prescribed by regulation.
The retirement village scheme must be registered in order for a residence contract to be legally enforceable. A person who signs a residence contract has 14 days to withdraw from it without penalty. The operator is then required to refund any ingoing contribution that has been paid.
Consequences if disclosure obligations are not met
Penalties apply for operators who do not observe disclosure obligations under the Act, including entering into residence contracts that are not in the approved form, do not include required terms or include prohibited terms.
These penalties also apply where retirement village operators fail to:
- provide public information documents, VCDs, PCDs, and residence contracts;
- register the retirement village;
- establish and manage funds and trusts;
- insure the retirement village correctly.
Speak with our expert team
Our experienced professionals at Big Law have a proven track record helping clients navigate the complexities of deciding to enter a retirement village. The obligations of village operators are considerable and important so that a prospective resident can make an informed choice on what is a very significant decision at this stage of life. Likewise, retirement village operators need to be aware of what is required of them under the Act. The team at Big Law will provide timely, relevant advice on the obligations of both parties so contact us today for further guidance.
