You’ve seen the brochure picturing a relaxed retirement, maybe a place with a garden, friendly neighbours, and someone else taking care of the lawns. Sounds good, right? Retirement villages offer that, but before you pack your bags, there are some risks to consider. It’s not as scary as it sounds, and having good advice means you can turn the page into your new chapter with ease.
Retirement villages are covered by the Retirement Villages Act 2003, which is there to protect you, the resident. Villages offer numerous benefits like secure, community living with amenities such as a pool or bowling green, various catering options, and organised activities. But, like most things in life, there are limitations to watch out for.
In fact, you must get legal advice before you move in. Unlike buying freehold property, you’re buying the right to live in a Village unit, and you’ll sign an Occupation Right Agreement (ORA). This agreement says what you’ll pay, when, and what your rights are while living there and upon exit.
Costs
Typically, you will pay the Village a capital sum to occupy your unit, plus weekly fees. When you leave your unit, the Village will deduct a “deferred management fee” from your settlement payment (often up to 20%-30% of the capital sum). If the Village wishes to refurbish the unit after you move out, some ORAs will allow the Village to deduct this cost from your settlement payment. Most ORAs don’t entitle residents to any capital gains on the unit, and the refund process can take a long time, as Villages usually don’t pay out until another resident takes possession of the unit.
If, down the track, you need to transfer to a different type of unit, for example, from a standalone villa to a serviced apartment, or to a rest home care facility, be aware you may need to cover extra costs while waiting for your settlement payment. You may also need to pay a new capital sum for the new unit at current market rates while receiving back only a percentage of the original capital sum you paid on entry into the village, which can result in a significant shortfall.
Other considerations include pet policies (some Villages don’t allow pets, others may permit a well-behaved cat or dog), guest restrictions, car parking arrangements, and storage restrictions, which vary by village.
Why do you need a lawyer?
Moving into a Village can put residents in a vulnerable position, which is why seeking legal advice is a requirement of your ORA. A lawyer will explain the fine print of the agreement, how your interests are protected and your rights, and help you decide if a particular Village is right for you. Every Village and agreement is different, so you need specific advice.
Villages often require you to have a valid Will and Enduring Powers of Attorney. If you don’t have these, your lawyer can help you sort them out at the same time as advising you on your ORA.
A retirement village can be a good and appealing option as you age, but it’s important to get the legal side sorted. WRMK Lawyers is home to a team of lawyers highly experienced in elder law matters, who are happy to meet with you and talk you through the benefits and risks of your retirement living options.
How can we help?
If you need advice on retirement living, WRMK Lawyers’ experienced team of experienced local life planning lawyers are happy to help.
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