There are several ways for people to own or occupy premises in a retirement village or aged care facility. You can enter a Retirement Village either under long-term lease, under license or by way of strata title ownership.
Under a long-term lease, the occupier is entitled to live in the property for a period of time pursuant to the lease (most commonly 99 years). The Retirement Village owner maintains ownership of the property but the lease is registered in the occupier’s name providing security of tenure. Beyond the lease agreement, a ‘service agreement’ sets out the terms and conditions regarding the services provided. A substantial ingoing contribution fee is required under this set up in addition to ongoing recurrent charges each week.
Under a license, the Retirement Village owner again maintains ownership of the property but the occupier provides a substantial long-term loan or donation (sometimes called a “bond”) in return for the right to occupy the property. This is a more cost-effective approach as the cost of entry can be substantially lower than with a long-term lease. The downside to this approach is foregoing the benefit of capital gains the property attracts as the market matures.
Strata title ownership is the most secure form of occupation with the added benefit of body corporate membership, granting certain rights to contribute to the management of the retirement village. The downside to this approach is a higher cost of entry due to stamp duty on the purchase, however, the advantage is accruing capital gains on the property.
Ten Questions To Ask Before Moving Into a Retirement Village:
1. Do not make a decision to move to any Retirement Village before doing your research to explore the various options that are available to you.
2. Ask yourself the following questions – Why are you moving? What facilities do you require? What options are available in the area you are considering?
3. Determine whether you can afford to live at a Retirement Village? What is the ingoing contribution fee? What are the recurrent weekly fees? What are the additional fees for meals and nursing and cleaning services? How are the fees determined each year? Will they increase each year and in what manner will they increase?
4. What is the financial position of the village? Is there a history of deficits or surpluses in the retirement village budget?
5. How much are the departure fees, commission and other expenses, such as redecorating when you leave?
6. Have you spoken to your family and your doctor and other support people about a move? Consider that you may be moving from an area where you have lived for a long time to an area where you are not so familiar. Do you have support services in place?
7. Have you spoken to your lawyer about the legal issues surrounding your move before signing the contract?
8. What are your obligations under any Retirement Village Contract? What obligations does the operator of the village have to you? Does the operator have a mortgage on a property where the village is located and if so what are the implications for you?
9. Is there a history of disputes between the residents and the operator of the village?
10. Is ongoing care (ie aged care) available if and when you need it?
At Attwood Marshall, we suggest seeking the advice of an experienced lawyer when considering your Retirement Village options and certainly prior to signing any documents regarding occupation. We can explain the Retirement Villages Act and the documents in plain language, providing you with a full understanding of your legal position under any Village Contract.
The Commonwealth Government’s Aged Care Act governs the operation of Nursing Homes which are managed differently from Retirement Villages. We can also discuss your rights under this legislation with you and or your loved ones. Please contact our Wills and Estates department manager Donna Tolley on 07 5506 8241 or email [email protected].