Are you or your parents/grandparents considering buying a retirement village unit? There are numerous ways of doing this, which can make the entire process confusing and overwhelming. This guide will explain the different accommodation to choose from and how the law affects each: 
The Law
Retirement Village law in New South Wales is governed by the Retirement Villages Act (NSW) 1999 (Act).
When purchasing a proprietary interest in a retirement village, there are various documents that regulate the purchase, including the Retirement Village Contract, which must comply with the Act. There are a number of different types of contracts – strata ownership, a licence agreement or long-term lease, but what’s the legal difference?
Strata Ownership
Purchasing a strata interest means you will own title to your apartment and purchase this type of interest by entering into a Contract for the Sale of Land with the owner of the unit or the operator of the retirement village. After buying the lot, you’ll be registered as the owner on the title.
Although the purchase is somewhat similar to buying a non-retirement village apartment, during residency you will pay all strata levies and any other village levies to maintain the common area. The Owners Corporation (or strata manager) will be in charge of all maintenance of village common areas. You will be responsible for maintaining your own unit.
There may also be other contract terms in place to be aware of, including a fee for entering the village and a personal services clause in circumstances where the resident requires a cleaner, nurse or additional services provided by the village, such as regular meals.
Licence Agreement
If you occupy premises under a licence, you will be granted a licence to live in the village in exchange for paying the village an Ingoing Contribution fee. This ingoing contribution is then treated as an interest-free loan during your period of occupancy and subsequently refunded upon your departure from the village. In calculating the “departure fee”, expenses incurred during your residency are taken into account.
Other fees you may be required to pay are “recurrent charges”, which are the equivalent to paying rent during your time in the village.
When you enter into a licence agreement, it must spell out any fees that are payable by the resident upon entering the agreement, during the occupancy, and upon your exit from the village. There must also be a formula as to the departure fee in the licence agreement.
It is a good idea to speak with an Elder Law specialist about your rights and obligations under any licence agreement before you sign and enter into one.
Long-Term Lease
Long-term leases typically run for 99 years, and are a very common type of retirement village contract.
Upon entering into the agreement, you are expected to sign the lease, a retirement village contract and any other service agreements. In all cases, a “disclosure document” should have been provided to you before entering into the contract. Unfortunately, there is usually a lot of paperwork to consider.
The lease will be registered on the title of the Village property and you are considered to be a registered interest holder in the property.
Once you enter the property/ lease agreement, an ingoing contribution fee will become payable. During your residency you will also be required to pay “recurrent” and service charges to the village operator.
Once the lease comes to an end, or you exit the lease, a departure or exit fee will become payable, as well as any “make good” costs for refurbishing or repairing the property to its original condition. Every retirement village contract/ lease should have detailed provisions that explain these costs and you should be made aware of these costs before you sign and enter into any Lease.
Your Retirement Village Contract should also have clauses relating to your entitlement to any capital gain on the property during occupancy. Ideally, any capital gain made on the property should be shared with the operator; however, many contracts will dictate the retirement village operator retains any capital gain on the property. Nevertheless, in practice, this is and should be negotiated.
Legal Advice
It is important that you seek independent legal advice before going ahead and entering into any Retirement Village Contract with a Retirement Village. This will ensure you have a fuller understanding of your legal rights, financial obligations and other aspects of the transaction under the retirement village contract and the Act.
Conclusion
At LegalVision we can review your retirement village contract and highlight any legal issues that you should be aware of. We can also look at your change in circumstances, along with your entire estate planning needs. For fixed-fee legal assistance, get in touch with LegalVision on 1300 544 755.