Legal documentation for retirement villages is often extensive and complicated — you will almost certainly need a solicitor to explain the documents effectively.

Why move to a retirement village?

Retirement village living offers an accommodation and lifestyle alternative which suits many people in the later years of their lives.

A retirement village is essentially a community for seniors. You don’t have to be retired to enter into a village — a frequent misconception!

Entry into a village is usually for those over 55 years of age. However, the average resident’s age is somewhere in the low to mid-seventies, with the average entry age being in the mid to high sixties.

About retirement villages

There are normally two forms of retirement village — resident funded and donor funded.

Resident funded villages can be operated by a non-profit organisation or the private sector. Donor funded villages are invariably owned and operated by ‘non-profit’ organisations. Both are managed on a commercial basis to produce a ‘surplus’ or profit.

Each State and Territory has enacted specific legislation that regulates the operation of retirement villages, and defines what is and what is not a retirement village — they can all be different.

The relevant legislation in the ACT is the Retirement Villages Act 2012.

Legal structures

There are at least eight common legal structures for retirement villages in Australia.

These legal structures are:

  • Long-term lease
  • Long-term licence
  • Strata title
  • Community title
  • Company title
  • Unit trust
  • Manufactured home
  • Conventional Lease

The structure adopted by a particular village will depend on where it is located.

Different structures can have different implications and raise different issues in terms of applicable legislation. Your solicitor can help guide you through the legislation applicable in your State or Territory.

Management agreements

With each village there will be a Management Agreement to be entered into. This Agreement will set out who is responsible for:

  • service charges,
  • refurbishment and capital replacement costs,
  • security of tenure, and
  • credit risk.

Your solicitor can help guide you through the village’s Management Agreement and advise you on your rights and responsibilities.

Financial considerations

As a resident of a retirement village, you may be required to pay:

  • an initial entry fee when you move in;
  • rent and/or recurring service charges during your stay, and perhaps beyond; and
  • a “departure fee”, deferred management fee, or exit fee when you leave.

The costs will depend upon the particular legal structure of the retirement village.

When entering a retirement village and considering the legal documentation, your solicitor will work closely with you and your financial planner or accountant to ensure you can afford the retirement option of your choice.

Why do you need your solicitor?

Legal documentation is often extensive and complicated and will almost certainly vary from village to village.

The documentation may have financial implications that you had not envisaged — this in itself is very complicated and the process needs to be explained effectively.

There are different departure fee structures associated with each village, and it is important that you fully understand the financial consequences to you if you leave the village.

Your solicitor will help you by guiding you through the documentation, answering any questions or concerns you may have, and ensuring that you understand the documentation before you sign it.

More information

Finding a solicitor

The Law Society can help you find a solicitor or law firm with expertise in retirement village documentation. Call 02 6274 0300 during business hours and ask for a list of firms.

You can also use the search function on the Law Society’s website to find registered law firms with particular areas of practice. 

This publication is intended as a simple guide. It is not, and must not be taken to be, legal advice. For legal advice please consult a solicitor. While every care has been taken to ensure the accuracy of the information contained in this publication, the ACT Law Society does not make any representations or warranty as to the accuracy of the material in the publication. The publication has been written according to the applicable laws in Australia relevant to a resident of the Australian Capital Territory as at March 2017.

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