Understanding your contract

The idea of downsizing and living in a retirement living community may be appealing, but there are certain factors which should be considered prior to making the transition from your home to ‘the village’.

Retirement village contracts are different from normal residential real estate contracts. So, it’s important to understand your rights and responsibilities and obligations under the contract, before you sign.

There are different types of contracts that residents and operators enter into depending on the arrangements in place at the village. You are more likely to make the right choices if you know what you want.

Don’t rush into making a commitment, instead, visit the village often, get to know the management staff, as well as the residents’ committee, and seek expert advice and answers to all of your questions.

Residence contract

If you have found the retirement village you see yourself residing in, request a copy of their standard residence contract. This is an important document which sets out the incoming resident’s rights and obligations as a village resident.

The contract ultimately governs the relationship between you and the administering authority.

It is important you read and understand the various clauses in the contract as it will be a legally binding document for both you and the administering authority should you proceed on taking the offer of accommodation.

If you do not understand parts of the contract, highlight them and seek further written clarification.

To protect both you and the administering authority, the residence contract is a comprehensive document and should include references to:

◆ The parties in the contract and any associated conditions.

◆ Residence details such as its location, type, layout plan and size, the certificate of titles on which the village is situated, and the form of tenure (like Strata Title, a lease or licence) or purchase which applies to you.

◆ Settling-in period and your right to ‘cool-off’.

◆ The action required to terminate a contract.

◆ Communal facilities available to residents and/or separate or additional facilities allocated to you, or any optional personal services ie cleaning, laundry or meals. ◆ The amount payable, how and when it is to be paid, the basis on which any premium refund will be calculated and returned to you, and the recurrent charges and the way they are calculated.

◆ Any current, planned or proposed expansions to the village and future extra facilities or future services offered. However, there is no guarantee that these proposals will be completed as planned and any funds established by the administering authority to which you contribute, and the purpose of those funds.

Before signing the residence contract you should be provided with copies of the following documents:

◆ Residence contract and premises condition report.

◆ Financial statements presented at the last annual meeting of residents, including a written statement of any changes at the village since that meeting which may significantly affect your decision to enter the village.

◆ Residence rules and dispute resolutions.

◆ Remarketing policy.

◆ Any other policy which may impact on the premium you are asked to pay.

It is strongly recommended you seek legal advice and ask for a copy of the contract before signing.

Retirement village contracts are different from normal residential real estate contracts.

Sealed the deal?

Cooling-off

After signing a residence contract the cooling-off period will give you the opportunity to seek further advice or discuss the matter with others.

During this period you can withdraw from the contract and receive a refund of any money paid by you under the contract, however some administrative charges may be incurred.

It is recommended you use this cooling-off period to seek the advice of a lawyer (if you didn’t do so prior to signing of the contract) to ensure you understand the financial and legal implications of the contract. A financial advisor may also be able to help you.

Settling-in

After signing the residence contract, you may find that the residential village, unfortunately, does not meet all of the care needs you require, or you may simply decide to leave for personal reasons.

In some States or Territories, should this be the case, you are entitled to a ‘settling-in period’, which, depending on the village, generally is about 90 calendar days after the date of the contract (or longer if specified in your contract), or the date on which you are first able to occupy your residence.

It is during this settling-in period that you may elect to leave the village without adjustment to your premium refund. Keep in mind that you may be required to pay any costs and market rent for the period of occupancy as detailed in your contractual agreement.

Be sure to find out if a settling-in period applies in your State or Territory before you make a decision.

It is important to remember the premium will be held until your residence is re-licensed, but you should not be required to pay any monetary penalty for termination during the settling-in period.

It is essential to know your rights and entitlements.

Premises Condition Report

This report is one of several documents you will be required to sign prior to moving into a residential village.

The Premises Condition Report sets out information on the condition of the fixtures, fittings and furnishings, the people who will be responsible for repairing and replacing any items, and how the cost of repairing any items are to be funded. This report should be signed together with the residence contract and must be completed at the date of the contract. Make sure you are satisfied with the information contained in the report before signing it.

Know your rights and entitlements

It is essential to know your rights and entitlements. Referring to the residence contract throughout your stay may be one way of helping you to understand your liabilities.

If you need to purchase personal care services or meals, remember these will be at an additional cost.

Keeping up to date and ensuring you receive all of the entitlements and concessions you are eligible for from Centrelink or Veterans’ Affairs is also important.

If you are finding it financially difficult to manage, speak to a specialist financial planner about retirement living financing before signing an agreement, or make an appointment to see a social worker at Centrelink by phoning 13 23 00.