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Retirement Villages

There are no standardised rules on the type of contract each village may require. It is essential that anyone contemplating a move to a retirement village be aware of the different ways that a unit in a village may be “owned”, the fees payable to enter, ongoing fees and how in going fees will be returned as well as some of your obligations and rights.

The following is a brief summary of retirement village types, costs associated with living in a village and some general rights and obligations. This is not an in-depth review, however if you are considering a unit in a retirement village, we can review any documentation provided to you by the village.

Different ways of “owning” a unit in a retirement village can include:


The legal right to occupy the unit and these rights and obligations are set out in a document, “Licence.”  


One “purchases” the unit for market value on a long-term lease.  


One acquires the unit as any other flat or unit.  


A company that sells shares in itself owns the retirement village. Each share has a right of occupancy to a unit.

The best structure for a particular person will depend on circumstances. You should speak to us before you buy to see which legal structure will best suit your needs.  


It is necessary to distinguish between a once off entry contribution used to “purchase” your right to reside in the retirement village, and the on-going service fees and body corporate fees.  


You will pay this lump sum payment when you move in. it is much the same as paying for the purchase of any other unit. Generally, conditions apply relating to who can sell the unit, restrictions on the type (age) of purchaser and the amount retained by the retirement village operator.

If you enter under a lease or licence, you will usually be entitled to a refund of part of the entry contribution. The amount of the refund, and when it is repayable should be set out in your contract.  


A service fee or accommodation charge, (payable weekly or monthly) for managing the retirement village, and supplying services such as a resident nurse or caretaker. The size of the fees depends on the facilities supplied.  


As in any strata development, the resident usually pays these. However, one must check and confirm the contract.  


A deferred management charge becomes due only when you leave the village or die, calculated:

a)         On a percentage of the resale value of your unit and the number of years you have lived in the unit – usually a maximum percentage is set in the contract,

b)        Where a lease or licence is given based on the amount of the entry contribution.

The Retirement Villages Act does not regulate these charges at all; it depends on what is set out in the contract.  


These fees cover common property maintenance, insurance, lighting of common areas etc. When you buy a unit, you must ascertain the amount of this fee. The body corporate has power to adjust this fee from year to year.



This is a one-off payment that an operator may request to meet a particular expense. Such as contributions to install, a bowling green and require a contribution by way of a special levy. The Retirement Villages Act says that you have to pay this levy in certain situations. If the owner asks for a special levy, and you are reluctant to pay, get legal advice about your obligations.  


The Retirement Villages Act says that you do not have to pay any increase above a Consumer Price Index adjustment unless a majority agreed to the increase, or the increase was due to a rise in rates, taxes or salaries and wages. However, if the cost to the manager of providing services is greater than the allowed increase, services may cease to save money, even if this is in breach of the contract.  


There are a considerable number of documents provided to you when you are planning to enter a village, which may include the following:  

  • Residence Contract
    This is the main agreement between you and the owner. It sets out the conditions by which you occupy your unit and the obligations of the owner. It could be in the form of a contract of sale (strata title), a sale of share agreement, a licence agreement, or a lease agreement.

  • Management Agreement
    An agreement between you and the manager of the village; it sets out the services provided in the village and the fees for these services.

  • Option or Right to Repurchase
    Used where you are buying your unit (strata title unit); it sets out how the unit can be repurchased from you when you leave.

  • Disclosure Statement
    Sets out the name and address of the village, which the owners are, the date that the village was officially registered with the Land Registry Office, and any details of mortgages over the land and attached to the contract. It contains information about the rates, any mortgages, covenants, or easements that affect the property, planning details, body corporate liabilities, etc.

  • Checklist
    The first part is nine questions deal with personal details and how they relate to the proposed move. The second part contains fifteen questions relevant to living in the village. If asked, the owner must answer each question truthfully and it is now common for answers to these questions to be part of the residence contract.

  • By-Laws
    List of house rules developed by management to ensure the easy and effective running of the village.


You must receive the contract or agreement at least 21 days before you sign. Then after you have signed the contract, you have three business days to change your mind –cooling-off period. The three days does not include a Saturday, Sunday or public holiday. If you change your mind, you must notify the owner in writing within the cooling-off time. You should contact us immediately if you change your mind, to ensure you get the refund.


There are a number of other situations where you can cancel the residence contract, for example, where the contract does not tell you about the cooling-off period or where the contract was not given to you at least 21 days before you signed it.  


This law gives you a right to participate in some of the decisions that affect your retirement village. Participation can occur in a number of ways: You can join a committee or attend meetings. Some of the decision-making processes include:

a)    Owners Corporation Committee;

b)    Residents’ Committee;

c)    Annual meeting; or

d)    By-laws and Owners Corporation rules  


If you have a dispute with the owner or manager, check whether your residence contract or the by-laws set out the process for resolving disputes. If there were nothing in the contract or by-laws, the remedies that you may have, in a dispute with the manager, would include, you or the manager taking the problem to an independent arbitrator.

In disputes with the Owners Corporation, you can apply to VCAT.

Where the dispute is between residents, the Retirement Villages Act says that this should be resolved through the residents’ committee acting as arbitrator.  


There are three situations where you may need to leave your unit.

1    Where you breach a condition of your contract; you must receive a 28 day-written notice. If you do not comply with the notice and the breach is substantial, the owner can give you 60 day-notice to move out.

2    Although it is not common, where you are a periodic tenant, i.e. a tenancy that continues from one period to another. In this case, the owner can give you notice to leave in six months or at the end of the tenancy (which is usually fortnightly, when your regular fees are paid), whichever is the latest.

3    Where your health care needs cannot be met, e.g., your health has deteriorated and you need nursing care. This is probably the most common situation. In this case, the owner can give you 14 day-notice to leave if:

a)    The residence contract has a condition authorising that this notice can be given;

b)    All related conditions in the residence contract have been satisfied; and

c)    There is a certificate from two doctors (you must choose one of them) confirming that the resident cannot be cared for in the unit.  


Your right to a refund of all or part of your entry contribution will generally depend on what is set out in your residence contract. Even if there is nothing about this in the contract, you might still be able to recover part of the entry contribution if the owner or manager promised to refund it at the time you originally negotiated the contract. The law does not require entry contributions to be held in a special fund or for refunds to be paid within a certain time. Contact us if the owner refuses to refund your entry contribution.  


If you live in your unit under a lease or licence and you decide to move out, you may have to pay the ongoing fees until another person moves in. The law does not regulate this situation at all, so your liability to pay these fees will depend on the terms of your contract.  


This charge falls due when you leave the village or die. The law does not regulate this charge, so you will have to study the contract to see whether you have to pay this charge and how much it is.  


If you sell your unit, there will be certain costs deducted from the sale price, which can include:

a)    Cost of refurbishing the unit;

b)    Reasonable costs of selling the unit;

c)    A percentage of the capital gain;

d)    In addition, “developer’s fees,” which entitle the developer to a percentage of the re-sale price for every year you have lived in the unit.

Before you sign up on any contract to purchase a retirement village unit, you should satisfy yourself on these points:

  • Effects on pensions entitlements;

  • Ways to minimise the amount of entry contribution you may be asked to pay;

  • The regular costs of living in the village. These can include weekly fees, maintenance charges, and special levies. Who is responsible for rates? For excess water charges? In what ways can fees be increased?

  • Ways you can participate in the management of the village? Do you have a right to information about the financial affairs of the village?
  • Whether you have any rights that are not contained in the contract and agreements? What statutory protection is provided?

  • The resolution of any disputes. Is there a tribunal that deals with all issues?

  • The best way to make a complaint. Is there a complaint process referred to in the documents? Is it a process that is likely to be effective?

  • The consequences if you are married and you or your spouse needs hostel or nursing home care.

  • Any consequences if you want to leave your unit. What will be the financial costs? How long will it take to get a refund of the entry contribution? How much is the village owner entitled to keep? Is there a deferred management charge?

  • The grounds on which you can be asked to leave your unit;

  • Your responsibility for repairs and maintenance;

  • The responsibility for insurance. What types of insurance is best for your needs?

  • Any restrictions on your activities. What do the house rules say? Can you keep pets? What are the rules about smoking? Can you have relatives stay the night? Can you sub-let a unit out to another person if you are away for an extended time?

  • The services that are provided. Which are included in their regular fees and which are extra services?

  • The medical and care services (if any) that are provided. Is there a nurse or doctor on call? What happens in a medical emergency?

  • Your rights to privacy. What rights of access are there to your unit?


Behan Legal assists and advises on these important issues. For an appointment, call 03 9646 0344 .

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