Protections for intending residents
The Retirement Villages Act gives important protections to intending residents of retirement villages by requiring village operators to provide them with comprehensive information. This enables the intending resident to compare retirement villages and make an informed choice about entering a village.
Who is an “intending resident”?
An intending resident is a person who:
- in the last three months has talked with a retirement village operator or their agent about entering into an occupation right agreement, or indicated to them that they’re interested in becoming a resident, and
- has given their contact details to the operator or their agent.
Advertising must be accurate
Retirement village operators and promoters must make sure their advertising isn’t misleading or deceptive. This includes signs and promotional material, as well as advertisements in newspapers and magazines, on radio, TV and websites and in other places.
It’s an offence to breach this requirement. The Registrar of Retirement Villages can also suspend a village’s registration for this reason.
The Fair Trading Act 1986 also applies to misleading or deceptive advertising (as well as to statements made by operators or their agents). That Act is enforced by the Commerce Commission.
No advertising or offers by unregistered villages
Operators of villages that are not registered cannot advertise the village, nor claim the place is a retirement village, nor make an offer to anyone to become a resident. That rule applies from 1 May 2007 for new villages, or after the allowed period of registration has ended for existing villages. The same rule applies to villages whose registration has been suspended.
If the operator breached this rule in some substantial way before a resident signed an occupation right agreement, the resident can end the agreement by notifying the operator and the village’s statutory supervisor in writing.
Information that must be given to intending residents
Before an intending resident signs an occupation right agreement with a retirement village, the operator must give them copies of:
- a disclosure statement that contains all the required information about the village (see below)
- the occupation right agreement
- the Code of Residents’ Rights
- the Code of Practice (and tell them it comes into force on 25 September 2007).
They are also entitled to get copies of:
- the most recent audited financial statements
- the village rules
- the management agreement
- the deed of supervision.
Disclosure statement
The disclosure statement is an important document that intending residents should read carefully.
Written in clear language and in large type, it starts with a statement warning intending residents and their families about common misunderstandings about:
- the kind of interest they have in their unit
- fees and charges, and
- what happens when they leave.
The operator must register their standard form of disclosure statement with the Registrar of Retirement Villages.
The requirements for what must be in disclosure statements are set out in Schedule 2 of the Retirement Villages Act and the Retirement Villages (General) Regulations. This includes the following:
The village
- the ownership, management and supervision of the village
- the village’s ownership structure and management arrangements
- the manager and staff (if any), including contact details and when they are there
- the village’s statutory supervisor, including their role and contact details, or any exemption from having a supervisor
- the state of the village, including its condition, stage of completion, numbers of occupied and unoccupied units, any new units planned and how these will affect residents, and how long it has taken to sell vacant units
- the services that the village offers or plans to offer (for example, security, housecleaning, meals, nursing care) and the shared facilities the village offers or plans to offer
- arrangements for maintenance and refurbishment
- the preparation, auditing and disclosure of financial accounts
- insurance cover and responsibilities
Occupancy rights
Information about the type of occupancy rights offered, including the type of legal interest a resident would have in their residential unit (for example, a licence to occupy or a unit title) and whether this can be sold and any applicable restrictions or conditions. This information focuses on:
- the village rules and any other restrictions on the resident living in or using their unit
- whether the operator controls the sale of the unit, and if so, the procedures and costs, what the resident gets back, and what happens if there is a delay
- the resident’s right to sell or market their unit, and to mortgage or borrow against it
- the resident’s right to let the unit, have someone else stay there (such as a partner, family member or carer), and to keep a pet
- whether the agreement can be changed by the operator or resident and, if so, in what situations
Costs and returns
- charges for entering, moving within and leaving the village
- periodical charges (monthly, for example)
- charges for maintenance, rates and insurance
- whether the resident receives a share of any capital gain or is liable for any capital loss when they leave the village
- the estimated financial return a resident could expect from the sale of their unit two, five and 10 years after entering into the agreement
Cooling-off period
- the 15-working day cooling-off period after signing an agreement and any additional period given
- the right to cancel the agreement for delay if the unit is not completed within six months after the proposed completion date; and any extensions of that right that are given
Termination
- the arrangements for terminating an agreement, including the effect on anyone else living in the unit, continuing charges, the process for finding a new resident, the process for determining the sale price, and what the resident receives
Other matters
- whether any lender who holds a security interest in the village (such as a mortgage) on 31 December 2002 has refused to consent to the village being registered, and the effect of this
- any exemptions from complying with the Code of Practice (after it’s in force from 25 September 2007)
- any other information required by the Code of Practice or by the regulations
- any other information that the deed of supervision requires the operator to disclose
What if an intending resident isn’t given this information?
If a person signs an occupation right agreement but then learns the operator left out something substantial from the disclosure statement, they can avoid (cancel) the agreement by notifying the operator and the statutory supervisor in writing.
If there’s a dispute about whether or not the information was given, the burden is on the operator to prove they gave the information to the intending resident. When there’s no evidence to the contrary, this will be proved if the intending resident signed that they received the information.
It’s an offence for the operator not to give an intending resident the required information.
Page last updated: May 2007