Attwood Marshall Lawyers Property & Commercial Lawyer, Andrea McGarry, discusses Retirement Village Agreements and how to avoid getting nasty surprises or making costly mistakes by getting the right legal advice from the start.
Retirement Village Living in Australia
The retirement living industry plays an important role in providing safe and suitable accommodation at a price retiring Australians can afford. Throughout Australia, there are over 2,200 retirement villages who provide accommodation and care for over 170,000 seniors over the age of 55. Those figures are expected to double by 2025. Retirement is a new stage of life and there is a lot to consider when deciding what your living arrangements and care requirements may be.
In the 2020 PwC Property Council Retirement Census, the data showed that there has been a rising popularity of vertical and combination villages.
The growing range of facilities on offer in retirement villages throughout Australia, reflect the social nature of retirement living. These facilities can provide a great alternative to independent living, with many retirement villages having facilities like cafes, craft rooms, men’s sheds, pools, movie theatres, libraries, gyms, and other activities onsite to help their residents live a healthy and happy life.
- The average age of residents entering retirement villages is 75 years
- The average time residents live in a retirement village is 8-9 years
- The average occupancy of existing retirement villages across Australia is 87%
- There is a higher percentage of female residents than male residents in retirement villages
- The national average price for a one-bedroom independent living unit in a retirement village is $324,00; and for a two-bedroom unit is $463,000
What is a Retirement Village?
A retirement village is a type of housing development that offers a range of accommodation options, services, and facilities. There are different levels of care available at retirement villages from low-level care, which may include laundry services, some meals provided, to mid-high-level care services where medication administration and personal care may also be provided. These services are usually available at an additional charge, which is a different arrangement to that of a nursing home that may already include high-level care services. Retirement Villages also have social and recreational activities available, which can vary from swimming pools, bowling greens, golf courses, to cafes, libraries, or other recreational spaces.
It is integral that people make the appropriate enquiries before moving into a facility so that they can pick which sort of facility is going to best suit their needs and lifestyle.
What to do if you are considering entering into a retirement village
If you are interested in moving into a retirement village, there are a number of steps you should take to ensure you make an informed decision.
Step 1: Explore your options. It is important that you inspect the village you are interested in. You should visit the village on more than occasion, even if you have your heart set on one particular facility. This can give you great insight into the type of environment you will be living in if you choose the facility. It is amazing what you can pick up on when you visit a retirement village and get a feel for the surroundings and what the residents are experiencing day-to-day.
You should look at all the available facilities in your area, not just the first one that comes to mind. Compare them and work out what you like and do not like about each one. This is a great starting point to make sure the retirement village checks all the boxes you need it to.
Step 2: Once you have decided on a facility you are interested in, you can communicate your interests to the facility manager who will provide you with some preliminary documents, which may include a disclosure statement and some facility information brochures. These documents, along with your visit to the facility, should give you a good indication about what your life would be like living there.
Step 3: Get trusted advice. When you think you are at a point you want to make a final decision, it is at this stage it is important to speak to an experienced lawyer who understands the retirement living industry and who can talk you through the process and explain what to expect moving forward.
At Attwood Marshall Lawyers, it is at this stage that our team would take over and facilitate the transaction right through until you move into the facility. Your lawyer can review all the documentation and will look for consistencies between the preliminary disclosure statement and the contract itself. It is our goal to make sure that what has been offered to you initially is what is reflected accurately in the Retirement Village Agreement.
Our team will also provide advice regarding the village rules, and ensure you are aware of your rights and obligations. If necessary, we can help you negotiate any amendments that you feel are necessary to make to the agreement.
Step 4: Sign the agreement. Once the agreement is signed, it will be sent back to the lawyer that acts on behalf of your chosen village. The agreement will be checked and if everything is in order, arrangements will be made to settle the matter. This works very much in a similar way to settling a conveyancing matter, which usually involves liaising with the lawyer acting for the village and coordinating the sale of any other property, which is often the case when people choose to sell their primary place of residence in order to facilitate their entry into a retirement village.
What you need to know about Retirement Village Agreements
Retirement Village Agreements can be incredibly detailed and complex documents. For many, the documents can be overwhelming and difficult to understand, particularly for people who are not used to reading through lengthy contracts. Retirement Village Agreements can be over 100 pages long and cover a broad range of content from contractual terms and conditions, residents’ rules and obligations, living and service costs, and exit strategies.
These are very important legal documents that can have serious consequences for you, your partner or spouse, and for your estate. It is essential that you obtain legal advice before you sign anything.
Costs of entry and exiting the facility are extremely important to understand and discuss with your lawyer so that you can facilitate these costs and not be caught off guard if your circumstances change down the track.
Playing by the rules
Every facility has its own set of residents’ rules that apply to living within the retirement village. Some examples of the rules that may apply to you when you move into a retirement village include:
- Visitors: if you are going to have a visitor come and stay with you, there may be restrictions around how long your visitors can stay or the times they may be able to visit. There may also be a procedure you must follow to notify the village of any visitors staying with you.
- Décor: You may be restricted when it comes to how you decorate your unit and there may be rules around hanging photos and paintings on the wall.
- Alterations to your living space: There may be rules around what alterations you can do to improve or refurbish your unit.
- Gardening and outdoor areas: You may be required to follow certain rules regarding gardening, and you may be restricted with what you can and cannot hang in your outdoor space.
- Pets: You may be restricted as to if you are permitted to have pets in the facility.
These are just a few examples of what rules may apply. They may seem trivial, however they are important to understand as if you find yourself in a situation where you have broken one of the rules, your agreement could potentially be terminated and you could even be asked to leave the facility.
Don’t underestimate a Retirement Village Agreement or dismiss the importance of getting the right legal advice
We’ve often heard people say that it isn’t necessary to spend the money upfront to have a suitably qualified lawyer review retirement living documents and agreements prior to signing and entering a facility. Many clients tell us that the salespeople in the retirement village tell them they don’t need to get legal advice!
Time and time again we have seen the consequences play out when someone has received an unexpected bill or has tried to get out of their agreement, without understanding what their strict contractual and legal obligations are. These situations can be extremely costly to rectify when there is a signed legally binding agreement in place. It usually boils down to the resident not fully understanding what they have agreed to by signing the agreement in the first place.
We receive many enquiries from retirement village residents who have not sought initial advice prior to entering a facility, but who would like to exit the facility early. They are shocked when they are given an estimate of the fees to exit the facility, which can be anywhere up to 35% of what they paid to move in. If this is in your agreement and you have signed the contract, there really is very little that can be done at this stage to avoid having to pay the exit fees if you need to change facilities or want to move elsewhere.
Recently, we had a client who had been living in a retirement village for a short period of time. Her health care needs had changed during this short period and the facility was not able to provide the higher-level of care she needed. This meant she needed to relocate to a facility that could meet her needs. Unfortunately, she was not aware that she needed to pay for reinstating her unit to the condition it was in prior to her moving in, as well as refurbishment costs. She suffered a significant bill shock when she received an invoice for the outstanding amount, which estimated at around $45,000.
If you get the right advice from the outset, you can ensure you understand your rights and obligations and what fees may apply if your circumstances change.
Retirement and estate planning
A Retirement Village Agreement won’t affect your Will directly, however entering into a retirement village will affect your estate. When you enter a retirement village, you often sell your home to fund your entry into the facility. When you decide to move out of the village, or if you pass away, the village will take an exit fee, which can be a substantial sum, in addition to any other refurbishment or administrative fees and legal costs. If you have a modest estate, these fees can have a significant impact on what you plan to leave to your beneficiaries.
It is important to review your estate plan if you are entering into a retirement village so that these fees and any sale of your other assets can be taken into consideration and planned for properly.
It is also important to make sure you have an up to date Enduring Power of Attorney, and/or Appointment of Enduring Guardian, as your health care needs change in the event someone needs to step in and handle your affairs on your behalf. Most care facilities insist you have these documents in place before you move in, but it is very important to have your affairs in order and obtain legal advice from lawyers experienced in this area. If you don’t have a properly prepared Enduring Power of Attorney in place, if you suffer an injury or illness that leaves you unable to make your own decisions due to lack of mental capacity, you could have your affairs handled by the Public Trust Office (QLD) or the NSW Trustee and Guardian. We have previously discussed the problems in having these government bodies acting on your behalf.
- QLD Public Advocate Review exposes Public Trustee’s failings and conflicts of interest
- Why we are seeing an increase in Public Trustee disputes
- Don’t blindly trust the Public Trustee – there are alternative options available
- Families forced to take legal action against Public Trustees
- Unfair commissions and financial mismanagement – NSW Trustee & Guardian cannot be trusted
- There’s no such thing as a free Will – beware of the Public Trust Office
Attwood Marshall Lawyers want to help you plan for your retirement
Our experienced Property Law and Aged Care team can assist with all facets of your transition to retirement living. We can help you with selling your home, right through to relocating to a retirement village or aged care facility, and updating your estate planning documents, to ensure your best interests are always protected.
We want to ensure that you make an informed decision about your living and care arrangements and that you understand the agreement you are entering into. We want to help you avoid getting any nasty surprises down the track and will make your transition to retirement living stress-free.
If you would like to find out more about getting advice on a retirement village agreement, contact Property & Commercial Law Department Manager, Jess Kimpton on direct line 07 5506 8214, mobile 0432 857 300 or email firstname.lastname@example.org or free call 1800 621 071 any time.
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