Friday 29th April 2022 from 9am

Wills & Estates Senior Associate Debbie Sage will join Robyn Hyland to talk about the importance of planning for end-of-life care and what options are available.

Retirement Village Agreements – get legal advice and make an informed choice!


Attwood Marshall Lawyers Property and Commercial Law Associate Mieke Elzer recently joined Robyn Hyland for “Law Talks” on Radio 4CRB to discuss what people need to consider when moving into a Retirement Village. It’s essential to get legal advice from a law firm experienced in aged care before signing a retirement village agreement; what may seem like a simple contract should not be underestimated!

Entering a retirement village is a major lifestyle and financial decision, with each village offering unique contracts, tenure types, unit styles, facilities, and services. Costs associated with entering, living in, and leaving a retirement village can also vary significantly, making it essential to weigh the options carefully.

Before delving into the intricacies of retirement village agreements, it’s essential to grasp the distinctions between retirement villages, nursing homes, and over 55s villages.

Retirement villages provide assisted living for those who can still live independently but may benefit from some level of support and amenities. These types of villages can provide low-care arrangements like meal preparation or laundry services, to higher levels of support if required. They also offer additional services such as social and recreational activities, making them great social hubs for seniors.

Nursing homes, on the other hand, cater to those requiring higher levels of care and are suited to those who have reached a stage in life where they can no longer live independently.

Over 55s villages are different again, offering residents a resort-style lifestyle and larger villas or apartments. Often these villages have five-star facilities such as swimming pools and club houses. The rule that you must be over 55 to live there means the resident will be surrounded by other people nearing retirement or who have already retired. 

Understanding these differences is paramount in making informed choices about retirement living arrangements.

In this blog, we’ll explore the process of entering a retirement village arrangement, and discuss the essential considerations regarding contracts, finances, and options available if you have a change of heart after moving in.

Initial steps to take when moving into a retirement village

Moving into a retirement village involves several key steps that individuals should follow to ensure a smooth transition. Here’s what you need to know:

  1. Finding the right village: Visiting several villages in your desired area allows you to compare options thoroughly. Although you may think you have found the one you love, each visit provides valuable insights, helping you get a feel for the atmosphere and operations of each community.  
  2. Understanding your financial needs: Seek financial planning advice to determine the best option for your financial situation. Retirement village contracts vary widely, so it is essential to find the best option that aligns with your financial goals and preferences.
  3. Securing a place: Once you’ve chosen a village, express your interest in securing a place. The facility will provide documents, including a disclosure statement, which contains key information about the village and its offerings. Individuals should review this statement carefully, and if satisfied, sign the disclosure statement. Signing the disclosure statement acknowledges your acceptance of its terms, however, it does not commit you to anything at this stage. This step triggers the village to provide you with the proposed formal agreement.
  4. Getting advice before making it official: When the retirement village issues the formal retirement village agreement, it is at this stage that you should engage a lawyer to review the contract thoroughly. Retirement Village Agreements are extremely complex documents, and legal advice is crucial to ensure you understand the terms and protect your interests. Collaboration between a property lawyer and your financial planner is essential to ensure the facility and the agreement are the right fit for you, saving you from unexpected surprises and potential disputes.

Obtaining financial and legal advice before entering a retirement village agreement is crucial not only for understanding the terms but for avoiding common pitfalls many individuals encounter when navigating this process independently.

One significant financial consideration is what impact moving into a retirement village will have on your Centrelink allowances. For instance, selling one’s family home to fund the move can lead to a surplus of funds. Depending on the amount left, this surplus may affect the individual’s eligibility for certain pensions, highlighting the importance of carefully assessing one’s financial situation before making any decisions.

Another key consideration often overlooked at the early stages isvillage rules. Like buying property under a strata title, where there are body corporate by-laws you must abide by, when considering a move into a retirement village you need to become familiar with the retirement village rules. This set of rules sets out certain standards of behaviour and obligations that residents must adhere to. They may cover various aspects such as pet ownership, visitor policies, and rules regarding parking and commons areas. Overlooking or underestimating the importance of these rules can lead to unforeseen restrictions and discomfort after moving in.

It’s crucial to thoroughly review and understand the village rules of your chosen facility to ensure they align with your lifestyle preferences and needs. By considering these factors early in the decision-making process, you can make more informed choices and select a retirement village that suits you best.

Different types of agreements

Retirement village contracts can vary quite significantly, so it is good to understand what options there are when it comes to paying for the facility, and when you must make those payments.

There are three types of contracts, called “Now”, “Later”, and “Bond”. These options dictate when and how much the resident’s ingoing contribution will be, and how much they, or their estate will get back when the contract comes to an end.

Beside the different types of contracts, there are also different types of payments involved.

Firstly, we have an entry payment, otherwise known as an Ingoing Contribution or loan amount. This is the amount the resident pays to the village operator when they enter into the village contract. The resident, or their estate, will receive the ingoing contribution back when the resident leaves the Village, less a departure fee and some administrative fees. The resulting amount that the resident, or their estate, receives, is referred to as the exit entitlement. The relationship between the ingoing contribution, the departure fee, and the exit entitlement is where the varying contract types make a big difference. No one contract type is better. The key point here is that the resident opts for the contract type that best suits their financial needs. The different contract types are outlined below.

Once the contract has commenced, the resident will also have recurrent monthly charges. These can be broken down into: general services, which go towards the upkeep of the premises and the village as a whole; optional services, for things such as meals, laundry; and personal services, for example personal care assistance or visits from a nurse.

The first and most common option is the “Later” option. This option offers the resident the lowest ingoing contribution on the basis that they pay a higher management fee when the contract comes to an end. the departure fee is calculated on a pro-rata basis depending on how long the resident has lived at the village, capped at 35 per cent of the ingoing contribution once the resident has lived at the village for five years or more.

For example: a resident who paid $300,000 as their ingoing contribution, whose Contract comes to an end six years after it commenced, will be entitled to $195,000 less some administrative fees when the contract comes to an end. That is $300,000 less $105,000 being 35% of the ingoing contribution.

The “Now” option sees the resident pay their departure fee upfront, but at a discounted rate of 20 per cent of the ingoing contribution.

For example: the resident from the above scenario, whose unit is valued at $300,000 will pay a higher ingoing contribution of $360,000 under the Now option. They will however be entitled to the full $300,000, less administrative fees, upon exiting, meaning a lower net amount.

The “Bond” option is where the resident pays a larger ingoing contribution.

For example: under the Bond contract a resident buying into the previous unit valued at $300,000, would pay $420,000 along with a 3 per cent non-refundable establishment fee, with the assurance that their full ingoing contribution will be returned when the contract comes to an end. This option works for people who have the upfront funds or are looking for ways reduce their capital funds to remain eligible for Centrelink payments.

Change of heart – what to do if a resident wants to exit the village

There are two stages the resident can exit a village agreement if for any reason they decide they do not want to live there, without incurring an departure fee.

The first three months is considered a settling in period. If someone moves in and they decide they are not entirely happy, and it is within the first three months of living at the village, the individual is entitled to a full refund of their ingoing contribution, less some administration fees.

There is also a 6-month move in guarantee. This means the resident can move out within the first 6 months if they change their mind or decide they do not want to live there, and they will receive their ingoing contribution money back, again less some administration fees.

There is also provision to terminate a contract if the resident moves in only to find out that the information, they were given in the disclosure documents and contract was false or misleading.

In our experience, very few people need to rely on these periods if they have done their homework and due diligence prior to selecting a village, and usually are very happy and comfortable in their chosen village.

Don’t forget to update your estate plan (i.e. your Will and Enduring Power of Attorney)

A Retirement Village Agreement won’t affect your Will directly, however entering into a retirement village will affect your estate. 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, or Appointment of Enduring Guardian. As your health care needs change it is important you have someone you trust that can step in and handle your affairs on your behalf. Most care facilities insist you have these documents before you move in.

Attwood Marshall Lawyers – helping people at every stage of life

Our experienced Property Law and Aged Care teams 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. When providing advice, it is our intent to help you avoid getting any nasty surprises down the track and to make your transition to retirement living stress-free.

If you would like to find out more about retirement village agreement, please contact our Property & Commercial Law Department Manager Taylah Lein on direct line 07 5506 8208, mobile 0484 281 196 or email

You can visit our lawyers at any of our conveniently located offices at Coolangatta, Kingscliff, Robina Town Centre, Southport, Brisbane, Sydney, or Melbourne.

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Mieke Elzer - Lawyer - Property & Commercial

Mieke Elzer

Property & Commercial

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The contents of this article are considered accurate as at the date of publication. The information contained in this article does not constitute legal advice and is of a general nature only. Readers should seek legal advice about their specific circumstances. 

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