Retirement village operators should act now to ensure
they are ready to implement the new contract and disclosure
requirements effective 1 October 2013.
In a move designed to increase transparency in the retirement
village industry and to simplify and streamline the contractual
arrangements for entry into and exit from retirements villages in
NSW, the NSW Government has introduced amendments to the Retirement
Villages Regulation 2009, which will govern contracts entered into
on and after 1 October 2013.
Three new prescribed documents have been introduced, which will
be compulsory to issue to prospective occupiers of retirement
The General Inquiry Document provides a basic
explanation about the retirement village, including financial
matters such as current recurrent charges, departure fees and
details on whether residents share in any capital gains.
The Disclosure Statement must be given to
potential residents at least 14 days before entry into a retirement
village contract. This document gives a more detailed overview of
matters such as the management, services offered, financial matters
and dispute resolution arrangements. Importantly, it also
highlights the prospective residents' rights to view village
documents, such as accounts, budgets and income and expenditure
If the information in the disclosure statement is materially
false or misleading, a resident may, within three months of
commencing occupation, apply to the Consumer, Trader and Tenancy
Tribunal for an order permitting the resident to rescind the
The Standard Retirement Village Contract has
been drafted in plain English so as to allow prospective occupiers
to clearly identify their rights and obligations and to compare
costs and conditions between retirement villages. There have been
five template contracts for the five most common village types
developed and these are available from NSW Fair Trading.
Areas of confusion in the past, such as around financial matters
including identification of the services included in the recurrent
charges paid by residents, charges for optional services, the
capital gain or loss structuring, departure fees and the sale of
units, have been clarified, as have the operators' and
residents' respective responsibilities to undertake repairs and
The purpose of the standard contracts is to make it easier for
prospective residents to make comparisons and to reduce complexity
for operators, which should deliver greater confidence in the
Retirement village operators may insert additional terms in the
retirement village contract, but they must ensure that those terms
do not contravene the Retirement Villages Act 1999 and are not
inconsistent with a term of the prescribed retirement village
contract, which will mean that careful drafting is required.
Penalties may be imposed on operators who enter into a village
contract for which the standard form of contract is prescribed
knowing that it is not in, or to the effect of, the standard form,
and the contract will be void to the extent to which it is not in,
or to the effect of, the standard form.
Village operators, which include entities who manage or control
the retirement village, should review their suite of
contracts to ensure compliance with the new regulatory
Clayton Utz communications are intended to provide
commentary and general information. They should not be relied upon
as legal advice. Formal legal advice should be sought in particular
transactions or on matters of interest arising from this bulletin.
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