The Retirement Villages Amendment Bill 2008 was passed by both Houses of Parliament last Thursday 4 December 2008 (the last sitting day of Parliament this year).

The Act will commence on a date to be appointed by proclamation which is expected to follow the release of the associated regulations which should be finalised in the first quarter of 2009.

The changes listed below are generally good news for Operators and should be taken into account in the preparation for the introduction to the amendments. The next steps for Operators are to:

  • revise their standard Resident Agreement;
  • prepare a draft "general inquiry document"; and
  • consider budget and management procedures required by the Act.

As the Act will affect all contracts and to that extent will act retrospectively, it will be important to take into account the reforms for all future resident agreements and transactions.

The Act differs from the original version introduced to Parliament on 26 June 2008 in the following respects:

  • The original version limited operators who charged ingoing contributions or departure fees to funding a maximum of 50% of the costs of capital maintenance from the capital works fund and recurrent charges. This limitation has been removed.
  • The original version required operators to obtain residents' consent to capital maintenance works. This requirement has been diluted to requiring operators to address capital maintenance in the proposed annual budget.
  • The original version limited the proportion of the costs payable by operators for capital maintenance within the residences of registered interest holders, including registered proprietors, shareholders in company title schemes, leases for a term of 50 years or leases for the life of the lessee under which the lessee was entitled to a proportion of capital gains. The capital maintenance costs were payable by the operator and the registered interest holder in the same proportions as they would share any capital gain. This apportionment has been removed.
  • The original version prohibited the funding of maintenance or replacement of roads or footpaths within a retirement village from the capital works fund or recurrent charges. This prohibition has been removed.
  • The original version allowed the residents of a retirement village to pass a special resolution consenting not to receive proposed annual budgets. Although residents may still give such consent, it need not be obtained by special resolution, but may only be given if the recurrent charges collected for the year do not exceed $50,000. This mirrors the $50,000 limit, after which operators must issue quarterly accounts and have their annual accounts audited.
  • The original version limited the period for which recurrent charges payable by a registered interest holders after vacating their residence to 42 days. Registered interest holders paying recurrent charges after vacating their premises at the commencing date of the amending Act, will only be required to pay recurrent charges for 42 days after the commencing date.
  • The original version replaced the concept of "capital replacement fund" with a "capital works fund". Any capital replacement fund was to be dissolved on the commencement of the relevant sections and the money to be held by the operator or used to fund the operator's proportion of any capital maintenance or replacement. The money from any dissolved capital replacement fund is now simply to be paid to the operator.
  • Miscellaneous drafting and transitional amendments have also been made.

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The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.