In your later years of life, entering a retirement village may seem idyllic. You would expect a village to provide security, companionship, support and health care on-site, as well as removing the obligation to maintain and repair your own home. Retirement villages, however, do vary and there are a few things you should be aware of. The Retirement Villages Act 2003 is the law with which retirement villages and residents must comply.
Every retirement village must provide:
- A disclosure statement which provides the ownership, management, services, facilities, financial information about entry fees, on-going fees and exit fees
- A cooling off period (minimum 15 working days) in which you can cancel an agreement you have signed (the occupation right agreement) and receive your money back.
When considering a retirement village package you should be familiar with the following legal terms:
- Licence to occupy: gives you the right to live in a unit without ownership rights. This usually means you cannot borrow against or mortgage the value of your unit
- Unit title: confers an ownership interest to you. Some villages give you the option to become a body corporate member (you’re responsible for the maintenance of shared areas)
- Cross lease: you share ownership of the land and its units, and you grant leases to one another to live there. Pay special attention to the lease agreement including information about the length of the lease and the use of the land, and
- Lease for life: gives you a lease which remains in place during your lifetime or until you leave the village.
When choosing a retirement village, ask for a copy of the village rules as these may include policies for visitors, pets, parking curfews, redecoration and additions to your unit, renting your unit and gardening. Talk to existing residents and find out if the village has a residents’ association and if it meets regularly with management. You need to know that a village is financially secure and will continue to provide the accommodation, facilities and services that you pay for. Assess the village owner’s reputation, whether the village’s financial accounts are combined with other villages, what a village’s insurance covers and what premiums and excesses are payable. Make sure you understand the entry and on-going costs including the cost of any on-going fees, who pays for outgoings such as rates, insurance, telephone and power and the policy for passing on increases costs.
Lastly, remember there are alternatives to retirement villages. You could modify your home with access ramps and rails, get home help, downsize to a smaller home, take a ‘reverse mortgage’ to free up capital, take in a boarder, or move in with your family or rent to free up your funds.
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