New South Wales

1. Legislation

Retirement villages in New South Wales are regulated by specific legislation, being the:

• Retirement Villages Act 1999 (NSW); and
• Retirement Villages Regulation 2009 (NSW).

Under this legislation, the land comprising each retirement village must be noted as retirement village land on the Land and Property Management Authority's register. You should check that any village you are considering moving into is noted as retirement village land on that register.

The retirement villages legislation applies to:

• residents, prospective residents and former residents of retirement villages; and
• the owners and operators of retirement villages (referred to in the legislation as operators).

Retirement villages with 'freehold' title (see Item 3) are also regulated by:

• if the village is a 'strata scheme' - the Strata Schemes Management Act 1996 (NSW); or
• if the village is a 'community scheme' - the Community Land Management Act 1989 (NSW).

General 'fair trading' legislation also applies to retirement villages in New South Wales. This includes the:

• Fair Trading Act 1987 (NSW); and
• Competition and Consumer Act 2010 (Cth).

The above legislation is available at www.legislation.nsw.gov.au apart from the Competition and Consumer Act 2010 (Cth), which is available at www.comlaw.gov.au.

2. Information you must receive

Before you sign any contracts to enter a retirement village, the operator must give you a Disclosure Statement for the village. The Disclosure Statement must be in the form prescribed by the New South Wales Government and must set out information about the village such as the accommodation offered, the costs and fees residents must pay, the facilities and services available for residents' use, the contracts that must be signed to enter the village (see Item 4), and various other matters.

The operator cannot enter into a village contract with you for at least 14 days after you receive the Disclosure Statement.

Comparing the Disclosure Statements for different villages will assist you to choose which village you want to live in.

The operator must also give you a copy of each village contract that you must sign to become a resident. The operator cannot enter into a village contract with you for at least 14 days after you receive those copies. This is so you have time to consider them before deciding to sign a contract.

The operator must also make available a range of documents for prospective residents to inspect at the village or at a NSW business address of the operator, including the village rules, plans of the village, recent financial statements of the village and (for freehold villages) documents relating to the relevant strata or community scheme.

If you do ultimately sign a village contract with the operator, the Disclosure Statement you were given, a copy of the village rules and a condition report for the relevant unit (if you are not a registered interest holder - see Item 17) must be attached to it.

3. Types of retirement villages

Retirement villages differ in relation to the types of title that residents obtain when they purchase a right to occupy the village. The most common types of title are:

• freehold (where you purchase the legal title to the unit and occupy the unit as its owner);
• leasehold (where you sign a long-term lease over the unit that will be registered on the title to the village land - generally for a term of 99 years); and
• licence (where you sign a contract that gives you a long-term right to occupy a unit in the village but the licence is not registered on title).

There are various other (less common) types of title, such as company share title and title arising from a unit trust.

You should seek legal advice about which type of title is best for you.

4. Contracts you will be required to sign

If you decide to move into a retirement village, you will be required to sign 1 or more village contracts. A village contract will:

• give you a right to occupy the unit you have chosen;
• give you a right to use the shared village facilities and to access the services provided at the village;
• set out your rights and obligations while living in the village as a resident and the fees and charges you must pay; and
• set out what will happen when you leave the village.

There is no standard or prescribed form of village contract in New South Wales, so the terms of the village contract will differ between villages and will depend upon the ownership and management structure of each village. However, the legislation specifies certain provisions that must be included in a village contract and other provisions that must not be included.

The contracts you sign will usually be:

• for freehold villages - a contract of sale to purchase your unit from the current owner of the unit, a management agreement or services agreement setting out your rights and obligations while living in the village, and a charge over your unit to secure the operator's right to receive the fees you are obliged to pay;
• for leasehold villages - a lease which will be registered on the title to the village land; or
• for licence villages - a contract giving you a long-term right to occupy your unit.

Any village contract under which you obtain the right to occupy your unit (ie a lease, licence, or contract to purchase a freehold unit) is called a residence contract. Any village contract with the operator that sets out the services you will receive at the village is called a service contract. A residence contract and a service contract may be contained in a single document.

Additional contracts may be required depending on the village - for example, you may have to sign a separate licence if you wish to secure the use of a garage, car space or storage locker at the village.

5. Waiting list fee, holding deposit, deposit under village contract

If there is a waiting list for the village, the operator may ask you to pay a fee of up to $200 to be placed on the list. You must be given a copy of the waiting list policy and a receipt when you pay the fee. If you decide not to become a resident, you may ask for it to be refunded and the operator must do so within 14 days. If you do become a resident, the fee paid must either be deducted from any ingoing contribution payable, or if there is no ingoing contribution payable, it must be refunded when you enter into a village contract with the operator.

If you pay the operator a holding deposit to hold the unit for you for a period of time, the operator must ensure it is held in trust and refunded to you within 14 days if notified that you do not wish to sign a village contract.

If you ultimately sign a village contract and pay a deposit under it, the operator must ensure it is held in trust until a party becomes entitled to it under the legislation.

6. Ingoing contribution/ purchase price

You will usually have to pay a one-off lump sum to secure your right to occupy the unit. This will take the form of either:

• for leasehold and licence villages - an ingoing contribution paid to the operator; or
• for freehold villages - the price of the unit you purchase from its current owner (either the operator or the current resident who wants to sell his or her unit).

If you need to sell your existing home in order to pay the ingoing contribution or purchase price, the operator or the current resident (as the case may be) may agree to make your village contract conditional upon you selling your existing home first.

7. Stamp duty

There is usually no stamp duty for leasehold or licence villages, but you may have to pay stamp duty to the Office of State Revenue to purchase a freehold unit. The amount of duty will vary depending on the purchase price.

8. Cooling-off period

After signing a village contract you have the right to cancel it and receive a refund of all moneys paid under the contract within a cooling-off period of 7 business days, starting at midnight on the day you give a copy of the contract that you have signed to the other party. Your cooling-off period is waived if you commence living in the unit.

9. Settling-in period

After signing a village contract you have the right to terminate it within a settling-in period of 90 days, starting on the date you occupy the unit or the date you become entitled to do so under your residence contract (whichever happens first).

If you terminate your village contract during the settling-in period all recurrent charges you have paid to the operator must be refunded and you can only be required to pay the following when leaving the village:

• a fair market rent for the period you occupied the unit;
• repair costs for damage to the unit in excess of fair wear and tear;
• the costs of additions or alterations made to the unit at your request; and
• a reasonable administration fee of up to $200.

If you are not a 'registered interest holder' under the legislation (see Item 15), the operator must then refund your ingoing contribution within 14 days after you terminate your contract.

10. Your rights and obligations

Your village contract will set out most of your rights and obligations while living in the village.

Other rights and obligations are set out in the legislation, including:

• the operator's obligation to maintain property in the village in reasonable condition (except property owned by a resident, common property under a strata scheme and association property under a community scheme) and rights regarding a capital works fund for long-term maintenance requirements;
• the operator's obligation to set the general recurrent charges payable by residents in each financial year in accordance with a budget (see Item 11);
• your right to enforce your village contract against a new operator of the village if the ownership or management of the village changes;
• your right to receive certain information about the village's financial affairs; and
• a range of rights and obligations about your behaviour in the village and your use of your unit.

11. Fees and charges you must pay

While living in the village you will be required to pay to the operator certain fees for the services and facilities the operator provides. These charges include:

• recurrent charges, which are recurrent (eg monthly or fortnightly) charges that you pay as a contribution to the costs of operating and maintaining the village, such as the costs of providing the common services and facilities and carrying out required maintenance; and
• charges for any optional services you have chosen to receive individually (such as laundry, unit cleaning or the provision of meals).

The recurrent charges for each financial year will be set at the beginning of the year in accordance with a budget. Generally, the residents must approve the budget and any proposed variation in the recurrent charges, and if they do not do so, the operator may apply to the Consumer, Trader and Tenancy Tribunal for an order approving the budget. The residents' approval is not required if the recurrent charges under the proposed budget will:

• stay the same;
• vary in accordance with a fixed formula set out in the residents' village contracts; or
• vary otherwise than in accordance with a fixed formula but will not increase by more than the increase in the Consumer Price Index for the previous year.

If there is a deficit in the village accounts in a financial year, the operator may carry it forward to the next financial year's budget if the deficit resulted from increases in certain limited costs, such as rates and taxes on the village land and salaries and wages.

If you are considering moving into a village that is still being developed and not all units or community facilities will have been built by the time you move in, you should check the residence contract to see how this will affect the amount of the recurrent charges you will be required to pay.

In much the same way as if you owned a home, your village contract may also require you to pay for:

• the costs of maintenance, repairs and replacements for your unit (if you do not own it) and any items that you own inside your unit; and
• any services separately provided to your unit, such as water, telephone and electricity.

For freehold villages you must also pay levies to the owners corporation (in a strata scheme) or community association (in a community scheme) under the relevant legislation, as well as local council rates and water charges payable for your unit.

12. Village rules

For leasehold or licence villages, residents may make, change or revoke village rules or by-laws (eg about disposal of refuse, noise, parking of motor vehicles, etc). They can do this by making a special resolution at a meeting of the residents (ie 75% voting in favour). The operator has the right to object by applying to the Consumer, Tenancy and Trader Tribunal. The legislation generally requires residents and operators to comply with these rules.

For freehold villages, the by-laws of the strata scheme or community scheme will apply and the residents cannot make separate village rules.

13. Resident input and participation

Residents may hold their own election and form a 'residents committee' for the purpose of interacting with the operator about the village. The legislation sets out the rights and obligations of the residents committee in dealing with the operator.

The operator must hold an 'annual management meeting' of the village residents within 4 months of the end of each financial year to report on matters relating to the operation of the village and to allow the residents to ask questions.

14. Dispute resolution

You may apply to the Consumer, Trader and Tenancy Tribunal for an order about any dispute you have with the operator. The Tribunal may appoint a conciliator to assist you and the operator to reach an agreement. If an agreement is still not reached, the Tribunal may then hold a hearing. It may make a range of binding orders after hearing the dispute.

15. 'Registered interest holder' residents

Some of your rights and obligations when leaving the village are determined by whether or not you are classified under the legislation as a registered interest holder resident.

You will be a registered interest holder resident if your interest in your unit is one of the following types:

• freehold;
• company title (ie if you have a right to occupy the unit as a result of having acquired shares in the company that owns or leases the unit in a 'company title scheme'); or
• leasehold where your lease is for a term of at least 50 years and your village contract entitles you to at least 50% of the 'capital gain' (see Item 19).

16. Terminating your village contract

You may terminate your village contract and leave the village at any time by:

• for freehold villages - selling the unit;
• for company share villages - selling the shares; or
• for leasehold and licence villages - permanently vacating the unit.

For leasehold and licence villages, the operator may terminate the village contract and require you to leave the village if it obtains an order from the Consumer, Trader and Tenancy Tribunal. Such an order may be granted only on certain limited grounds set out in the legislation - for example, if you breach your village contract or a village rule or cause serious damage or injury to a person in the village.

17. Reinstatement, refurbishment

If you are not a registered interest holder resident, the legislation requires you to reinstate your unit as nearly as possible to its condition when you moved in (as set out in the original condition report - see Item 2), fair wear and tear excepted.

Registered interest holder residents may be obliged to carry out such reinstatement under their village contract.

In any event you are not responsible for any 'refurbishment' work (being work exceeding that required to reinstate your unit to the above standard).

18. Finding a new resident

If you are a registered interest holder resident you have the right to appoint a selling agent of your choice to find a new resident and set the new ingoing contribution or purchase price payable by the next resident of your unit. You may choose to appoint the operator as the selling agent.

For other residents, the process of finding a new resident will be set out in the village contract.

19. What you will receive when you leave the village

For leasehold or licence villages, your village contract will usually give you a right to receive a refund of your ingoing contribution. You may also receive a share of the increase in the value of your unit since you first moved in - known as the capital gain.

If you have a right to receive a refund of your ingoing contribution, that right is protected by the registration of your lease with the Department of Lands (for leasehold villages) or a 'charge' on the village land created by the legislation which prevails over most other interests in the village land (for licence villages). The charge also applies for leasehold villages for residents who are not registered interest holders.

Your village contract will specify the time within which the operator must refund your ingoing contribution after you terminate your village contract. Generally, this cannot be any longer than 14 days after a new resident occupies or purchases the right to occupy your unit or, if you are not a registered interest holder, 6 months after you give vacant possession of your unit to the operator.

For freehold villages, you will not receive a refund of an ingoing contribution from the operator as you will have paid a 'purchase price' rather than an ingoing contribution. However you will be able to sell your unit to a new resident who the operator approves. The new resident will pay you the agreed purchase price for the unit and that price will be paid to you when you settle the sale with the new resident.

20. What you must pay when you leave the village

Your village contract will specify any amounts you must pay to the operator when you leave the village. The most common payments are:

• a departure fee (which will be calculated in the way set out in your village contract and must be calculated on a daily basis);
• for freehold villages - a share of the capital gain;
• the reinstatement costs for which you are liable (see Item 17);
• your share of the operator's costs of finding the new resident, calculated in accordance with the legislation;
• any unpaid services charges (including any services charges accruing after you have left the unit that the legislation says you are responsible for);
• administration fees; and
• legal fees.

For leasehold or licence villages, these payments will be deducted from, or set off against, your refund of the ingoing contribution and any capital gain share you receive. For freehold villages, the operator will require you to make these payments out of the purchase price you receive from the new resident.

21. Websites

NSW Fair Trading (which is a division of the Department of Finance and Services) is responsible for the regulation of retirement villages in New South Wales. More information about retirement villages may be obtained from NSW Fair Trading's website at www.fairtrading.nsw.gov.au. NSW Fair Trading's pocket guides to retirement village living in NSW ('Retirement Village Living') and moving into a retirement village ('Moving into a Retirement Village?') are available on that website.

The Consumer, Trader and Tenancy Tribunal has jurisdiction for retirement village disputes. For information about the Tribunal, visit www.cttt.nsw.gov.au.

For information about stamp duty, see the NSW Office of State Revenue website at www.osr.nsw.gov.au.