Retirement villages in Victoria operate under specific legislation that protects the rights of residents. Simply click on any of the headings below to reveal information that will help explain more about what's involved in retirement village living.
Retirement villages in Victoria are regulated by specific legislation, being the:
- Retirement Villages Act 1986 (Vic);
- Retirement Villages (Contractual Arrangements) Regulations 2006 (Vic);
- Retirement Villages (Records and Notices) Regulations 2005 (Vic); and
- Estate Agents (Retirement Villages) Regulations 2006 (Vic).
Under this legislation, the land comprising each retirement village must be noted on the land registry maintained by the Registrar of Titles as being used as a retirement village. You should check that the land comprising any village you are considering moving into is noted on that register as being used as a retirement village.
The retirement villages legislation applies to:
- residents, prospective residents and former residents of retirement villages; and
- the owners and managers of retirement villages (referred to in the legislation as owners and managers respectively).
Retirement villages with 'freehold' title (see Item 3) are also regulated by the Owners Corporations Act 2006 (Vic). The Sale of Land Act 1962 (Vic) also regulates the process of entering into contracts for freehold title.
General 'fair trading' legislation also applies to retirement villages in Victoria. This includes the:
- Fair Trading Act 1999 (Vic); and
- Competition and Consumer Act 2010 (Cth).
Moving into a retirement villageMore
2. Information you must receive
At least 21 days before you sign a contract to enter a retirement village, you must be given:
- a Disclosure Statement in the form required under the Act (containing information about the village location, the notation of the village on the land registry and any mortgages or agreements over the land that may impact on the rights of residents to live in the village);
- a copy of any 'residence contract' you must sign to become a resident (see Item 4);
- a copy of any 'management contract' (see Item 4) or other contract relating to services the manager will provide to you;
- a copy of any other agreement about payment of an in-going contribution or recurring charges for goods or services;
- a prescribed list of 'Important Information for Prospective Residents'; and
- a copy of any village rules or by-laws and any document in which you will agree to abide by them.
The owner/manager cannot enter into a contract with you for at least 21 days after you receive these documents. This is so you have time to consider them before deciding to sign a contract.
Comparing the documents provided for different villages will assist you to choose which village you want to live in.
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 - generally for a term of between 49 and 199 years); and
- licence (where you sign a contract that gives you a long-term right to occupy a unit in the village).
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 contracts which 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 contract in Victoria, so the terms of the contracts will differ between villages and will depend upon the ownership and management structure of each village.
At a minimum you will have to sign a residence contract, which is a contract under which you obtain the right to live in your unit. This will be:
- for freehold villages - a contract of sale to purchase your unit from the current owner of the unit;
- for leasehold villages - a lease for a term of between 49 and 199 years; or
- for licence villages - a contract giving you a long-term right to occupy your unit.
The legislation specifies certain provisions that must be included in a residence contract.
For freehold villages you may also have to sign a management contract setting out the services you will receive from the manager and your rights and obligations while living in the village, and a mortgage and/or caveat over your unit to secure the manager's right to receive the fees you are obliged to pay.
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.
If you ultimately sign a residence contract and pay a deposit under it, an estate agent or lawyer acting for the owner of the unit must hold it as stakeholder under the contract until a party becomes entitled to it under either the retirement villages legislation (for leasehold or licence villages) or the Sale of Land Act 1962 (Vic) (for freehold villages).
6. In-going contribution/ purchase price
You will usually have to pay a one-off lump sum to secure your right to live in the unit. This will take the form of either:
- for leasehold and licence villages - an in-going contribution paid to the owner; or
- for freehold villages - the price of the unit you purchase from its current owner (either the village owner or a current resident who wants to sell his or her unit).
If you need to sell your existing home in order to pay the in-going contribution or purchase price, the owner or current resident (as the case may be) may agree to make your residence 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 State Revenue Office to purchase a freehold unit. The amount of duty will vary depending on the purchase price.
8. Cooling-off period
After signing a residence contract you have the right to cancel it and receive a refund of all money paid under the contract within a cooling-off period of 3 business days from the date you sign the contract (except if you are purchasing a unit in a freehold village and you obtained legal advice before signing the contract).
If you rescind the contract within the cooling-off period the other party must refund all money you have paid under the contract, however they may deduct an amount equal to 0.2% of the in-going contribution/purchase price or $100, whichever is greater.
Living in a retirement villageMore
9. Your rights and obligations
Your contracts 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 obligation of the owner/manager to set the maintenance charges payable by residents in each financial year in accordance with a budget (see Item 10);
- your right to enforce your residence contract against a new owner of the village if the ownership of the village changes; and/li>
- your right to receive certain information about the village's financial affairs.
10. Fees and charges you must pay
While living in the village you will be required to pay certain fees to the owner or manager for the services and facilities provided. These charges include:
- maintenance 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 personal services you have chosen to receive individually (such as laundry, unit cleaning or the provision of meals).
The maintenance charges for each financial year will be set at the beginning of the year in accordance with a budget. Generally, the charges must not increase from one year to the next by more than the increase in the Consumer Price Index for that year, except if the excess is approved by a majority resolution of the residents (ie more than 50% voting in favour) or the residents committee, or if it results from increases in particular costs such as rates and taxes on the village land, or salaries and wages.
The manager is not liable for failing to provide particular goods or services to residents if the costs of doing so are above the maximum maintenance charge it is permitted to levy and the manager has acted reasonably.
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 your residence/management contract to see how this will affect the amount of the maintenance charges you will be required to pay.
In much the same way as if you owned a home, your contract may also require you to pay for:
- the costs of maintenance, repairs and replacements for your unit and any items that you own inside the 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 under the owners corporation legislation, as well as local council rates and water charges payable for your unit.
11. Village rules
Residents may make, revoke or alter 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). A term of your contract may require you to comply with these rules.
12. Resident input and participation
At leasehold and licence villages, residents may hold their own election and form a 'residents committee' for the purpose of representing the interests of residents at the village. The residents committee has the right to call meetings of the residents and approve maintenance charge increases above the limit imposed by the legislation (see Item 10).
For freehold villages a separate residents committee cannot be formed but the owners corporation for the village formed under the Owners Corporation Act 2006 (Vic), of which all residents will be members, is given the same rights as the residents committee by the retirement villages legislation.
The manager must hold an annual meeting of the village residents after the end of each financial year to report on matters relating to the operation of the village, including presenting financial statements for the last year, forecasts for the new year (such as maintenance charge increases) and the status of resident complaints raised during the last year.
13. Dispute resolution
All villages must have a policy for dealing with:
- resident complaints about the management of the village; and
- disputes between residents,
and must keep a record of all such complaints and disputes.
If you have a dispute with the owner or manager of the village, you may also apply to the Victorian Civil and Administrative Tribunal for assistance to resolve the dispute. The Tribunal may appoint a mediator to assist you and the owner/manager 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 following the hearing.
Leaving a retirement villageMore
14. Terminating your contracts
If your wish to terminate your contract and leave the village, your contract will set out the process for doing so. That process will involve:
- for freehold villages - selling the unit; or
- for leasehold and licence villages - terminating your lease or licence by giving notice to the owner.
For leasehold and licence villages, the owner has rights under the legislation to terminate your contract and require you to leave the village on certain limited grounds - for example, if you commit a substantial breach of your lease or licence.
15. Reinstatement work
Your contract may require you to perform work on your unit when you leave the village that will assist in it being marketed to prospective new residents. For example, you may be required to restore the unit to the same condition it was in when you first moved in. Alternatively, the contract may allow the owner or manager to carry out that work and require you to pay all or a share of the costs.
At a minimum you will usually be required to pay for any damage you have caused to the unit or work required due to accelerated wear and tear.
16. Finding a new resident
Your contract will set out the process that will apply for finding a new resident for your unit, including any rights you have to appoint an estate agent. You may be required to pay a fee to the owner or manager for performing work to assist in finding a new resident.
17. What you will receive when you leave the village
For leasehold or licence villages, your contract will usually give you a right to receive a refund of your in-going 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 in-going contribution, that right is protected by a 'charge' on the village land created by the legislation which prevails over most other interests in the village land.
Your residence contract will specify the time within which the owner must refund your in-going contribution. Under the legislation this cannot be any longer than 14 days after a new resident moves into the unit or purchases the right to do so or, if the contract does not give you certain rights in relation to the re-marketing of the unit to prospective new residents, 6 months after you give vacant possession of the unit.
Certain departing residents have the right to ask for early payment of some or all of their refund if required for the resident to move into an aged care facility.
For freehold villages you will not receive a refund of an in-going contribution from the manager as you will have paid a 'purchase price' to purchase the unit, rather than an in-going contribution. However you will be able to sell your unit to a new resident who the manager 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.
18. What you must pay when you leave the village
Your contract will specify any amounts you must pay to the owner or manager when you leave the village. The most common payments are:
- a deferred management fee (which will be calculated in the way set out in your contract);
- for freehold villages - a share of the capital gain;
- reinstatement costs (see Item 15);
- any sale or marketing fees or costs you must pay under your contract;
- a contribution to any capital or long-term maintenance fund for the village;
- 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 in-going contribution and any capital gain share you receive. For freehold villages, the manager will require you to make these payments out of the purchase price you receive from the new resident.
Where to find more informationMore
Consumer Affairs Victoria (which is a division of the Department of Justice) is responsible for the regulation of retirement villages in Victoria. More information about retirement villages may be obtained from Consumer Affairs Victoria's website at www.consumer.vic.gov.au. Consumer Affairs Victoria's pocket guide to retirement village living in Victoria ('Retirement Villages: A Guide to Choosing and Living in a Retirement Village') is available on that website.
The Victorian Civil and Administrative Tribunal has jurisdiction for retirement village disputes. For information about the Tribunal, visit www.vcat.vic.gov.au.
For information about stamp duty, see the State Revenue Office website at www.sro.vic.gov.au.