When exit fee is payable

About this article

This article is general information only.  It briefly explains when a former resident’s exit entitlement is payable and provides information about the buyback of freehold units.

Except for those few expressly exempt resident-operated retirement villages, this article applies to every residence contract for any accommodation unit (non-freehold unit (i.e.) and freehold unit) where an exit entitlement is payable, irrespective of when the residence contract was signed.

Definitions

The tribunal is the Queensland Civil and Administrative Tribunal (QCAT).

Non-freehold units are units held under arrangements other than freehold, and include leasehold units, licenced units and units held under other similar non-freehold arrangements.

Non-freehold unit or freehold unit

The scheme operator must pay the former resident the exit entitlement on the earliest of the following days –

• the day stated in the residence contract
• 14 days after the settlement date
• no later than 18 months after termination* of the right to reside where the right to reside or unit remains unsold
• the day fixed by the tribunal where the operator has been granted an extension.

Where a former resident has died, the exit entitlement must be paid by the later of:

• the due date mentioned above; or
• the day that is 14 days after the operator is shown the probate of the former resident’s will or letters of administation of the former resident’s estate.

Additional requirements for buyback of freehold unit

Where a freehold unit remains unsold the scheme operator must first buy the accommodation unit from the resident in time to pay the exit entitlement as stated above – that is, no later than 18 months after termination of the right to reside.

To meet the 18-month deadline, the scheme operator must enter into a contract to complete the purchase of the unit by the latest of –

• 18 months after termination* of the right to reside
• if the former resident has died, 14 days after the operator is shown the deceased residents probate or letters of administration
• the day fixed by the tribunal.

You may be required to reimburse the village operator for operator’s legal costs in relation to the buy-back.  The scheme operator must not charge a sales commission on the buy-back.

Extension of time for scheme operator to pay exit entitlement

A scheme operator may apply to the tribunal to extend the time for payment of the exit entitlement. The tribunal must be satisfied that:

• the scheme operator is unable to sell the right to reside or the unit
• the scheme operator is likely to suffer undue financial hardship
• extending the payment time would not be unfair to the former resident.

The tribunal may order the operator to pay the exit entitlements by instalments.

* Note – the 18- month period commences only when the right to reside is terminated.  The period does not commence when a resident arranges with the scheme operator to only market a right to reside.