Vacating a retirement village unit

About this article

This article provides general information for residents and their family about what may be required when the last resident of a unit permanently vacates and all residents’ right to reside in the unit, are terminated.

The resident/s may be leaving or have left to go into another type of accommodation (including care), or they have died.

Advice

As you can see from the list below there are many regulations and requirements when a retirement village unit is to be ‘resold’.  Also, a contract may be different to other contracts within the village.  It is therefore important to obtain proper advice that is specific to your resident contract and circumstances.

Disputes

Members of ARQRV members or a family member may contact ARQRV where help is needed with an issue relating to your rights or obligations when leaving your unit.  ARQRV will continue working for a member until the exit entitlement is paid.

A dispute may also be referred to the Queensland Civil and Administrative Tribunal for resolution.

Matters which need to be attended to

The residence contract (or, if the contract is silent, the Retirement Villages Act 1999) fully sets out the entitlements (rights) and responsibilities (obligations) of both the resident and the village operator when the resident terminates their right to reside in their unit.  Usually, the following matters will need to be attended to and are generally included in the contract:

  • terminating the right to reside
  • agreeing on resale value
  • resident’s right to resell the right to reside in their unit
  • sales offers
  • updating agreed resale value every 3 months
  • exit fee payable
  • resident’s exit entitlement and when payable
  • how capital gains are shared between the resident and the village operator
  • amount of ongoing fees payable
  • details and costs of reinstatement of the unit required to be completed at the expense of the resident
  • details and costs of renovation of the unit required by the village operator at the expense of the resident
  • costs of selling.

In addition to the above matters, different arrangements for a resident to have a right to live in their unit (right to reside) will require further legal procedures, fees and charges for the resale – for example, the resale of a freehold unit together with a right to reside therein is quite different to the resale of only a right to reside in a licenced unit.

Terminating the right to reside

Before your right to reside (and unit, if freehold) is resold, your residence contract must be terminated.   You can terminate your residence contract by giving a one-month written notice to the village operator.

Most scheme operators have a process that is to be followed and will also provide the necessary paperwork to be completed.

Also, when a resident dies, their right to reside in the unit, is terminated. 

Agreeing on resale value

Within 30 days from the date it was decided you would leave the village (i.e. the termination of your right to reside in the village), you and the operator must agree on the unit’s resale value.

If you and the operator cannot agree on the resale value, the operator will need to get a valuation from a valuer within 14 days.

The valuation is taken to be the agreed resale value of the right to reside for the unit.

Resident’s right to resell the right to reside in their unit

If the operator has not resold your unit in the village within 6 months and you haven’t been paid your exit entitlement, you can contact a real estate agent to act on your behalf.  Your residence contract may provide a shorter time frame for this.

Your residence contract may also allow you to privately find a buyer.

Sales offers

If you haven’t been paid your exit entitlement and your unit remains unsold, the operator must promptly give you details of each offer to purchase your right to reside.

You can also ask the operator to give you information about all sales enquiries of your right to reside, what they are doing to promote the sale of your right to reside, and details of all other rights to reside in the village.  The operator must give you this information as soon as is practicable after the end of each month that your unit remains unsold.

Updating agreed resale value every 3 months

If your right to reside has not been sold within 3 months of your termination date, and you haven’t been paid your exit entitlement, you and the operator are to reconsider the resale value of your right to reside at least every three months.

If you both agree, even if it’s the same value, you must do this in writing.

If you and the operator cannot agree on the resale value, the operator will need to obtain a valuation from a valuer within 14 days.

The valuation is taken to be the agreed resale value of the right to reside for the accommodation unit.

Exit fee payable

An exit fee is an amount you agreed to pay the operator in the residence contract, either when:

  • you leave the village or
  • the contract selling your right to reside is completed.

The exit fee is calculated as at the day you leave the village.

The fee is usually a percentage of the ingoing contribution amount for each year (or part thereof) that the resident/s occupied the unit. This amount is retained by the village operator out of the funds on settlement of the resale or at the time provided by the contract.

Resident’s exit entitlement

An exit entitlement is the amount remaining after the deductions from your ingoing contribution which the village operator must pay you (or your estate) when the right to reside in your unit is resold.

The entitlement must be paid on or before certain timeframes.  For more information, refer to article When exit entitlement payable

Exit statement

The operator must provide a statement with the exit entitlement showing how the entitlement was worked out, including the following amounts:

  • the exit fee
  • accrued general services charges
  • outstanding services charges
  • maintenance reserve fund contributions
  • expenses that you must pay relating to the resale of the right to reside (reinstatement or renovation of the unit, and the cost of a valuer if engaged)
  • capital gain/loss
  • any other payments stated in the contract.

Capital gains

Depending on the terms of your residence contract, you may be entitled to all or a share of any capital gain.  You also may be responsible for all or a share of any capital loss made on the resale of your unit.  Your exit entitlement will be adjusted, accordingly.

Ongoing fees payable

You may have to pay general services charges and maintenance reserve fund contribution in full for up to 90 days after you leave the unit, unless the unit sells earlier.

After the 90 days, you and the operator share the cost of the charge in the same proportion as you will share the proceeds of the unit resale.  You pay your share for 9 months or until the unit is sold, whichever comes first.

If your unit has not been sold within the 90-day period, the operator may accrue your proportion of the general services charge as a book debt and reduce your exit entitlement amount.  The operator is not allowed to charge interest on the accrued amount.

If the unit is freehold, you may also have to pay body corporate fees.

Reinstatement work for the unit

You are obliged by the Retirement Villages Act 1999 to pay for some level of reinstatement to your unit, unless your resident contract provides more beneficial conditions.  The level of reinstatement is determined by the date of your contract.

Contracts before 1 Feb 2019

You may be obliged to pay expenses for replacements or repairs that are reasonably necessary to get your unit back to the condition it was when you moved in – for example, if the kitchen appliances and floor covering were new when you moved in, you must pay to have them replaced.  Similarly, the interior of the unit may require repainting.

Contract on and from 1 Feb 2019

You may be obliged to pay expenses for replacements or repairs that are reasonably necessary to get your unit back to the condition it was when you moved in, apart from fair wear and tear and renovation work.  Fair wear and tear includes a reasonable amount of wear and tear to items commonly used in a retirement village.  The entry condition report and exit condition report will be used to determine wear and tear

Renovation work proposed by the village operator

Contracts before 1 Feb 2019

In this case you are not obliged to pay for any work proposed by the scheme operator, other than reinstatement work.  However, you may agree to further work and time to complete the work to improve the unit’s saleability, but you must weigh up outlays and benefits.

Contract on and from 1 Feb 2019

The scheme operator may propose to conduct renovation work for your unit.

If your contract states that you and the operator must share any capital gain on the sale of the unit, and your contract does not provide more beneficial conditions, you must share the cost of renovation work in the same proportion as the capital gain.  Otherwise, the operator pays for renovation work.

Before doing any proposed renovation work in or affecting your unit, the operator must:

  • agree with you on the date the work will be completed; and
  • ensure the work is completed by that date.

*Renovation work means replacements or repairs other than reinstatement work, and is proposed by the village operator.

Costs of selling

The scheme operator must not charge a fee, charge or commission for selling a former residents right to reside in their unit.  However, a residence contract may include that the costs/outlays for the sale of the right to reside, may be charged.

If you engage a real estate agent, you will have to pay to the agent the costs and commission for the sale.

The former resident and scheme operator must share the costs for a valuer, where engaged, in the same proportion as they are to share the gross ingoing contribution on the sale, as provided for in the residence contract.

A residence contract usually states that operators will deduct your exit fees and other costs from the amount you are owed when your right to reside is resold.