Reinstatement work –
contracts made between 15 Mar 2006 & 31 Jan 2019
About this article
This article relates to residence contracts made from 15 March 2006 but before 1 February 2019.
It does not include matters about a resident’s relative who has a right to reside in the accommodation unit where reinstatement work is required or refurbishment work is proposed.
This article provides information that explains the difference between reinstatement and refurbishment.
Important information – your rights and obligations may differ from those explained in this article owing to your village’s specific operational arrangements (e.g. you live in a freehold village) or the conditions stated in your residence contract (e.g. you may not be responsible for reinstatement costs) (see article – The importance of referring to your residence contract).
Former RV Act – the Retirement Villages Act 1999 in force 31 January 2019.
Resident – includes, in this fact sheet and where relevant, a representative of a resident – for example, the executor of the deceased former resident’s estate.
Termination date – means the date a resident’s right to reside is terminated by death or by voluntary notice given to the scheme operator. There are other times a right to reside is terminated but these are not covered here.
Vacation date – means the date the former resident vacates the accommodation unit.
Background and law
Sections 58, 59, 61 and 62 of the former RV Act provide that contracts may contain conditions which require for reinstatement work of former residents’ units where rights to reside are terminated under contracts signed before 1 February 2019.
The number of alternatives created by differing residence contracts makes a ‘one size fits all’ statement impossible to write when the objective is to optimise the outgoing resident’s financial recovery.
What is reinstatement work?
The dictionary of the former RV Act provides reinstatement work as –
The replacements or repairs that are reasonably necessary to be done to reinstate the accommodation unit to a marketable condition having regard to—
(a) the condition of the accommodation unit at the start of the former resident’s occupation; and
(b) the general condition of other accommodation units in the retirement village that are comparable with the accommodation unit.
In layman’s terms this means that, if the residence contract does not provide more beneficial conditions, the accommodation unit must be returned to its former condition but does not involve any manner of improvement above the unit’s former condition at the time the resident’s occupancy commenced.
Reinstatement may include but is not limited to, and taking into account where it is relevant, returning the following to its former condition, by –
- replacing fixed appliances including oven, stove top and dishwasher
- repairing and repainting of all interior walls and ceilings
- replacing worn carpet, broken or chipped floor tiles, other worn floor coverings, and damaged basins or toilets
- replacing worn or damaged fixtures or fittings – for example, taps, light switches or light fittings
- replacing damaged or worn window latches, screens and window covering or furnishings.
Reinstatement relates to only the interior unless there is accelerated wear and tear, or damage to the exterior of the unit causes by the resident – for example, the garage door has been dented by a resident or a guests vehicle.
How is necessary reinstatement work decided?
Unless a residence contract provides more beneficial conditions relating to reinstatement work, the former RV Act provides the following –
- the former resident and scheme operator must within 30 days after the termination date, negotiate in good faith and, if possible; agree in writing on any reinstatement work.
- where agreement is not reached within the 30 days:
- the scheme operator must give the former resident an itemised quote* for doing that the scheme operator considers to be reinstatement work; and
- the former resident must give an itemised quote* for doing what work the former resident considers to be necessary
- where agreement is still not reached after the exchange of quotes, the former resident or scheme operator may make an application to the tribunal for an order about reinstatement work to be done.
*Quotes must be from an appropriately qualified tradesperson and must be given within 44 days after the termination date.
When reinstatement work to be completed
Where a residence contract requires the resident to pay the costs of reinstatement work, and the scheme operator and the resident agree on the reinstatement work, the former RV Act provides the work must be completed within –
(a) 90 days after the date the resident vacates the accommodation unit; or
(b) another day agreed to by the scheme operator and the resident.
Where the tribunal has made an order relating to reinstatement work, the work must be completed within the period fixed by the tribunal.
Who pays for reinstatement work?
Unless the residence contract offers more beneficial conditions, the former RV Act provides –
- for leasehold or licence units, the resident must pay:
(a) for the full cost of reinstatement work because of accelerated wear and tear or deliberate damage to the interior, and for other reinstatement work, in the same proportion as the residence contract provides the resident and the scheme operator share the capital gains; or
(b) Nil, where the resident is not entitled to any part of capital gains. In these cases, the scheme operator must pay for other reinstatement work out of the capital replacement fund.
- for freehold units, the resident must pay the full costs of labour and materials for the work.
What is refurbishment work?
The term ‘refurbishment’ (as opposed to ‘renovation’ having a different meaning under the current Act) is an informal term and is sometimes used to describe remedial work proposed by a scheme operator, to the be paid by a former resident, in the following circumstances:
- where there is no requirement for reinstatement at the former residents expense; or
- where the work is in addition to agreed reinstatement work.
There is no provision in the Act for former residents to pay for work of this type. Therefore, there is absolutely no obligation for former residents to agree on this type of work. However, it may improve the saleability of a unit, but residents must ensure there is tangible benefit to them. It is also important to identify who is paying for what.
Terms other than ‘refurbishment’ are sometimes used by scheme operators to describe this type of work.