Statutory charge over retirement village land

About this article

This article explains what a statutory charge is, what purpose a statutory charge has under the Retirement Villages Act 1999 (RV Act), and how it operates.

This article applies only to residents who do not hold a leasehold interest or a freehold interest in an accommodation unit.  Put simply, this article is not for you if you own the freehold of your unit or have your right to reside secured by a registered lease.

This information is given only for your interest.  It does not imply any financial consequences to residents.

Definitions

Retirement village or village – unless otherwise stated, all references to a retirement village or village means a retirement village where residents do not hold a leasehold interest or a freehold interest in an accommodation unit.  Residents in a non-freehold village or a non-leasehold village would usually have a licence over an accommodation unit.

Licence – for an accommodation unit in a retirement village, is an agreement between the resident and the scheme operator which provides a level of security for the residents right to reside.  A licence provides less security for a resident, than a registered lease.

Registered – unless otherwise stated, means registered under the Land Titles Act 1994 in the Titles Registry of the Department of Natural Resources, Mines and Energy.

Background

Immediately the chief executive of the department administering the RV Act registers a retirement village scheme, a statutory charge is created over the retirement village land, except where the chief executive decides it should not apply because the operator –

• is established for a religious, charitable or community purpose; and
• is of good standing in operating retirement villages; or
• because of other exceptional circumstances the scheme operator provides another security to secure the rights of a resident under a residence contract.

Where a statutory charge is created, the charge must be registered in the Titles Registry on the title to retirement village land.

So, if your village is not exempt, a statutory charge would have been created over the land for your village when the scheme was first registered by the DH&PW, and it would appear as a registered notation on the land title.

What is a statutory charge, generally?

Firstly, a statutory charge is not a ‘cost’ or a ‘fee’ imposed on a person by a statute (an Act or a law).

A statutory charge is a legal mechanism whereby, under an Act, a legal interest in land is created at the time, and for the purposes, stated in the Act.  Usually to provide a mechanism to enforce an action or to provide a security.

As an interest in land is created, the interest may be registered on the land title over which the statutory charge was created.  As such, all persons who have an interest in the land affected by a statutory charge, or otherwise specified in the Act, are also afforded the protections, rights and remedies provided by the registering Act.

Statutory charges are not unique to the law relating to the establishment and operation of retirement villages.   There are numerous other laws whereby statutory charges are created over land for various reasons.

Purpose of statutory charge over retirement village land and how it operates

How a statutory charge operates

As stated above, a statutory charge is created over retirement village land for a non-exempt scheme at the time when a new scheme is registered in the DH&PW.

The DH&PW will lodge the statutory charge for registration on the title for retirement village land.  The registered statutory charge may be seen by any interested person searching the title for the village land.

Purpose of statutory charge under the RV Act

Residents who have a licence over their unit rather than holding a freehold interest or a registered leasehold interest in their accommodation unit require security more than that provided by the licence.  Therefore, the RV Act provides that the statutory charge secures the right of each resident of the retirement village to which it relates, to –

• occupy the resident’s accommodation unit
• use the village’s communal and recreational facilities
• be paid an exit entitlement the resident is entitled to under the residence contract on termination of the contract.
• Protection from other claims

A registered statutory charge created under the RV Act has priority over other registered securities* – for example, a registered mortgage.  In these cases, no matter when a mortgage was registered the registered statutory charge has priority over the mortgage, which means an exit entitlement would be paid before any claims made by a mortgagee.

*Exceptions to the above are where another charge created, under a Commonwealth law or another law of the State have priority over a statutory charge created under the RV Act.

Enforcing a statutory charge

The RV provides that a resident who is denied a right mentioned above may, in certain circumstances, apply to the District Court for an order that the retirement village land be sold.   Where relevant, other persons including other residents who have sufficient interest, may be joined as a party to the application.

Extinguishing and releasing a statutory charge

To provide further protection and security for residents who have the benefit of a statutory charge, the RV Act allows a statutory charge to be extinguished or released in only very limited circumstances.