The importance of referring to your residence contract

About this article

Your residence contract provides details about your rights and obligations and also the scheme operators rights and obligations.

Many issues may be resolved by simply referring to the documents that comprise your residence contract.

This article explains that ‘no-one-size -fits-all’ when attempting to determine a particular resident’s lawful rights and obligations for their retirement village living arrangements.

Your residence contract is a vitally important document and must be kept in a safe place.  Also, it is wise to inform your family where it is kept.

What is a residence contract?

A residence contract is 1 or more written contracts, about residence in a retirement village, entered into between you, the resident, and the scheme operator.

Documents that comprise your residence contract may include, but are not limited to –

  • a public information document (PID)
  • a written contract
  • a licence
  • a lease
  • a sub lease
  • an ancillary contract which is dependent on or arises out of, the making of the residents contract – for example, a loan agreement

At the end of this article there is a list of some of the matters that must, by law, be included in a residence contract.

You must refer to all relevant documents

Where there is more than one document that provides your rights and obligations you may have to read these together to ascertain the appropriate information – for example, clauses which provide a right to privately find a buyer of your unit may be contained in both the public information document and the lease.

Why do I need to refer to my residence contract?

There are many reasons why you should refer to your residence contract, here are four –

  1. there are significantly different operational arrangements across different villages
  2. each residence contract may and probably will be different to other contracts
  3. a residence contract may provide more beneficial conditions than those provided by Part 3 of the RV Act
  4. some provisions of the RV Act or former RV Acts apply to residence contracts signed on only certain dates.

1. Different operational arrangements in villages

You must refer to your residence contract as the RV Act allows for various operational arrangements for retirement village schemes.  As such, various provisions of the RV Act will not apply to some villages due to their operational arrangements.  However, your rights and obligations will be set out in your residence contract.

Schemes may operate under, but not limited to, the following arrangements –

  • not-for-profit or ingoing contribution below market value
  • leasehold
  • licence
  • freehold.

2. Different conditions stated in different residence contracts

There are many and varied conditions which may be included in a residence contract, provided the included conditions do not contravene the provisions of the RV Act or another relevant Act.

The RV Act and the Retirement Village Regulation lists specific matters which must be included in the residence contract.  It does not specify the actual substance to be included but rather only that the details must be included.  In other words, the RV Act only provides the headings with the details to be added for each contract.  To explain further, the following simple example is given –

Every residence contract must include details about the exit entitlement (s 45(1)(f) of the RV Act), but –

  • one residence contract states ‘the exit entitlement will be Nil’ as there is a 100% exit fee (yes, they do exist); while
  • in another, the exit entitlement for a certain year of residency is stated as a percentage of the ingoing contribution.

3. Residence contract providing more beneficial conditions than the RV Act

Section 42 of the RV Act provides that a scheme operator may agree in the residence contract, or otherwise, to conditions more beneficial to the resident or former resident than the provisions of Part 3 – Residence Contracts – for example, s 58 of the RV Act puts an obligation on the former resident to reinstate the unit to the same condition it was when they moved in – however, some residence contracts do not require any manner of reinstatement work but rather the scheme operator is responsible for this.

4. Different versions of the Retirement Village Act will apply

The date on which your residence contract was signed is another important matter.  Some amendments to the RV Act including those about reinstatement work and/or renovation work relate to residence contracts entered into during only certain periods.  The relevant dates are as shown below.

Residence contract entered into –

  • before 1 July 2000
  • from 1 July 2000 to 14 March 2006
  • on or after 15 March to 31 January 2019
  • on or after 1 February 2019

In all cases you must refer to your residence contract, and to the provisions of the Act in force at the time your residence contract was signed to ascertain your specific rights and responsibilities.

What if I am unable to understand my residence contract?

You may wish to ask your village manager to explain matters.

You can seek advice from your solicitor.

ARQRV may be able to assist you, if you are an ARQRV member.

Some matters included in a residence contract

  • the ingoing contribution payable under the contract
  • the exit fee payable under the contract
  • the resident’s exit entitlement
  • the services charges
  • the amounts payable, and when the amounts are payable, by the resident for the maintenance reserve fund for the retirement village
  • the insurance for the retirement village, and insurance for which the resident is responsible
  • all conditions precedent to the resident’s right to reside in the retirement village
  • the resident’s right to resell the right to reside in the accommodation unit
  • the resident’s entitlement to audited and unaudited financial statements for the village
  • the dispute resolution process established under the RV Act
  • the statutory charge, if relevant to the resident’s title to, or interest in, the accommodation unit
  • the resident’s and scheme operator’s rights to terminate the contract
  • the funds the scheme operator is required to keep
  • the retirement village facilities
  • the retirement village land
  • whether the resident and the scheme operator are to share any capital gain or capital loss after the resident’s right to reside in the unit is terminated and, if so, how it is to be shared
  • the services to be supplied to the resident, including—
    • services funded from the general services charge; and
    • services funded from the personal services charge; and
    • services, if any, available on a fee-for-service basis.