Check-list for residents departing freehold villages
(all sections quoted are from the Retirement Villages Act 1999)
- The residence contract applicable to residents who hold freehold title in registered retirement villages may vary considerably from the residence contract applicable to leasehold or loan/licence villages.
- Within 30 days after the termination date, the outgoing resident and the scheme operator are to negotiate and agree in writing on the proposed resale value of the unit (s 60).
- Generally, resident contracts grant the operator up to six months for exclusive rights of selling, before an unrelated party can be engaged.
- Exit fees are generally included in the resident’s contract and are payable to the scheme operator when a sale is concluded. Some contracts may grant all or part of the capital gain arrived from the sale to the scheme operator. Other contracts provide for all of the capital gain to go to the resident.
- Similar to a leasehold contract, the outgoing resident pays for all reinstatement costs (s 61). In a freehold village, the outgoing resident is responsible for any additions or improvements.
- Body corporate fees and other monthly expenses usually paid by the resident must continue to be paid until a sales contract is finalised, unless there is some other arrangement contained in the residence contract.
- The former resident may be wholly or partially responsible for GSC for up to nine months after vacating, these ongoing unpaid fees may be accrued as a book debt and set off against the resident’s exit entitlement as an interest-free loan (s 104).
- Legal advice should be sought.