Check-list for residents departing leasehold or loan/licence villages
(all sections quoted are from the Retirement Villages Act 1999)
- The resident should request the scheme operator to provide an estimate of exit entitlement which must be provided within 14 days of the request (s 54).
- Provide a notice of termination to the scheme operator giving one month’s written notice (s 52). If you have a solicitor acting on your behalf, the notice should include the name and address of the solicitor who will be acting on your behalf
- A right to reside in a unit or villa is terminated on the death of the resident (s 55). However, if the lease/licence is held in joint names, the other person can continue to reside, but the lease/licence document should be amended. A document should be lodged with the Titles Office recording the change.
- After the resident has vacated the unit and handed over all keys, the reinstatement process commences. Within 30 days after the termination date, the former resident and the scheme operator are to negotiate in good faith and if possible agree in writing on the necessary reinstatement work (s 58). If the former resident or their representative and scheme operator cannot agree on the reinstatement work, s 58 provides the means by which this can be resolved. The scheme operator must ensure the work is completed within 90 days of the vacation date, or another date to which both parties agree (s 59).
- 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).
- The scheme operator must advise the former resident of all sales enquiries, and steps being taken to promote a sale each month, until a sale and settlement occur (s 65).
- Residents should be aware of the differences between reinstatement and refurbishment. The former covers the work and costs necessary to bring the unit back to the standard which existed at the commencement of the outgoing resident’s lease/licence. However, many scheme operators carry out improvements to lift the standard to compare with newer units available on the market. The cost differential between the agreed reinstatement cost and the cost of the proposed refurbishment would normally be borne by the scheme operator (s 62).
- Where the capital gain is shared with the scheme operator the cost of the reinstatement is shared in the same proportion. However, where the residents retains 100% of the capital gain they may be responsible for the full cost of reinstatement (s 62).
- 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 subject to the scheme operator agreeing to this deferred payment arrangement (s 104).
- Legal advice should be sought.