Reselling the right to reside
When establishing the price at which an accommodation unit is to be resold the former resident and the scheme operator are obliged to agree the figure as set out in Section 60 of the Retirement Villages Act.
Scheme operators have taken to offering new residents a variety of alternative contracts for the same accommodation unit (in one known case four different alternatives) in order to meet market expectations or in order to achieve sales using a different financial model.
By way of example a unit previously sold freehold may be offered for resale on a leasehold contract or a unit previously held on a full capital appreciation may be offered on a non-capital appreciation contract to a new resident.
When a former resident identifies an intention to resell their accommodation unit on a different contractual basis to that which they hold on the unit they should question on what basis their exit entitlement will be paid. The former resident should insist that their exit entitlement is based on the unit’s value if it were to be sold on the same contractual basis on which they acquired it.
If an agreement cannot be reached with the scheme operator the former resident is advised to insist that the scheme operator obtains a valuation (on the same contractual basis that the former resident acquired the right to reside) as set out in Section 60 (2) of the Retirement Villages Act.
Members are urged to copy this page and leave it with your documents for whoever may be dealing with the disposal of the right to reside in your unit at some time in the future.