The recent ABC Four Corners investigation (watch here)into the retirement village juggernaut, Aveo, has highlighted the need for anyone looking to enter a retirement village contract to obtain legal advice.
In New South Wales, while a standard form of contract is required pursuant to the Retirement Villages Act 1999 (NSW), the contracts can differ depending on the type of tenancy taken up (ie. strata, leasehold, licence or other) and retirement village operators are still able to add additional clauses. Further, there are no regulations about fees and operators can therefore charge whatever fees they like, including entry fees, ongoing accommodation and care fees and exit fees.
These contracts can be quite complex and some may have difficulty in understanding fully the terms of the contract and the obligations imposed on them personally and the operator.
In the investigation, it was uncovered that some Aveo contracts have exit fees as high as 40% of the value of the units after 2 years. For a unit valued at $600,000, this would result in an exit fee payable of $240,000 after just 2 years of residency, on top of regular fees paid for accommodation and care throughout the residency period. Such fees can cause real financial trouble if the resident is not aware of the fees or does not understand how they are calculated and when they will be incurred.
A retirement village lifestyle has the potential to provide older Australians with safety, security and more freedom than they would otherwise have if they lived on their own and in their own home, but it is vital that potential residents understand the terms of the written contract and do not simply rely on what they are told by the operator or current residents. It is also important to ensure that the level of care and facilities to be provided are very clearly stated so as to avoid unnecessary additional costs or disappointment.
If you need assistance with a retirement village contract, please feel free to contact us for tailored legal advice.