Retirement villages are an option for older people who are still active and who wish to scale down but want to live in a community and have access to the services that the village offers.
The financial arrangements regarding retirement villages are governed by various laws, but are still very tricky. We recommend that before you commit to any village, you employ a lawyer to go through the contract with you. You really do need to know what you are getting into.
What information can I ask the retirement village for?
Retirement villages are required by law to give you a fact sheet which addresses 39 issues within seven days of you asking for it, as well as an expanded disclosure document within 21 days of you asking for it. They are also required to produce an annual report, which must be audited unless an annual general meeting vote has agreed not to audit the report.
What are some of the issues I need to clarify?
Here is a list of some of the main issues you will need to consider:
- Is the retirement village registered?
- Who owns the title? You or the village owner?
- Are you leasing or are you an owner?
- How much must I pay, and is this in the form of a loan?
- Is the loan repayable?
- What deductions are there?
- How long after I leave the village or die will the loan be paid to me or my estate?
- After I sign, is there a cooling off period in case I change my mind?
- What system is in place to deal with disputes and complaints?
- Is there a management fee? Is it capped? Can this fee be deferred?
- What maintenance and repair costs must I contribute to?
- Do I have a right to a capital gain if I re-let the property or sell it?
- Can I appoint an independent agent to sell or lease my unit?
- Are any commissions payable? To whom?