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Issues to Be Considered When A Retirement Village Contract Ends

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Accredited Property Specialist, Garry Pritchard, in his paper Issues to Be Considered When A Retirement Village Contract Ends, discusses the following scenario:

Let us assume that one of your relatives has either died, or moved out of a retirement village into a nursing home. When he entered the village on 28 March 2006 he paid $250,000 to go in and was told that when he left the village the operator would deduct 5% a year for a maximum of five years. He left the village on 28 August 2010 and the village has found a new resident who wants the unit and is prepared to pay $375,000.

The village operator has given you a document setting out the calculation of the amount which the village says is to be returned to your relative. The calculation is attached to this paper. How do you understand the document that you have been given? This paper will consider each of the items in the document and the underlying law behind each item.

I emphasise that this is an example and in each case you have to look at the village contract to work out how much the resident or their estate should receive. Sometimes the departure fee is based on the amount of the ingoing contribution being paid by the next resident rather than the ingoing contribution paid by the departing resident.

The Retirement Villages Act was amended in March 2010 and the amendments generally apply to all existing contracts.

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