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Amendments clear up retirement village confusion


The Queensland Government’s new legislation aims to give a new retirement village resident greater clarity about the agreement they are entering into, writes Julie McStay.

Confusion over the rights and responsibilities of retirement village residents and operators has been at the heart of recent media controversies in the aged care sector. In Queensland, the State Government has taken steps to bring some clarity to the situation.

Julie McStay

In a move to minimise the likelihood of misinterpretations occurring between new residents and operators of retirement villages, the government has adopted new legislation that significantly amends the Retirement Villages Act 1999.

The intention is to give a potential resident greater clarity about the agreement they are entering into with a village operator and the obligations that exist on both sides of the agreement.

While the new requirements will place an initial administrative burden on village operators, the long term benefit should be a reduction in resident complaints about the contracts they have signed.

Some of the key changes include:

  • A village comparison document (VCD) will replace the current public information document (PID). The VCD is to be published on an operator’s website (every operator must maintain a website) and be included in any promotional material that is given to prospective residents. The VCD provides information about the scheme to potential residents including types of accommodation, facilities and services, and amounts payable by or to residents or the operator.
  • A new prospective costs document for the residence contract provides a summary of the estimated costs of moving in, living in and leaving the village.
  • A new process for operators and residents to complete condition reports on units at both commencement and termination of residence contracts. 
  • Operators must not enter into a residence contract until 21 days after the operator has given the prospective resident the residence contract, VCD and prospective costs document. However, a prospective resident may sign a residence contract less than 21 days after receiving the documents if they have signed a waiver stating they have received legal advice from a lawyer about entering into the contract. Cooling-off provisions in their current form remain available to residents to rescind residence contracts.
  • Operators are required to pay residents their exit entitlement 18 months after the residence contract is terminated, unless to do so would cause the operator undue hardship. This change will apply to new and existing residence contracts, that is, where a resident has already left the village the 18 month period for payment of the exit entitlement will start from the date of commencement of the amended act. An operator must pay the exit entitlement at the end of the 18 month period and if the parties do not agree on the resale value, the operator must obtain a valuation not more than 14 days before the payment date.
  • If the resident does not leave the unit in the same condition (except for fair wear and tear and agreed renovations) as when they entered the unit, the operator may carry out reinstatement work and claim the cost from the resident.  A new definition of “reinstatement work” in the amended Act establishes the “same condition” test. There appears to be no restriction on the operator and resident agreeing on entry that any reinstatement costs will be deducted from the exit entitlement.

The operator and former resident must agree on the date when renovation work to the unit will be completed. The cost of the work is paid by the parties in the same proportion they share in any capital gain on the sale of the unit. The definition of “renovation work” is replacement and repairs other than reinstatement work.

If the operator fails to complete the renovation work by the agreed date, the former resident may obtain an order that the operator pay the exit entitlement. The former resident has to show they were materially prejudiced by the failure.

These new processes do not apply for residence contracts in force before the commencement of the amended Act.

  • The operator and resident can now make submissions (and respond to each other’s submissions) about the valuation of the resale value of the unit to the valuer. It also sets out other matters the valuer must have regard to in conducting the valuation and gives the valuer the power to request information from the operator about the Village, the unit or the residence contract.
  • The amended act contains a new part which prescribes behaviour standards for residents and operators (and their staff), including:
      • an operator must take reasonable steps to ensure a resident does not interfere with the reasonable privacy of another resident, and
      • an operator must give a written response within 21 days of receiving a written complaint, proposal or question from a resident or former resident (or their representative).

Overall, the changes are a positive move to clarify the rights of residents, while at the same time balancing the need for operators to run villages within an agreed set of principles and commercial guidelines.

Julie McStay is a Director at Hynes Legal and leader of their national aged care and retirement living team.

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3 Responses to Amendments clear up retirement village confusion

  1. Anthony November 22, 2017 at 2:56 pm #

    Incredible how a State Government can get involved and make decisions that will have a huge impact on the viability of the QLD RV industry yet have no expertise in this industry.. The State government (unlike the Federal Government in Aged Care) contribute NO funding or assistance what so ever to the RV industry not one cent.
    Under what guise of expertise does this government decide what commercial decisions is right or wrong for this industry??
    No other industry has this type of heavy handed control over it.
    If the state government was contributing tax payers money then by all means set the rules. But this is not the case RV’s in Australia was until this act was changed a free market where the price and conditions in your village contract decided if you sold your units or not. This whole affair reeks of Large RV operators and state Government being in the same bed as the large providers. The buy back changes will have no effect on them as they have such deep pockets and can afford to pay out 5-6 clients at no impact to their company. The smaller RV operators in the same conditions will more than likely go bankrupt. Reducing even more the number of interdependent RV operators which will in turn reduce the choices of contract conditions and prices for the consumer.
    So with the State Government forcing the small family run RV operators to close the whole RV industry will be operated by two or three large RV corporations eg AVEO.
    Shame on you QLD govt for your corrupt dealings with these RV operators while forcing the small interdependent RV operator broke.
    We the consumer are not stupid and can read our contracts if not our lawyers can.
    This Qld government has stolen from me the choice of being able to choose a village I want to buy into on the conditions of its contract,
    The changes to the RV act is the death stroke to small interdependent RV operators that were keeping this industry honest and giving consumers choices to choose from.
    The industry now will be one size fits all, the AVEO size whether you like that type of contract or not.
    Well done Qld labor government for destroying a vibrant RV industry that was providing affordable quality accommodation to Qld elderly. Something this government wouldn’t and couldn’t do.
    Shame on you Annastacia Palaszczuk.

  2. Jen August 29, 2018 at 11:05 am #

    I agree, what the Qld Government has done is unconsionable. My stepmother died in January 2017 but the amendments to the RV Act 1999 mean that we, her beneficiaries, are not entitled to receive the exit entitlement until My 2019!!! When one reads the Act and the Amendments, it is unbelievable that a Labor government could have been so inept.

  3. Anonymous August 29, 2018 at 4:57 pm #

    Jen, my understanding is that the legislation provides a refund no greater than 18 months after termination – but earlier if the contract states it, or within 14 days of a settlement.

    One would therefore assume that until this 18mth end date was lesgilated, then the estate received the exit entitlement whenever it was sold (ie not time limited). At least now there is a limit.

    Where else do you receive the proceeds from a sale when there has been in effect no sale?

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