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Retirement Housing

From 1 January 2018, the Retirement Villages Act 2016 (SA) governs retirement villages, from entering into residence contracts, to meetings and consultation, residence rules, termination and exit entitlements.

What documents and information can a prospective resident expect to receive?

At least 10 days before a person enters into a retirement village residence contract, the operator of the retirement village must give the person a copy of the following:

  • The residence contract
  • The disclosure statement

  • If the contract relates to a retirement village already established:

    • The financial statements presented at the last annual meeting of residents and a written statement of any subsequent changes

    • A copy of the minutes of the last 2 annual meetings of residents

  • The residence rules

  • The policy regarding remarketing of residences

  • Any code of conduct to be observed by the operator or residents, and

  • Any other document prescribed by the Retirement Villages Regulations 2017 (SA)

[Retirement Villages Act 2016 (SA) s 22]

Residence Contracts

What must be included in the residence contract?

A residence contract must include the name and contact details of the operator of the retirement village, details about the particular residence the person will reside in, and the resident’s rights and obligations under the contract, including [Retirement Villages Act 2016 (SA) s 20]:

  • The right to cool off (to rescind the contract and not proceed with becoming a resident in the retirement village)
    • Under section 24 of the Act, a prospective resident is entitled to rescind the residence contact (cool off) within 10 business days after the day they signed the contract, unless they occupy before the end of that period and sign a written waiver of their right to cool off.
  • If a person wishes to cool off, they must do so in writing to the operator.
  • The right to occupation of the residence
  • Recurrent charges the resident must pay
  • The right to terminate occupation and receive an exit entitlement

The contract should also include information about:

  • additional services and facilities available to residents and the cost of them
  • who will be responsible for repairing or replacing fixtures, fittings and furnishings in the residence and how the cost is to be covered, and
  • anything else prescribed by the Retirement Villages Regulations 2017 (SA)

Warranty as to Accuracy of Information

A residence contract is taken to be correct (subject to any written change made by the operator with the consent of the resident on or before signing the contract), unless the resident elects not to rely on its correctness.

Disclosure Statement

Fees and Charges

The disclosure statement must be in writing and set out the financial arrangements for residents of the retirement village, including [Retirement Villages Act 2016 (SA) s 21]:

  • a description of all fees and charges (whether on entry or exit or once off or recurrent fee), including the amount or how the amount is to be calculated

  • what the operator does with the fees and charges

  • any utilites, services or facilities provided or available to residents that the operator has an interest in or gains a benefit from

  • the way the resident’s exit entitlement will be calculated and the effect of section 30 of the Act where the resident is exiting to enter into an aged care facility

  • the insurance arrangements that are in place for the retirement village

  • a statement advising of the possibility of a fee or charge arising for the operator to recover an unforeseen expense (this is called a special levy under the Act).

Legal and Financial Advice

The disclosure statement must include a statement advising that [s 21(2)(c)]:

  • the disclosure statement does not form part of the residence contract, and is intended only as a summary of certain information in the contract
  • the prospective resident must ensure they fully understand the terms of the residence contract itself, rather than relying on the disclosure statement, and
  • recommending that the prospective resident seek independent legal and financial advice about the proposed residence contract.

Condition of the Premises

The operator of a retirement village must complete a premises condition report not more than 10 business days after a person enters into occupation of a residence [Retirement Villages Act 2016 (SA) s 23].This report must provide detailed information about the condition of the fixtures, fittings and furnishings in the residence and be signed by or on behalf of the operator.

Termination

Can the operator terminate a resident’s right of occupation?

An operator of a retirement village can only terminate a resident’s right of occupation if [Retirement Villages Act 2016 (SA) s 44]:

  • the resident commits a breach of the residence contract or residence rules

  • acts in a manner which adversely affects the health and safety of persons working in the retirement village or that seriously disturbs the peace and comfort of other residents

  • the residence becomes an unsuitable place of residence for the resident because of the resident’s mental and physical incapacity, or

  • circumstances exist that make it no longer appropriate for the resident to continue to reside in the residence

The operator must not terminate the resident’s right on the basis of the resident’s behaviour unless they have made reasonable efforts to stop the resident acting in the manner complained of, such as [s 44(3)]:

  • giving the resident written warning to stop acting in that manner, or

  • conducting some form of mediation or dispute resolution process with the resident, or

  • any other means appropriate in the circumstances.

In order for the operator to terminate a resident’s right of occupation, the termination must be confirmed, on the application of the operator, to SACAT [s 44(8)].

A resident’s right of occupation can also be terminated in the following limited circumstances:

  • the holder of a mortgage or charge that was in existence at the commencement of the former Retirement Villages Act 1987 (SA) becomes entitled to vacant possession [s 44(1)(e)], or

  • the Supreme Court terminates the residence contract in proceedings under section 58 [s 44(1)(g)]. Section 58 relates to the termination of an entire retirement village scheme.

Can a resident terminate their right of occupation?

A residence contract cannot limit or qualify the right of a resident to terminate during their settling-in period [s 44(4)]. The settling-in period starts from the day the resident signed the contract or began occupying the residence (whichever was later) and ends 90 days thereafter, or such longer period as may be specified in the resident’s contract.

If a resident terminates the right of occupation during the settling-in period, the resident is liable to pay fair market rent for the period of occupation and any other amounts payable under the residence contract [s 44 (5)] (except an amount sought by way of penalty for terminating during the settling-in period, as seeking such an amount is not allowed under the Act [s 44(7)]).

The amount due may be deducted from the resident’s exit entitlement [s 44(6)].

Exit Entitlement

What is an exit entitlement?

An exit entitlement is the amount of money that is, under the residence contract, payable by the operator of the retirement village when a resident leaves their premises vacant, or when certain conditions under the residence contract are fulfilled, whichever occurs first [see Retirement Villages Act 2016 (SA) s 4].

When does an exit entitlement become payable?

An exit entitlement may not become payable immediately. It may become payable when [s 27]:

  • specified conditions are fulfilled under the residence contract, or

  • 18 months have passed since the resident left the residence vacant, or

  • 18 months have passed since the resident gave written notice that they were leaving the residence, the last 3 months of which the resident did, in fact, leave the residence vacant, or

  • the operator otherwise agrees to pay the exit entitlement earlier.

The operator may apply to the South Australian Civil and Administrative Tribunal (SACAT) for the period of 18 months to be extended where special circumstances exist to justify it. Regard must be had to the financial hardship likely to be suffered by the operator if the period is not extended and whether the operator, has for example, made taken reasonable steps towards sale [ss 27(7)-(8)].

The operator must pay the exit entitlement within 10 business days after the resident becomes entitled to the payment. Failure to pay on time is an offence on the part of the operator [s 27(15)].

Can a resident continue to occupy the residence during the notice period?

When giving written notice, a resident may advise the operator that they will remain in occupation for the following 15 months, allowing for 3 months of vacancy, before the 18 month period elapses, and their exit entitlement then becomes payable. The notice takes effect 10 business days later.

Can a resident participate in the sale of the premises?

A resident can participate in the sale of the premises, if:

  • payment of the exit entitlement depends on the sale of the resident’s right to occupy the residence, and

  • 9 months have passed since they left the residence vacant or gave written notice that they were leaving the residence.

This must be done through an agent and the operator of the retirement village must be kept informed of this and any developments in relation to the sale. The operator can also continue to remarket the premises concurrently in accordance with the operator’s remarketing policy.

[Retirement Villages Act 2016 (SA) s 32; regs 9 and 18]

What if a resident changes their mind after giving written notice?

Notice that a resident will be leaving the premises vacant may be withdrawn at any time with the agreement of the operator [s 27(4)]. The resident will, however, be responsible for any remarketing costs incurred since the notice was given (which may be deducted from their exit entitlement).

How is the exit entitlement calculated?

If an exit entitlement becomes payable and the contract says that it shall be calculated on the consideration paid on the sale of the right to reside in the retirement village, but that sale has not yet occurred, the resident may elect to either wait until the sale occurs, or receive the entitlement as if the consideration paid on the sale was the current market value [s 27(5)]. If paid in this way, the entitlement is not later subject to an adjustment after the sale occurs [s 27(6)].

The operator must provide residents, at their request and free of charge with a statement of the amount to which the resident would be entitled, by way of exit entitlement [s 42(1)].

What if a resident disagrees with the proposed market value?

If a resident does not agree to the operator’s determination of the market value, the resident may require the operator to obtain an independent valuation (with the operator entitled to recover half of the cost of obtaining that from the resident) [s 27(16)].

Does a resident have to pay recurrent charges even if they are absent for a lengthy period?

If a resident is absent for a continuous period of at least 28 days, the resident is not thereafter liable to pay any amount in relation to any personal service that the retirement village no longer provides due to the resident’s absence [s 29(1)]. The same applies if a resident ceases to reside in the retirement village [s 29(2)]. A personal service is one which is provided to the resident individually, rather than to residents generally.

A resident is taken to have ceased to reside in the retirement village when the person (or someone else on their behalf, including an executor or administrator of their estate upon their death) delivers vacant possession to the operator. If the person’s right of occupation is terminated, it is then the date that is fixed by SACAT for vacant possession. Vacant possession means that the residence is no longer occupied and all personal property has been removed from the residence [s 4(2)].

The operator of the retirement village may recover the costs of any other recurrent charges as a deduction from the exit entitlement (up to an amount not greater than the exit entitlement itself, and for a length of not more than 6 months, unless extended by SACAT or shortened by the residence being re-sold or re-occupied earlier) [ss 29(3)-(7)].

There are provisions under the Act for a resident who leaves to enter into an aged care facility to request the operator to make payments to the facility on behalf of the former resident [s 30].

Resolving Disputes

The operator of a retirement village must have a written dispute resolution policy, which must comply with any requirements prescribed by the Retirement Villages Regulations 2017 (SA) [Retirement Villages Act 2016 (SA) s 45 and reg 18].

A copy of the policy must be provided to residents within 5 business days of request.

If, after reasonable attempts to resolve the dispute by following the dispute resolution policy, the dispute continues, a party to the dispute may apply to the South Australian Civil and Administrative Tribunal (SACAT) for resolution of the matters in dispute [s 46].

Legal advice should be sought before making an application to SACAT.

An application must not be made to SACAT concerning an act or omission that occurred more than 4 years beforehand, except with the permission of SACAT [s 46(2)(b)]. In these cases, permission should be sought in the first instance.

SACAT can make a range of orders, including orders [s 46(3)]:

  • to restrain a breach of the contract or the Act

  • to require action in the performance of the contract or compliance with the Act

  • to pay compensation for loss or injury, other than personal injury, caused by a breach of the contract or the Act

  • to require the operator to vary or reverse its decision

  • to avoid or modify terms or conditions of an agreement between the operator and resident

  • to require the operator to repay to the resident any amount paid by the resident, and

  • to determine the amount payable as an exit entitlement

SACAT may suggest mediation, particularly if it has not yet been attempted, but may only refer a matter for mediation with the express consent of the parties [s 46(4)].

A dispute as to an exit entitlement may alternatively be brought before a court with jurisdiction to hear and determine a claim founded on contract for the amount in dispute [s 46(9)]. Depending on the amount sought, this would likely be the Magistrates Court or District Court.

    Retirement Housing  :  Last Revised: Thu Feb 15th 2018
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