Articles
Retirement village contracts - what are they?
Moving into a retirement village is a major life decision that can have significant financial consequences. Many people are unaware that residents usually do not own their unit in a retirement village but instead purchase the right to occupy it.
Retirement Villages Act 2003
Operators of retirement villages are required to comply with the Retirement Villages Act 2003, which is a law designed to protect the interests of residents and intending residents of retirement villages.
The Act contains a Code of Residents' Rights which sets out the basic rights that all village residents have. Operators have to give a copy of this code to every intending resident, together with a copy of the Code of Practice 2008 (a legally binding document which sets out the minimum requirements that operators must carry out to meet their obligations under the law).
Operators are also required to provide intending residents with a comprehensive disclosure statement, which by law must include details of the following:
- Ownership, management and supervision arrangements (if any);
- State of the village, services, charges and accounts;
- Rights of cancellation/cooling-off periods, terminations, deductions and estimated financial returns;
- Any other relevant matters.
These are lengthy documents. The Code of Practice in its current form is 56 pages long, and whilst disclosure statements vary from operator to operator in terms of how they are structured, most are also substantial documents.
Occupation right agreements
One of the main ways the law tries to protect the public is by requiring intending residents to take independent legal advice before signing the legal contract with the retirement village operator (known formally as an "occupation right agreement").
Behind the glossy brochures, these contracts contain the actual terms and conditions upon which intending residents purchase the right to occupy a unit in the village, the rules that govern their occupation, and what happens when the agreement comes to an end. By their very nature, these are complex legal contracts that in many cases are not readily understandable by the public.
We have built up significant expertise in reviewing retirement village contracts and advising intending residents on the effects and implications of signing up, and are well-versed in particular with the documentation used by all of the main operators in the greater Auckland region (although we are happy to advise in relation to villages throughout New Zealand).
Contact us today if you are thinking of moving into a retirement village and need clear, concise advice regarding the contract documents and your legal rights.