Whether it's for yourself or a loved one, moving into a retirement village or nursing home is a big step. If all goes well, you'll be able to enjoy your retirement years in comfort and style.
Entering a retirement village is a large financial commitment, so it's essential that you fully understand the contract and the costs involved.
Here is an overview of retirement village contracts and some of the things you need to consider.
What is in included in retirement village contracts?
Retirement villages will typically have a standard form of contract. There will likely be some variation between what is included in the contracts by different retirement villages, but the industry as a whole is strictly regulated. This means that variation between different villages is usually around which services are included and which cost extra.
Retirement village contracts typically involve three different parts that all make up the rights and obligations of residents. The three parts are:
- The Contract itself
- A Management Agreement
- A Lease or a Deed
It is up to the village whether it offers units for rent or for sale, and this will determine whether you have a lease or a deed. If you do purchase the unit, you will have an Option Deed which gives the retirement village the first right to purchase the unit when you vacate. However, it is becoming more and more common for residents to lease their units rather than buy them.
Typically, the biggest concern that people have when entering into retirement village contracts is the costs involved.
Understanding the fees and charges
Before you sign any retirement village contracts, you must be given a disclosure statement which details all of the fees you will have to pay and when you will have to pay them.
Some of the fees that may apply include:
- An entrance fee or daily fees
- Management fees or deferred management fees
- Owners corporation fees
- Extra services like hairdressing or podiatry
- Refurbishment or renovation fees after vacating
The entrance fee to a nursing home, called a Refundable Accommodation Deposit (RAD), is usually very expensive and people typically sell the home they are moving in order to pay for it. The RAD is paid upfront and then you or your estate will receive a portion of it back when you vacate the village.
Instead of the RAD, you may have the option to pay a Daily Accommodation Payment (DAP). This means that instead of paying upfront, the entrance fee is paid on a daily basis.
There is also an upfront payment for entry into retirement villages which often requires the sale of a property to fund.
There are also some costs that may persist after you vacate the retirement village. You or your estate may need to continue to pay certain fees until the property has been sold or leased to a new occupant. This could potentially be years after vacating.
What else do you need to consider?
One of the most important things you need to consider is affordability and how long you're likely to stay in the retirement village. Will you be able to continue to afford it after ten or more years?
Another consideration which is important for many people is whether or not they will be able to bring their pets. Different villages will have their own policies regarding pets, so this is something you'll have to check.
Finally, you should find out whether or not the retirement village has on-site facilities in case you need to move to a higher level of care as you get older. Eventually, you may need to move into a nursing home or other facility so that your medical needs can be properly met.
Get the right legal advice
Moving into a retirement village is a big decision and a big financial commitment. Getting the advice of a lawyer will help you to understand all of your rights and obligations under retirement village contracts.
At Rose Lawyers, we can help you through every step of the move into a retirement village as well as provide any help you may need with Will and Estate matters.
For help with your retirement village contract, call Rose Lawyers on 03 9878 5222.