The retirement village industry and particularly operators use the terminology that you pay the deferred fee only on departure. Village operators like this because it sounds better and sells better when something is way off into the future. You will not have ownership of the property even though you are paying a commensurate cost as if you were taking ownership, you are paying this large sum of money for just a right to live in the property. The reality is that you write the cheque before you move in not when you move out, the operator simply performs a magic trick naming it an in-going amount on the way in and naming it a deferred management fee on the way out.
Retirement village operators will defend the deferred fee structure on the basis that every resident should make a contribution toward the village communal hall and recreational facilities. What they fail to detail however is that they get a contribution from every new resident over the entire life of the village.
A village with 100 units of an average value of $500,000.00 per unit, 1. a deferred period of say 7 years and 2. a deferred fee rate of 25% ($125,000.00), with the industry average of 7 years per stay this has the capacity to generate up to $12.5 million dollars in deferred fees every 7 years for the life of the village.
This and other retirement village issues are presented at http://www.retvill.net/
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