Retirement Village Contracts

What’s wrong with retirement village contracts -

Nestegg.com.au reports in an article by Lucy Dean:-

"Retirement village contracts can be so complex that Australians should seek legal advice before signing them, a consumer protection lawyer has urged.

The senior policy officer at the Consumer Action Law Centre, Katherine Temple said it can be “difficult” for retirement village residents and their families to understand their rights as a result of the complexity of the contracts.

Noting that some contracts can be more than 100 pages in length, she said: “I would suggest to residents and their families to get legal advice before moving into a retirement village.”

She highlighted three main “red flag” areas to “really be aware of”:

The deferred management fee

This fee is usually a percentage of the sale price of the unit. “Obviously, you don't know what the sale price of your unit will be so you don't know how much that fee will cost you,” she said.

The lawyer explained that due to the deferred nature of the fees, people often don’t have enough money to move somewhere else once the exit fees are taken out.

Reinstatement and refurbishment costs

“Although in the contract you'll be liable to pay them, you don't know what the amount will be until you go to move out,” she said.

The loan-lease arrangement

Ms Temple said the “other big trap” is understanding that many retirement villages operate under a loan-lease purchasing arrangement. This means that tenants are not actually purchasing property, rather the licence to reside in the village.

“That's not obvious a lot of the time in the sales pitches that people hear that talk about buying into a retirement village. You're not buying a unit, you’re just buying the right to live there and that's very different and so they can impose a lot of restrictions on what you can do while you live in the village.”

Full article here:- what's wrong with retirement village contracts "