Visiting and scoping a retirement village

Visiting and scoping a retirement village

Village management

Meet the Village Manager, employed by the operator. Note that the manager has a dual responsibility to manage and maintain the village facility in the interests of both the residents (stakeholders) and the operator.
Ask questions about maintenance provided by the operator and supervised by the Village Manager.

 

  • gardens and maintenance
  • cleaning exterior of villas or apartment buildings as well as exterior window surfaces
  • Emergency alarms and smoke alarms
  • Higher care facilities

Costs after you become a resident

Check the rate of the Weekly Fee, that is each resident’s share of the costs associated with running the retirement village and disclosed in the Occupation Right Agreement (the contract you sign).

Ask if the fee is fixed or variable. For some villages the fee is either fixed for life or capped by CPI. If the fee is variable you must enquire how it is determined annually.

An Annual Meeting (chaired by the Statutory Supervisor) and a Budget Meeting must be held in terms of the Retirement Villages Act. These meetings are held in recognition of the fact that the residents as stakeholders, are paying the weekly fee. They have the right to question any changes contemplated for charges.

Deciding whether to live in a retirement village

Most intending residents who purchase an occupation right to a retirement village unit might find the stack of legal documentation provided by the owner of the village (better known as the Operator), overwhelming.
These should consist of the latest village disclosure statement, a copy of the Code of Practice and Code of Resident Rights, an occupation right agreement and perhaps the village’s financial statements.

All this material must be provided by law so you can make a decision to move to a village (or not) with full disclosure and transparency. All intending residents must also have proper legal advice.

Important matters to consider

We suggest that as a prospective resident, you should take the following into account before you sign-up to obtain an occupation right:

  • Understand the costs of entry, costs while you are there, and exit costs (what the financial implications would be upon vacating your unit). You must be comfortable with the financial implications of becoming a resident, relative to your unique financial position.
  • Make sure that you fully understand and accept the legal regime, occupancy model and key consumer protections of living in a retirement village.
  • Do not hesitate to approach the current chairperson of the village residents’ association, alternatively any existing resident in order to establish what issues they have experienced since they moved in.
  • Note that in some villages, residents may not have set up an independent residents’ association. However, residents have the legal right to form a residents’ association.
  • The Government has approved a Code of Practice for retirement villages to regulate residents’ rights and the way Operators should conduct themselves.
  • NOTE: This Association is actively involved in lobbying the Government to amend certain provisions in the Code of Practice which can result in negative outcomes for residents.”
  • The majority of Occupation Right Agreements (ORA) contain standard clauses. We do however recommend that you give special attention to contract clauses that cover the following aspects, and discuss these in detail with your solicitor:
  • Most ORA’s contain standard clauses which provide that the resident must maintain and even replace when they become irreparable, the following items: stoves, dishwashers, garage door openers, electrical fittings, tap ware, hot-water cylinders as well as any item described as fixture or fitting.
  • Endeavour to negotiate that you will not be responsible if any such item becomes faulty as result of fair wear and tear and requires replacement and definitely not for any maintenance of a hot-water cylinder and any fixture or fitting that is not regarded as a chattel.
  • If you intend to move into a village where the weekly fees are variable, make sure that residents will not be responsible for any capital improvements to the village property.
  • Operators do not refund the balance of the original purchase price until a new a new resident signed a contact made payment in full of the purchase price.
  • We therefore recommend that you carefully review the disclosure statement to establish the average time it takes to find a new resident for a vacated unit.Weekly fees:
  • Negotiate with the Operator that you will not have to pay any fees for longer than 30 days or other reasonable period after vacation the unit.
  • Repayment of capital after vacation: Negotiate with the Operator that you will receive your pay-out within 3 months after vacation irrespective of whether the Operator has granted a new occupation right to a prospective resident or not.
  • Check if there are varying levels of care available onsite (should you or a spouse’s/partner’s health change) – and if not, where the nearest care facilities are and what they are like.
  • Continuum of care: If a village is offering continuum of care with Serviced Apartments or Care Suites, ask whether there is a second Deferred Management Fee (DMF) that would apply if transferring into one of these. Some providers do not charge a second DMF – some do, which can result in over 50% of your capital invested being taken between the two DMF’s.

In the current economic climate you might find that Operators may be willing to negotiate different terms in relation to the above-mentioned aspects.

A booklet “Thinking of Living in a Retirement Village” is available to download from the CFFC website here: http://www.cffc.org.nz/retirement/retirement-villages/

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 if you would like to talk about any matter concerning