Terminating a resident´s right to reside
A resident´s right to reside may terminated if:
- they pass away
- they decide to leave
- the operator asks them to leave.
Termination by residents
If a resident wishes to leave, they must give one month´s notice. If they decide to leave, they can request a written estimate of their current exit entitlement. You must provide this within 14 days, unless you have already given them one within the previous six months.
If a resident becomes aware that the retirement village is not registered, two things can happen:
- The resident can terminate the contract. They must give you 14 days notice after becoming aware that the village is not registered. You must refund their ingoing contribution in full within 30 days.
- The resident can choose to remain in the unit, or vacate the unit and continue to pay the ongoing contractual commitments, such as charges and exit fees, until you settle all issues. If they decide to leave in these circumstances, the scheme operator must refund the full amount of the resident's ongoing contribution within 30 days of termination.
Termination by operators
You may terminate a resident´s right to reside, by giving 14 days written notice, if they:
- intentionally or recklessly injure a person in the village
- seriously damage their unit
- seriously damage another person´s property in the village
- are likely to or intentionally or recklessly do these things.
You may terminate a resident´s right to reside by giving two months written notice if they:
- do not fulfil the financial requirements of their contract
- abandon their right to reside
- are assessed by a suitable professional (under the Aged Care Act 1997) who finds that the accommodation is unsuitable for the resident.
In the written notice, you must state why you are terminating the right to reside and the latest date that the resident must vacate.
If you cannot find the resident´s current address, you can publish a notice in a statewide or nationwide newspaper.
When a resident leaves, you must return their unit to a marketable condition to resell the resident´s right to reside. The income from the sale generates the resident´s exit entitlement and the operator´s exit fee.
Spouses or relatives who live in the unit, but are not on the contract, may also have rights to residency.
Reinstating to a marketable condition
Before you can re-sell a resident´s right to reside, you must:
- reinstate the unit to a marketable condition
- agree with the former resident on the resale value.
Within 30 days of termination, you must negotiate with the former resident about the work needed to reinstate the unit to a marketable condition. Consider the unit´s condition when they moved in and the general condition of similar units.
If you cannot agree on the work needed, give the former resident an itemised quote from a qualified tradesperson for the work you believe needs doing. The former resident may give you their own quote. Provide these quotes within 44 days of the termination date.
If the former resident´s relative has lived in the unit for at least six months, and wants to enter into a residence contract, and has a right to do so, negotiate with the relative about the work needed. The relative should be inconvenienced as little as possible.
Complete the work within 90 days of the resident leaving the unit, unless you have negotiated a different time with them.
If the former resident has a freehold interest, they must pay for all labour and materials.
If their interest is leasehold or by licence, they may have to pay for the work, depending on when they obtained the interest and what the type of work:
- The former resident must pay for accelerated wear to the unit´s interior and deliberate damage.
- Contracts signed before 15 March 2006 may state who must pay reinstatement costs. If the contract does not state who pays the costs then for contracts signed:
- before 1 July 2000, the former resident and operator must share the costs in the same proportion as they share the ingoing contribution from the unit´s sale
- between 1 July 2000 and 15 March 2006, the operator pays.
- For contracts signed on or after 15 March 2006, the former resident and operator must share the costs in the same proportion as they share capital gain from the unit´s sale.
The operator should pay for their share of any reinstatement work from the capital replacement fund.
Agreeing on unit resale value
You must negotiate with the former resident and agree in writing on the resale value of the right to reside in the unit.
If you cannot agree, ask an independent registered valuer to give you a valuation within a further 14 days. This valuation becomes the agreed resale value.
If you do not sell the unit within six months of the termination date, and you have not yet paid the former resident an exit entitlement, reconsider the resale value and, every three months after, and agree on a new resale value (even if the value is the same each time).
Selling the right to reside
The operator and resident share the costs of selling the right to reside in the same proportion they will share the gross ingoing contribution on the sale.
You must not charge a former resident a fee, charge or commission for selling the right to reside in their unit, unless the contract states otherwise and commenced before 1 July 2000, or you are a licensed real estate agent that the resident has appointed to sell their right to reside.
You must tell the resident about each offer you receive to purchase their right to reside.
If requested, give them monthly information about:
- all sale enquiries
- how you are promoting the sale
- details of other rights to reside that are for sale in the village, including the number for sale, the size of the units, selling prices and how long they have been for sale.
If you accept an offer less than the agreed value, calculate the former resident´s exit entitlement as if you sold the right to reside at the agreed value.
If a former resident accepts an offer less than the agreed value, calculate their exit entitlement on the accepted amount.
You can only refuse an offer if you believe the prospective resident is not within the age limit specified in the public information document, or that the unit is unsuitable for them.
If you do not sell the right to reside within six months of the termination date, or paid the former resident their exit entitlement, the former resident can ask a real estate agent to help sell it. In this case, the former resident must pay the agent´s costs and commission.
An exit entitlement is the amount you may have to pay or credit a former resident when they leave the village.
You must pay the entitlement on, or before the date, stated in the resident´s contract, or within 14 days after settlement day (whichever is first).
You can pay the exit entitlement after termination but before the unit sells, if you and the resident agree on the value.
Give the former resident a statement showing how you calculated their entitlement, including:
- the exit fee
- accrued general services charges
- outstanding services charges and fund contributions
- expenses that the resident must pay
- any other payments stated in the contract.
Rights of a spouse or relative
A spouse or relative, who has lived in the unit for six months or longer, but was not a party to the residence contract, has the right to live in the unit for three months after the resident dies or leaves.
During the three months, the relative has all the rights and liabilities of a resident.
The spouse or relative must write to the operator within 14 days of the termination date stating that they agree to the terms of the resident´s contract while they live in the unit.
If the spouse or relative meets certain conditions, they may enter into a residence contract for the unit before the three-month period expires.
These conditions include when:
- the original resident´s interest was leasehold or licence
- no other person has a right under the contract to live in the unit
- they meet the eligibility criteria to live in the village
- they give written notice of their wish to enter into a residence contract at least 14 days before the end of the period.