In brief – Plain English documents aim to remove complexity and confusion
A new standard form of plain English retirement village contract specifies all costs, services, facilities and alterations, as well as arrangements for performing repairs and sharing capital gains.
New standard form of contract, general enquiry document and disclosure statement
The NSW state government has released a new standard form of contract and a general enquiry document as well as a revised and simplified disclosure statement to be put in place by all retirement villages by 1 October 2013.
"These reforms will make moving into a (retirement) village easier and less stressful for retirees and their families," the Minister for Fair Trading, Anthony Roberts, had said.
"Under the new standard contract, the confusion and complexity that currently exists will be removed, with the new documents written in plain English so they are easier to understand."
What is covered by the new standard form of contract?
The new standard form of contract for retirement villages covers various issues such as:
• The type of residence being acquired in the village
• All costs the resident must pay for entering, living in and leaving the village
• If there are capital gains, how they will be shared with the village
• Any settling in period
• All services and facilities to be provided
• Any alterations and additions that are agreed to be done
• All repairs and maintenance
General enquiry document summarises financial matters, services, regulations and governance
In addition to a new village contract, there is also a new general enquiry document. This sets out in summary information about the village, management, accommodation, financial matters, facility services and village life.
"Village life" covers the controversial issues of whether pets are allowed, whether residents do their own gardening, whether there are organised social activities in the village, whether the village has a residents’ committee and whether there is a secretary or chairperson.
Prospective residents encouraged to seek independent legal or financial advice
The disclosure statement will be reduced by nearly fifty per cent, with some of the information being moved across into the general enquiry document. The disclosure statement is still required to be given at least 14 days before the resident enters into a village contract.
The statement recommends that the resident seeks independent legal or financial advice if they are unsure about the information contained in the statement. The new disclosure statement is written in plainer English.
When doesn’t the standard form of retirement village contract apply?
The new standard form of village contract does not apply to:
• stand alone contracts giving rights to use a garage, parking space or storage room, provided they are not contained within a resident contract or services contract
• a resident's contract relating to premises that are subject to a community land scheme, company title scheme or strata scheme
New documents to be used by retirement villages from October 2013
Accordingly, where the standard form contracts do apply, village operators will need to have the new general enquiry document, the revised and simplified disclosure statement as well as the new form of standard contract on and from 1 October 2013.
If you require more information you should read the NSW Fair Trading publication Moving into a Retirement Village? as that gives an overview of the retirement village industry and contains useful checklists for prospective residents.
Word versions of the new documents and more information on the rights and responsibilities of residents, including information about these important changes are available at the NSW Fair Trading website or by calling Fair Trading on 13 32 20.
This article has been published by Colin Biggers & Paisley for information and education purposes only and is a general summary of the topic(s) presented. This article is not specific legal or financial advice. Please seek your own legal or financial advice for any questions you may have. All information contained in this article is subject to change. Colin Biggers & Paisley cannot be held responsible for any liability whatsoever, or for any loss howsoever arising from any reliance upon the contents of this article.