Operators are reminded that the first tranche of amendments to WA’s retirement village laws commenced on 1 April 2014 with further amendments expected to commence later in 2014 when a further code will be developed.
Currently an interim code of practice has been promulgated that will expire on 31 September 2014. The interim code picks up a number of recommendations and changes outlined in the Retirement Villages Amendment Act 2012.
What do you need to know now
Pre-contractual disclosures and cooling off
Retirement village operators must now give the information statement and other pre-contractual disclosures to a prospective resident at least ten business days (previously five business days) prior to the person entering into a residence contract. Operators can no longer pass on to a resident its costs for the provision of the information statement and other pre-contractual disclosures.
A prospective resident may rescind a residence contract within seven business days (previously five business days) of the date of the residence contract. If the required information statement and other pre-contractual disclosures are not given, the prospective resident can rescind the residence contract within 17 business days (previously ten business days) after the date the disclosure was given.
Where a resident has paid a premium to an operator, those moneys (held in trust) can be released to the operator once a resident is entitled to occupy the residential unit and the cooling off period has expired, notwithstanding that the resident may not yet occupy the unit. Previously premium moneys held in trust could only be released to an operator once the resident enters into occupation of the residential unit. The amendment addresses a situation where a contract has been entered into and the resident does not immediately enter into occupation of the resident unit.
Recurrent charges after permanently vacating
A former resident’s liability to pay recurrent charges to an operator after the resident vacates a residential unit is now time capped to:
- For residence contracts entered into pre 1 April 2014 and where the resident is deceased prior to 1 April 2014, six months after the later of the date the operator is given evidence of the resident’s death or 1 April 2014
- For residence contracts entered into pre 1 April 2014 and where the resident leaves the residential unit on or after 1 April 2014, six months after the later of the resident permanently vacating a residential unit or the operator is given evidence of the resident’s death
- For residence contracts entered into on or after 1 April 2014, three months after the later of the resident permanently vacating a residential unit or the operator is given evidence of the resident’s death.
A resident permanently vacates a residential unit when:
- The goods and belongings of the former resident have been removed from the residential unit
- The former resident ceases to reside in the residential unit
- The right to exclusively occupy the residential unit has been given up by the former resident or his or her estate in the case of a deceased resident
- If required by the residence contract, the operator is notified of the former resident’s intention to vacate the residential unit.
The State Administrative Tribunal may make an order for a former resident’s liability to pay recurrent charges to end earlier than the timeframe set out above. Additionally the residence contract may prescribe that a former resident’s liability to pay recurrent charges to end earlier than the timeframe set out above.
A resident may elect by written notice to the operator to pay any recurrent charges together with interest by their deduction from the amount of premium repayable.
Retirement village operating budget
An operator must not demand or receive payment from a resident or former resident in respect of:
- Lodging or withdrawing a caveat (unless the operator has done so at the request of the resident for any reason other to permit the sale of the residential unit)
- Certain marketing and advertising costs
- Obtaining legal advice, instituting or defending proceedings or participating in mediation
- Complying with any State Administrative or Court order
- Certain membership/accreditation costs
- Certain administrative costs, such as overseas travel by the operator or its employees.
The above list is not exhaustive and legal advice should be sought to ensure that your village complies with the new requirements.
For retirement villages operating prior to 1 July 2014, the prohibition set out above will apply on and from 1 July 2014 only. This allows retirement villages that have included prohibited fees and charges in their 2013/2014 operating budget to recover those charges.
Persons not to be involved with retirement villages
Bankrupts, persons who have committed certain fraud and violence related offences and persons disqualified from managing a company are not prohibited from being involved with the management of retirement villages for five years from the period of bankruptcy, conviction (or release from custody, if imprisoned) or disqualification.
Persons that fall within the above categories may apply to the Commissioner for Consumer Protection for an exemption certificate permitting the person to be involved in the operation of a retirement village. Additionally transitional arrangements are in place permitting exempt persons to have an exemption certificate for six months, permitting the person to be involved in the operation of a retirement village whilst the exemption certificate is valid.
What do you need to know for the future
The second tranche of amendments to WA’s retirement village laws is anticipated to commence later in 2014 following the commencement of revised Regulations and a new Code.
The revised Regulations are to set out the matters that must or must not be included in residence contracts.