From 30 July 2017, the Retirement Villages (Contractual Arrangements) Regulations 2017 (Vic) (“New Regulations”) will take effect. The New Regulations will repeal and replace theRetirement Villages (Contractual Arrangements) Regulations 2006 (Vic) (“Old Regulations”).
The New Regulations largely preserve matters dealt with under the Old Regulations. However, they will significantly change the rights and obligations of retirement village operators and residents with respect to funding residents’ aged care accommodation payments (“New Aged Care Rule”).
In summary, under the New Aged Care Rule:
- residence contracts entered into before and after the New Regulations come into effect are differentiated in terms of the operator’s payment obligations;
- for existing contracts, village owners may have to advance up to 85% of a resident’s estimated refundable ingoing contribution by way of a residential accommodation deposit (“RAD”) or daily accommodation payments (“DAP”);
- for new contracts, village owners may have to advance up to 85% of a resident’s estimated refundable ingoing contribution by way of DAP only;
- if the village owner and resident cannot agree on the estimated refundable ingoing contribution for payment of a RAD, an independent valuation must be obtained with the costs of obtaining such valuation to be shared between the parties; and
- residents retain the same rights with respect to the resale process (if the 6 month rule does not apply) as existed under the Old Regulations.
Village operators will need to review their current contracts and procedures to ensure they correctly reflect the New Aged Care Rule and the other minor changes to the schedules with respect to the resale procedures and proxy amount included in the New Regulations.