Retirement village operators need to implement the new requirements for all residents who enter into contracts after 1 April 2014.
Sections 13 and 14 of the Act – Disclosure and cooling-off periods
The operator must provide the Information Statement and other pre-contractual disclosure requirements at least 10 (increased from 5) working days before a person enters into a contract.
The cooling-off period within which a prospective resident can rescind the contract is increased to 7 (instead of 5) working days after the date of the contract.
Section 23 of the Act – Limitation on liability to pay recurrent charges
There is now a cap on a former resident’s liability to pay recurrent charges after they permanently vacate a village. The Act has a detailed definition of “permanently vacated”.
A former resident’s liability for recurrent charges will cease:
- 6 months after they permanently vacate (for existing residents); and
- 3 months after they permanently vacate (for future residents who enter a contract after 1 April 2014).
This shifts to operators the perceived burden of former residents being required to pay recurrent charges for extended periods. New Regulation 9 provides that for deceased estates, the 6 or 3 months is taken from the later of the grant of probate (or letters of administration) or permanent vacation.
Section 25 of the Act – Operator not to require payment in respect of prescribed matters
An operator is prohibited from demanding or receiving payment from a resident or former resident in respect of certain charges. New Regulation 11 lists the prohibited charges. These include the costs of:
- lodging or withdrawing a caveat;
- obtaining legal advice and any court costs for participating in legal proceedings;
- complying with an order made by the State Administrative Tribunal or a court to pay compensation;
- overseas travel by employees of the operator; and
- various other costs.
Regulation 11(5) is a transitional provision that provides the prohibited charges will not have operational effect until the first day of the next financial year of the retirement village.
Village operators should urgently review their residence contracts to ensure compliance with the new requirements. Not all of the changes are mentioned here.