Retirement villages in NSW are now under new disclosure rules from October 1, 2013.

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Working carers who have responsibility for an older relative will benefit from understanding the new laws affecting retirement villages.

The NSW Government has developed a standard contract for retirement villages that will be mandatory for village contracts entered into on or after 1 October 2013.

There are also some new requirements about what disclosure documents operators must provide before prospective residents sign a contract.

The aim is to make it easier for prospective residents to compare the costs and conditions between villages before signing a contract. This forms part of the government’s commitment to building a stronger retirement village sector for the benefit of residents and operators.

Also, the changes have been introduced to increase transparency in the retirement village industry and to simplify and streamline the contractual arrangements for entry into and exit from retirement villages in NSW.

The Retirement Villages Regulation 2009 has been amended to include three new documents which will be compulsory to issue to prospective occupiers of retirement villages:

  • Standard retirement village contract
  • General inquiry document
  • Disclosure statement

The General Inquiry Document provides a basic explanation about the retirement village, including financial matters such as current recurrent charges, departure fees and details on whether residents share in any capital gains.

The Disclosure Statement must be given to potential residents at least 14 days before entry into a retirement village contract. This document gives a more detailed overview of matters such as the management, services offered, financial matters and dispute resolution arrangements. Importantly, it also highlights the prospective residents' rights to view village documents, such as accounts, budgets and income and expenditure accounts.

If the information in the disclosure statement is materially false or misleading, a resident may, within three months of commencing occupation, apply to the Consumer, Trader and Tenancy Tribunal for an order permitting the resident to rescind the contract.

The Standard Retirement Village Contract has been drafted in plain English so as to allow prospective occupiers to clearly identify their rights and obligations and to compare costs and conditions between retirement villages. There have been five template contracts for the five most common village types developed and these are available from NSW Fair Trading.

Areas of confusion in the past, such as around financial matters including identification of the services included in the recurrent charges paid by residents, charges for optional services, the capital gain or loss structuring, departure fees, and the sale of units, have been clarified, as have the operators' and residents' respective responsibilities to undertake repairs and capital replacements.

Retirement village operators may insert additional terms in the retirement village contract, but they must ensure that those terms do not contravene the Retirement Villages Act 1999 and are not inconsistent with a term of the prescribed retirement village contract, which will mean that careful drafting is required.

Penalties may be imposed on operators who enter into a village contract for which the standard form of contract is prescribed knowing that it is not in, or to the effect of, the standard form, and the contract will be void to the extent to which it is not in, or to the effect of, the standard form.

Village operators, which include entities who manage or control the retirement village, should review their suite of contracts to ensure compliance with the new regulatory regime.

For more information go to www.fairtrading.nsw.gov.au and in the search box on the top right of the home page, type in Retirement Villages Amendment (Standard Contract) Regulation 2013; or Standard contract and disclosure documents.

Alternatively, visit: http://www.fairtrading.nsw.gov.au/ftw/Tenants_and_home_owners/Retirement_villages/Standard_contract_and_disclosure_documents.page