Unexpected Costs in Retirement Villages
With any contract, it is important to be mindful of hidden costs. These can be secreted away in seemingly benign clauses and go unnoticed until one day you receive a hefty bill. This is true for retirement village contracts as well.
Some hidden costs:
- Waiting list fee:
The operator may charge a waiting list fee of no more than $200. This sum must be deducted from any ingoing contribution the person pays on moving into the village or, if they decide not to proceed, refunded within 14 days of written request.
- Contract preparation expenses:
The maximum amount a person can be required to pay towards the legal and other expenses related to the preparation of the contracts is $50 (s14 of the Retirement Villages Regulations 2017 (NSW)).
The operator may require the resident to pay a portion or all of their legal costs on vacating the village.
- Reinstatement costs:
On leaving the village, the resident is required to cover the costs of reinstating their unit to the condition it was in when they first moved in, except for fair wear and tear (s163 of the Retirement Villages Act 1999 (NSW)).
“Fair wear and tear” refers to the deterioration that occurs over time with the use of the property and the resident is not liable for the costs of rectifying such standard deterioration.
- Recurrent Charges:
Recurrent charges are regular payments made by the village residents for the ongoing general services and facilities and the upkeep of the village (such as village administration, gardening, insurance, rates, etc.). These are a standard feature of retirement village contracts.
What may come as a surprise, however, is the requirement for the resident to continue to pay the recurrent charges for up to 42 days after having left the unit and returned the keys to the operator.
Our experienced elder law team are available to review village contracts and provide advice people moving into a village, making sure they are fully informed about the “hidden costs” upfront. We can also assist clients leaving a village to check that they are not being charged more than they should be.
*please note that the information provided in this article is NSW specific.
