Changes to the Retirement Villages Act 1999

Published: 16 March 2007.

This fact sheet explains major changes to the Retirement Villages Act 1999 (the Act) that will affect retirement village operators and residents in Queensland from 15 March 2006. The changes to the Act will make retirement village laws clearer and fairer for both village residents and operators.
Since 2001, retirement village laws in Queensland have been under review. As part of this review, there has been extensive public consultation with both retirement village residents and operators throughout the state.
Major changes as a result of the new laws are:
? more accurate public information documents;
? fairer meeting procedures;
? clearer management of finances;
? capped insurance excesses;
? streamlined dispute resolution; and
? increased rights when leaving the village.
More accurate Public Information Documents
Public Information Documents are given to people interested in living in a retirement village before they sign a residence contract. Where a retirement village operator runs several villages, they now have to develop a specific Public Information Document (PID) for each village, instead of the previously allowed generic PIDs. The operator must also include more financial information in the PID, including details about future costs and timeframes for expected village improvements. The Retirement Villages Form 1 ? Public In formation Document has been revised to reflect the new requirements. All operators are now required to use the updated version of this form as the basis for any new PIDs developed.

Village operators must also now follow more stringent requirements to notify residents about inaccuracies in public information documents. The operator must make a full written disclosure of the inaccuracy to:
? each resident of the village who is, or
is likely to be, materially affected by the
inaccuracy and the Office of Fair Trading
within 28 days of becoming aware of an
inaccuracy;
? a person who has signed a residence contract for which the cooling-off period still applies, before the cooling-off period ends;
? a person who has indicated to the operator that they intend to sign a residence contract, before they sign the contract.
The operator must also amend the public information document to remove the inaccuracy as soon as practicable after becoming aware of the inaccuracy. A maximum penalty of $40,500 applies for failing to comply with any of these requirements.
Fairer meeting procedures
The new laws will improve the way village meetings are run. Where residents are required to vote at a meeting, a ?one vote per unit? rule now applies. This protects the rights of single occupants, who make up the majority of retirement village residents, and mirrors the per-unit way that fees and charges are usually levied. Residents also have the option to introduce a ?one vote per person? rule by a special vote.
Residents still also have the option of proxy votes if they are unable to attend resident meetings. However, a resident can now nominate another person, such as another resident or a close family member, to exercise their proxy vote. The retirement village operator is no longer permitted to hold a resident?s proxy vote, and no person can hold more than two proxy votes per meeting.
Under the new laws, retirement village operators are only allowed to attend a residents? meeting or a meeting of the residents? committee if invited, or if a special resolution is being voted upon. If invited to attend, the operator must leave after addressing the meeting or voting on the special resolution, unless invited to stay. The operator is, of course, entitled to attend a meeting of residents called by the operator.
Clearer management of finances
Residents are still responsible for maintenance costs and operators are still responsible for capital replacement costs. However, the new laws ensure these costs are classified properly and consistently.
To date, residents have had no role in annual budget-setting. Under the new laws, from 1 January 2007, operators will be required to provide a draft budget to residents before the start of the financial year to which the budget relates, and then call a meeting of residents to discuss this draft before it is finalised. The draft budget will cover maintenance, replacement of village facilities and ongoing general fees and charges. Residents may also ask for explanatory information to accompany the quarterly financial statements, showing why expenses are greater than what was budgeted for.
Before increasing any general services charges, the operator will now be required to consider more cost-effective alternatives. The operator will also be required to create and maintain an annual general services charges budget to ensure better planning for these costs over the year.
Capped insurance excesses
The operator will be entitled to take out an insurance contract with an excess, but the excess must be capped at $2,000. A special resolution (which requires at least 75% of residents to agree) will be required to increase the excess. Unlike all other changes, except for the budget setting changes, this change does not come into effect immediately. It will come into effect later this year.
Streamlined dispute resolution
Under the new laws, resolving complaints has been made simpler. Residents can now appoint another resident of the village or a close family member to represent them before the Commercial and Consumer Tribunal. Where several residents have the same dispute, a joint action can be taken before the tribunal. In situations where operators are ordered to pay dispute resolution costs by the tribunal, costs can no longer be passed to residents through increased charges.
Increased rights when leaving the village
Under the new laws, obligations regarding contracts, reinstatement and vacation of units upon exit have been clarified.
? Return of unit to its prior condition
- The laws clarify whether residents are liable for the cost of returning their unit to its original condition (?reinstating?) when they leave. Residents in a freehold unit will still pay reinstatement costs. For all future residents in a leasehold unit, the operator will no longer be able to put provisions in resident contracts to avoid paying for reinstatement. However, if the resident and operator share any capital gain from the sale of a leasehold unit, they will also share the reinstatement costs.
A new reinstatement standard has also been introduced for all contracts, clarifying the purpose of reinstatement so residents do not have to bear unnecessary costs. Residents have also been given the right to obtain their own quote for reinstatement work so they can compare, and if necessary, challenge the quote obtained by the operator.
? Exit fees payable to the operator - All contract exit fees must now be calculated as at the day residents vacate the unit, regardless of when the contract was signed. Until now, the date on which exit fees are calculated differed depending on when the contract for that unit was signed. This means units which took a long time to sell may have incurred a higher exit fee. Under the changes to the Act, all residents now have the same calculation date which will provide more certainty in what fee will be payable.
? Exit entitlements payable to the
resident - Under the new laws, once the unit is sold, operators must pay residents their exit entitlements within 14 days, instead of the 28 days previously allowed under the Act.
? Liability for general services charges - An ex-resident?s liability to continue paying the general services charges now stops nine months after they vacate the unit, unless the unit is sold earlier.
? Liability for personal services charges - An ex-resident?s liability to continue paying for personal services has been amended, and varies depending on the circumstances in which they vacate the unit.
Residents can be charged for personal services for up to:
? One month after the resident gives standard notice that they intend to vacate their unit;
? 14 days after they give notice because the village is not registered;
? 14 days after the operator gives notice because of dangerous behaviour by the resident;
? 2 months after the operator gives notice because the resident has materially breached the residence contract, abandoned their unit or been assessed as no longer medically fit to live in the village.
If a resident stays in their unit beyond the period of notice given, where that resident is given an extension of time, personal services may not be charged more than 14 days after that latter time.
? Voting rights - Where a resident has vacated their unit, they now continue to have limited voting rights until their unit is re-sold.
? Rights of spouse or relative - Previously, a spouse or relative of a resident who lived in the unit but has not signed the residence contract had no rights if the resident died or vacated the unit. A spouse or relative who has lived in the unit for six months or longer will now be given a right to remain in the unit for a further three months after the resident dies or vacates the unit, to give them time to organise alternative living arrangements.
For more information
Copies of the Retirement Villages Act 1999 are available to download free from: www.legislation.qld.gov.au, or to
purchase from:
SDS Publications
371 Vulture Street, Woolloongabba
Locked Bag 500, Coorparoo DC QLD 4151 Email: service@sds.qld.gov.au
Freecall 1800 679 778
More information about the Retirement Villages Act 1999 and how it affects operators and residents is available from the Office of Fair Trading.
Telephone: 13 13 04 www.fairtrading.qld.gov.au
© The State of Queensland (Department of Tourism, Fair Trading and Wine Industry Development) 2006
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