Residents leaving retirement villages

Terminating a resident's right to reside

A resident's right to reside may be terminated if:

• they pass away
• they decide to leave
• the operator asks them to leave
• the operator is implementing an approved closure plan.

Termination by residents

If a resident wishes to leave, they must give 1 month's written notice to the scheme operator. If they decide to leave, they can request a written estimate of their current exit entitlement. You must provide this within 14 days, unless you have already given them one within the previous 6 months.

If a resident becomes aware that the retirement village is not registered, the resident can terminate the contract. They must give you 14 days' notice after becoming aware that the village is not registered. You must refund their ingoing contribution in full within 30 days.

Termination by operators

You may terminate a resident's right to reside, by giving 14 days' written notice, if they:

• injured a person while the person was in the village
• seriously damaged their unit
• seriously damaged another person's property in the village
• are likely to, or intentionally or recklessly, do these things.

You may terminate a resident's right to reside by giving 2 months' written notice if they:

• do not fulfil the financial requirements of their contract
• abandon their right to reside
• are assessed by a suitable professional (under the Aged Care Act 1997 (Cwlth) who finds that the accommodation is unsuitable for the resident.

If you terminate a resident's right to reside as part of implementing an approved closure plan, then you must pay the exit entitlement within 14 days, once an agreed resale value is determined under section 60 of the Retirement Villages Act 1999. However, that time frame does not apply if the resident terminates their right to reside, even if that occurs during implementation of a closure plan.

In the written notice, you must state why you are terminating the right to reside and the latest date that the resident must vacate.

If you cannot find the resident's current address, you can publish a notice in a state-wide or nationwide newspaper.

Unit resale

When the resident leaves a unit, they must leave it in the same condition it was in when they started occupying that unit, apart from fair wear and tear and renovation. Reinstatement work can help an accommodation unit to sell promptly for a good price.

If the resident does not return the accommodation unit to the same condition it was in, you may carry out reinstatement work and claim the cost of the work from the resident.

Definition of 'reinstatement work', 'fair wear and tear' and 'renovation work'

Reinstatement work means replacements or repairs that are reasonably necessary to reinstate an accommodation unit to the condition it was in when the former resident started living there; apart from fair wear and tear and renovations carried out with the agreement of the resident and you as the scheme operator.

As the scheme operator, you must come to an agreement with the former resident about the:

• extent of any reinstatement work required
• parties responsible for any reinstatement work
• cost for any reinstatement work the resident is responsible for
• timeframes for completion of the work.

Reinstatement work can be completed during one of the following times:

• a time agreed by you and the resident
• at the same time as renovation work
• 90 days after the resident vacates the unit.

If an agreement to complete reinstatement work can't be reached, this is a dispute under Retirement Villages Act 1999. If the Queensland Civil and Administrative Tribunal (QCAT) orders the work to be done, it must be completed in the time set by QCAT.

Fair wear and tear includes a reasonable amount of wear and tear associated with the use of items commonly used in a retirement village.

Renovation work means replacements or repairs other than reinstatement work.

Renovation work

This applies if you propose to carry out renovation work in or affecting the accommodation unit.

Before starting the renovation work, you must agree with the former resident on a date by which the renovation work will be finished. You must ensure the renovation work is completed by the agreed date.

A dispute about the date by which the renovation work will be finished is a dispute under the Act.

Who pays for renovation work

If the former resident is required to pay for all or part of the costs for renovation, you must come to an agreement with them about the extent and expected costs of the renovation work.

If the residence contract provides that the former resident and the scheme operator are to share any capital gain on the sale of the accommodation unit, the cost of renovation work must be shared in the same proportion the capital gain is to be shared.

Otherwise, you are required to pay for renovation work.

In cases where a resident signed a contract after the 1 February 2019, both parties should refer to the entry condition report to agree on any work required on the unit when completing the exit condition report.

Agreeing on unit resale value

Within 30 days after a resident's right to reside is terminated, you must negotiate with the former resident and agree in writing on the resale value of the right to reside for the accommodation unit.

If you and the former resident cannot agree on the resale value, you will need to obtain a valuation from a valuer within 14 days.

The valuation is taken to be the agreed resale value of the right to reside for the accommodation unit.

Exit entitlement

An exit entitlement is the amount you must pay or credit the former resident after they terminate their right to reside in the village.

You must pay this to the former resident on or before the earliest of the following days:

• the day stated in the residence contract
• the day that is 14 days after the settlement day for the unit resale
• if the right to reside was terminated by the scheme operator when implementing an approved closure plan – the day that is 14 days after an agreed resale value is determined
• if the unit has not been sold, the day that is 18 months after the termination date or any later date fixed by order of the tribunal.

When you pay the exit entitlement to the former resident, you must give them a written statement showing how the exit entitlement was worked out and the particulars of any of the following that are payable by the former resident:

• the amount of any exit fee and how it was calculated
• any accrued general services charges and maintenance reserve fund contributions payable by the former resident. This will include
  • general services charges and maintenance reserve fund contributions payable by the former resident for a period of 90 days after the date they vacate their accommodation unit unless the unit sells earlier
  • any outstanding general services charges and maintenance reserve fund contributions payable after 90 days from the date of termination and up to 9 months after termination which are to be shared with the operator. After 90 days, you and the resident share the cost of the general services charges and maintenance reserve fund contributions in the same proportion as you will share the gross ingoing contribution from the unit resale. The percentage share payable by the resident should be detailed in this statement.

You must not charge interest on these accrued amounts:

• any outstanding services charges such as personal services charges or charges for services not included in the general services charge
• any expenses that they must pay relating to the resale of the right to reside
  • the costs of selling a retirement village unit can include costs which are the direct result of the sale of a particular unit (or the right to reside in a unit). These can include costs directly associated with advertising the unit, valuing the unit, demonstrating the unit to prospective purchasers and other specific costs including legal fees for the sale of the unit
  • the costs of selling a unit do not include costs associated with advertising or marketing a brand or retirement village
  • the costs of selling a unit are shared by the former resident and the scheme operator in the same proportion as they share the ingoing contribution upon the sale of the right to reside, as provided for in the residence contract. The percentage proportion of these costs payable by the resident must be detailed in the exit entitlement statement (i.e. how the amount payable was calculated)
• any other payments stated in the contract such as legal fees, costs for reinstatement or renovation and how these amounts were calculated.

Read the regulatory guideline about how to calculate the percentage of proportionate costs for selling a right to reside and sharing ongoing resident fees after termination.

Mandatory purchase of freehold property

The mandatory purchase provisions apply to units where a former resident terminated their right to reside but their freehold interest remains unsold.

You must complete the purchase of these units by the date that is 18 months after the termination date.

You must enter into a contract to purchase a former resident's freehold property and complete the purchase unless:

• the freehold property is sold to a person other than you before the day you were required to complete the purchase
• or
• if you have a reasonable excuse (e.g. the former resident failing to secure the release of a mortgage over the property or otherwise hinders the process despite your best efforts).

Timing of mandatory purchase

You must enter into a contract in sufficient time for the purchase to be completed.

The purchase must be completed by the latest of the following dates:

• 18 months after the right to reside was terminated
• if the former resident has died – 14 days after the village operator is shown the probate of the former resident's will or letters of administration of their estate
• the day fixed by the Queensland Civil and Administrative Tribunal.

A resident can terminate their right to reside either by giving 1 month's written notice to the operator or by their death.

If the resident does not terminate their right to reside in a freehold unit, you aren't required to purchase the unit.

The resident may choose to list their property for sale before terminating their right to reside (subject to their residence contract). If this occurs, the mandatory purchase provisions start from the date that their right to reside is terminated.

Purchase price of freehold property

If you and the former resident agreed on a resale value in the previous 3 months, that becomes the price for the mandatory purchase.

If you didn't agree on a resale value in the previous 3 months, you must have a registered valuer provide an independent valuation of the unit. This valuation will be the agreed value for the mandatory purchase.

Alternatively, you and the former resident can agree on a value for the mandatory purchase.

Extensions

You may apply to QCAT for an order extending the time by which you must pay the exit entitlement of the former resident or complete the purchase of a former resident's freehold property.

QCAT may order an extension if they are satisfied that:

• you are unlikely to be able to sell the right to reside in the unit before the exit entitlement is due to be paid
• you are likely to suffer undue financial hardship if the order is not made
• the order would not be unfair to the former resident (who may make submissions about hardship they are likely to suffer if the order is made).

Rights of a spouse or relative

A spouse or relative who has lived in the unit for 6 months or longer, but was not a party to the residence contract, has the right to live in the unit for 3 months after the resident dies or leaves.

The spouse or relative must write to you within 14 days of the termination date stating that they agree to the terms of the resident's contract while they live in the unit.

During the 3 months, the relative has all the rights and liabilities of a resident.

If the spouse or relative meets certain conditions, they may enter into a residence contract for the unit before the 3-month period expires.

These conditions include when:

• the original resident's interest was leasehold or licence
• no other person has a right under the contract to live in the unit
• they meet the eligibility criteria to live in the village
• they give written notice of their wish to enter into a residence contract at least 14 days before the end of the period.

A residence contract entered into by the spouse or relative must be on the same terms as would be offered to any other potential resident, and adjusted to include any agreement between the relative and the scheme operator about the re-instatement work for the unit.

Also consider...

• Read the Retirement Villages Act 1999.
• Read the Retirement Village Regulation 2018.
• Learn more about the role of the Queensland Civil and Administrative Tribunal (QCAT).