Atkinson Vinden Lawyers

As one of New South Wales' leading law firms in providing expert advice in the health and aged care area, our particular focus is on compliance with the Retirement Villages Act, 1999 (NSW) and the Aged Care Act, 1997 (Cth).

Our experience is coupled with a pragmatic approach to issues and we concentrate on understanding your business and staff.  In doing so, we provide a hands on service and meet on site to better understand your needs.

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Specialist Advice Undertaken

• Implementation and continued compliance with the Retirement Villages Act, 1999 (NSW)
• Establishment of retirement villages and all aspects of documentation including Disclosure Statements, Service Agreements, Condition Reports, Leases and Strata Title Conditions
• Development finance for retirement villages and aged care facilities.  We act for various banks and financiers specialising in this area
• Regulatory advice and assistance in resolving disputes before both the Consumer Trader & Tenancy Tribunal and the Supreme Court
• Due diligence in the acquisition of retirement villages and aged care facilities
• Advice to various industry organisations such as the Retirement Village Association of New South Wales (NSW Division)
• Purchase and sale of real property, assistance in obtaining planning approvals and necessary appeals to the Land & Environment Court of New South Wales
• Documentation for nursing homes, hostel care and respite accommodation
• Assisted clients with audits from the Office of Fair Trading

Statutory Compliance

Retirement Village legislation is state-based. This lack of uniformity causes issues for operators located in more than one state.

The complex and constantly changing regulations result in increased costs for operators and need to be accounted for in projecting costs for the set up and operation of a village. Cost exposure has increased in the following areas:

• Capital costs, refurbishment and reduced scope to recover maintenance and outgoings from residents
• Automatic refunds to residents on termination
• Delays resulting from restrictions on resale of units
• Consumer activism that causes liability and litigation costs

We are active contributors to the Retirement Village Association and the Aged Community & Services Association, the peak industry bodies for the retirement village industry. Active in all states of Australia, both organisations provide products and services to retirement villages and their residents.

Estalishing a New Village

An experienced advisory team is recommended for set up and ongoing operation of a new village given the complexity of changing legislation and increasing consumer activism in aged care. Failure to engage this team is a common and costly error made by syndicates and developers.

For example correct legal documentation for the preservation of departure fees for vacating residents has become more frequently challenged.

Local councils’ specific town planning and zoning provisions need careful consideration from a legal perspective as there are often severe site restrictions and each council has their own prerogatives.

Contract preparation needs to be commenced at an early stage once the type of title has been selected for the project. The contract needs to be compliant with both council and state legislative requirements and when written to be ‘user friendly’, can contribute to the promotion of the village to intending residents.

Application For Development Approval

Since retirement village developments are politically sensitive for local councils, understanding the relevant planning instruments is essential and special legal representation may be required when councils choose to reject applications for political reasons.

Councils focus on location, transport, facilities and support services report: These may need to be translated into the contract and disclosure information as well as considering the requirements of the relevant retirement village legislation. The support services report particularly is likely to cause poor court assessment if typical areas are neglected such as: accessibility to units, gradients, flexi-care services, off site facilities, emergency communication systems and building standards relating to internal layout and finishes.

The local planning process can be costly and very drawn out if the initial application has not been well considered legally and inclusive of all possible aged care considerations that are outside the usual property development requirements.

Once approved, the construction contract needs to be carefully reviewed for crucial elements such as variations, progress payments, termination and timeframes.

Approval conditions the lawyer will need to implement will include: title consolidation, preparation of title restrictions on users and easements, specific by-laws for strata-title developments and conditions relating to facilities and support services.

Diversity of Title

Villages in the private sector usually operate under leasehold, strata or company title while those in the not-for-profit sector often utilise a licence arrangement.

There are many different variations, e.g. loan-lease or lease-premium and it becomes confusing for intending residents to make comparisons and some states have specified mandatory contract inclusions to assist this issue.

The different forms of title mostly focus around ownership and resident rights.  There have been cases of unscrupulous operators abusing loan-licence title and with financial losses for residents.

The lack of national uniformity in legislation has not addressed the differences between retirement village legislation and the legislation associated with the different title types e.g. strata-title legislation.

Examples of disadvantages of different title forms:

• Leasehold operators are being made liable for costs of capital replacement, refurbishment, depreciation and maintenance charges. New tax rulings have removed advantageous up front deductions and deferred income provisions.
• Strata title requires stamp duty payment in most states and there are management and operations issues as the operator does not own the units so contracts need to be well detailed.  Stamp duty on a lease is usually at a much lower rate.
• Company title incurs additional compliance costs and directors’ exposure under the Corporations Law.  Documentation can be more complex with matters like redeemable preference shares and this form of title is less understood by consumers.

Operator Disclosure Requirements

Disclosure for intending residents reduces the risk of future litigation if residents become dissatisfied. These need to be made openly available for intending residents and can be promoted in a positive context to facilitate comparison between villages.

There is no national uniformity on requirements, though the following documents under the New South Wales Act provide good information:

• Site plan with location, condition report, floor plans and dimensions
• Audited Village accounts for the last three financial years
• Examples of villages contracts
• Trust deed for any trust fund monies
• Village rules
• Terms of development consent
• Statements of fund balances for capital replacement or maintenance funds if established
• Fee calculation method for departure or termination
• Explanation of how termination can occur
• Calculation method for recurrent charges

Operator's Basic Obligations

This is a basic list of obligations, some of which are statutory:

• Insurance to full replacement value and public liability of not less that $10,000,000
• Security of premises in regards to working locks
• Provide statements of proposed expenditure 60 days prior to the start of a financial year
• Annual audit of village accounts
• Do not request or exercise a power of attorney or proxy on behalf of a resident unless the resident is a relative
• Ensure compliance of village rules and legal terms in village contract
• Access to resident’s premises in accordance with retirement village laws
• Seek residents' consent for proposed variations to village rules
• Use of any in-going contributions and departure fees paid by residents
• Settle disputes through Residential tribunal
• Follow the National Privacy Principles as minimum standards for handling residents’ personal information

Issues for Intending Residents

This is a basic list in a wide ranging area and seeking expert legal advice will be time well spent, as will meeting current village residents:

• Financial stability of the villages
• Management background
• Dependent sale status
• Services agreement
• Lifestyle issues such as car parking, pets and visitors
• Departure fees calculation method and capped amount
• Refund basis for prepaid rent
• Refund of initial purchase monies regarding re-sale or commissions
• Handling capital gain
• Capital loss liabilities
• Handling stamp duty
• Maintenance fees
• Liability for maintenance fees after vacating