Village residents need better rights
Retirement villages promise the good life in your golden years, however, the contracts signed before moving in often heavily favour the village. The contract terms can have a nasty financial sting if a resident’s circumstances change, and they need to vacate their property.
The Retirement Villages Act is supposed to protect consumers moving into a village. It's finally in review after two decades and aims to balance the rights of retirement village residents and operators.
What we're calling for
- Laws that will better protect residents.
- Independent advocacy support for residents.
- Fair contracts that are not heavily weighted in favour of village operators.
- A more effective dispute resolution system.
We will be submitting on the review, representing the voices of retirement village residents and their families. It’s about time residents start getting a fairer deal.
What do you think about retirement villages?
Your feedback will help us with our submission to the Ministry of Housing and Urban Development.Tell us
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Most retirement villages offer residents a “licence to occupy” which can cost anything from $200,000 to over a million dollars for a one-to-two-bedroom unit. Before moving in, a resident must sign an “occupation rights agreement”, also known as an ORA. An ORA gives a resident the right to occupy their unit, with no ownership rights, and sets out what residents can and can’t do.
Upon leaving the village, the resident (or their estate) forfeits a portion of the amount paid for the licence to occupy. This is called a “deferred management” or “exit” fee. This fee can be as much as 20 to 30 percent of the initial licence cost.
Most residents don’t get any capital gains when they leave their village. However, these residents could still be liable for capital losses. We think this is unfair. We want to ensure residents will only be liable for a capital loss to the same extent they would be entitled to a capital gain. So, if a resident is entitled to 50% of a potential capital gain, they should only be liable for up to 50% of any potential capital loss.
Most contracts include penalties for residents for any late payments. The late fees tend to be interest-based rather than flat fees – so the higher the bill, the more the resident ends up paying. However, some villages don’t pay any interest on money owed to a resident.
Other villages only pay interest on a resident’s exit payment if their unit is unsold after six months and some residents have told us they’ve had to wait many months for their occupation licence to be on-sold – leaving them in limbo while they wait for the money.
Mary*, an 80-year-old widow, was left in financial limbo, having to pay thousands of dollars in fees for a unit she had left almost a year ago.Read about Mary's story
Some contracts also make residents liable for the cost of repairs to appliances and other items in their unit, even though the resident does not own them. This could include the oven, garage door, plumbing or electrical fittings.
We think terms like this are at odds with residents’ rights under the Consumer Guarantees Act to receive goods and services of a reasonable standard. If the oven in a unit breaks, the village should wear the cost of repair or replacement.
Contracts dictate what residents can and can’t do in the unit they occupy. For example, there can be strict limitations on how long a resident can have visitors without the agreement of their village operator.
Some villages have contracts which restrict residents’ right to raise objections about developments within their village. We don’t think this is fair.
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