Retirement village contracts: the questions to ask before you sign

Before you sign anything, the village must give you certain documents. In Queensland, that’s a Village Comparison Document and a Prospective Costs Document, at least 21 days before you sign. The Prospective Costs Document sets out the entry, ongoing and exit costs for the unit you’re looking at. In NSW, you get a general inquiry document, a disclosure statement and the contract, which must reach you at least 14 days before you sign.

Read them with a pen in hand. Write your questions in the margin. Then ask the village to answer them in writing, so you have a record.

Don’t let anyone rush you. A “special offer” that ends Friday is a reason to slow down, not speed up. If you’re an adult child helping a parent, your job is to make sure the questions get asked, not to make the decision for them.

• Have I got every document the law says I should get?
• What type of contract is this: a lease, a licence, strata title or something else?
• Can I take the documents away and show them to my solicitor and family?
• Can you put your answers to my questions in writing?

The entry payment is usually the biggest cheque you’ll ever write after buying a house. In Queensland it’s called an ingoing contribution. Make sure you know exactly what it buys and whether any other costs come with it.

In NSW, some up-front costs are capped by law. For example, contract preparation costs and waiting list fees have limits, and holding deposits must be refunded if you change your mind. Ask what each payment is for.

• What is the full entry payment for this unit?
• Are there other costs to move in, such as legal fees, stamp duty or a holding deposit?
• Is the holding deposit refundable, and how quickly?
• Do I own anything, or am I paying for the right to live here?
• Can I make changes to the unit, and who pays for them?

Every village charges an ongoing fee. In Queensland it’s the general services charge. In NSW it’s the recurrent charge. On top of that, there may be charges for optional services and your own bills.

Fees go up over time. In Queensland, increases in the general services charge are generally limited to CPI (a measure of inflation) unless residents vote for more, with some exceptions such as rates and insurance. Ask to see how fees have changed over the last few years, and look at the village budget.

• How much is the weekly or monthly fee, and what does it cover?
• How much has it gone up each year for the last five years?
• What do I pay for separately: electricity, water, internet, contents insurance?
• Is there a maintenance or capital works fund, and who pays into it?
• Can I see the latest budget and financial statements?
• What optional services are there, and what do they cost?

This is the most important part of the contract and the easiest to skim past. The exit fee, also called a deferred management fee or departure fee, is paid to the operator when you leave. It usually grows each year you live there, up to a maximum.

Ask the village to show you, in dollars, what you would get back if you left after one, three, five and ten years. In NSW, you can also ask for a contract check-up meeting later on, where the operator must give you a written summary of your costs as if you left on a set date.

• How is the exit fee worked out, and what is the maximum?
• Is it a percentage of what I paid or of the resale price?
• Who gets any capital gain, and do I share any capital loss?
• Will I have to pay for refurbishment or renovation when I leave?
• Who pays the selling costs, such as agent fees and marketing?
• Can you show me, in dollars, what I would get back after one, three, five and ten years?

A retirement village is not an aged care home. Most villages don’t provide nursing care. But the help on offer varies a lot, from a weekly bus to meals and personal care.

Think about the next ten years, not just today. What happens if you need more help, or if one of you needs care and the other doesn’t?

• Is there an emergency call system, and who answers it, day and night?
• Is there staff on site, and when?
• Can I get government-funded home care here, and does the village have rules about who provides it?
• Are meals, cleaning or personal care available, and at what cost?
• If I need to move into aged care, what happens to my fees and my money?
• If my partner moves into aged care, can I stay?
• Can a family member or carer stay with me?

Most people don’t plan to leave, but everyone does in the end. How and when you get paid matters, for you and for your family.

In Queensland, if your unit hasn’t sold, the operator must pay your exit entitlement no later than 18 months after you leave, and may have to buy your unit. You may keep paying the general services charge in full for up to 90 days after you leave, then share it. In NSW, if you have a loan or licence contract, general services charges stop no more than 42 days after you leave, and there’s a process to apply for an exit entitlement order if your unit hasn’t sold within a set time.

• Who sells my unit, and who sets the price?
• How long does it usually take for units here to sell?
• What fees do I keep paying after I leave, and for how long?
• When exactly will I, or my estate, be paid?
• What happens if I die: can my partner stay, and what does my family need to do?

The money questions matter, but people rarely leave a village because of the contract. They leave because they’re unhappy there. So ask about daily life too.

Visit more than once, at different times. Have a meal if you can. Talk to residents without the sales staff nearby. Ask what they like, and what they’d change.

• Is there a residents’ committee, and how does management respond to it?
• What are the village rules on pets, visitors, parking and noise?
• What activities are actually running, and who organises them?
• Are there plans to expand, redevelop or sell the village?
• How are complaints handled?
• Would residents choose this village again?

Village contracts are complex. Have your own solicitor read the contract before you sign, ideally one who works with village contracts regularly. Don’t rely on a solicitor suggested by the village.

Free help is available. In Queensland, Caxton Legal Centre runs the Queensland Retirement Village and Park Advice Service, a free legal service for people living in, or planning to move into, a retirement village. In NSW, Seniors Rights Service offers free legal advice to current, former and prospective village residents, and can refer you to solicitors who know village contracts.

For questions about how a move might affect your pension, the Financial Information Service at Services Australia is free. For bigger financial decisions, a licensed financial adviser can help.