Termination of a retirement village residence contract

This schedule must included with retirement village residence contracts entered into on or after 1 October 2015.  The information generally reflects the termination rights and responsibilities under retirement villages law.

1. A resident’s right to occupy residential premises

The legal right to occupy particular residential premises in a retirement village most often follows the signing of a residence contract and in many instances involves the payment of a sum of money called ‘a premium1’.

A residence contract is a binding agreement between the resident and the operator2 of the village (who may or may not also own the village). It can take a variety of forms including:

  • non-owner residence contracts which take the form of a lease for life, a lease/licence to occupy, or a periodic or fixed term rental agreement. Each of these grant occupancy rights but not land ownership to residents;
  • owner residence contracts in a strata title scheme which grant both occupancy rights and ownership of a ‘lot’ (land and buildings) within the village; and
  • owner residence contracts that confer a right to occupy particular premises under a purple title scheme in which the resident becomes a co-owner after buying an undivided share of the village.

2. Termination initiated by an operator and recovery of the residential premises

A residence contract and right of occupation cannot be terminated by an operator without a resident’s consent except in the range of circumstances specified in sections 17, 58, 59, 62 and 63 of the Retirement Villages Act 1992 (the RV Act). Paragraphs 4 and 5 below contain additional detail on these provisions.

An operator of a retirement village or any other person is prohibited from entering residential premises occupied by a resident of the village under a residence contract for the purpose of recovering possession of the premises, unless this is authorised by a judgment, warrant or order of a court or the State Administrative Tribunal (SAT) (section 66).

An operator is also prohibited from commencing proceedings in a court for the recovery of possession of residential premises occupied by a resident of a village under a residence contract (section 65).

These provisions ensure that the SAT has primary jurisdiction in relation to the termination of residence contracts.

3. Termination initiated by a resident (sections 14 and 17)

A resident can rescind a residence contract within seven working days after entering into the contract (the cooling off period) as long as they have not moved into the residential premises (section 14). A longer period3 applies where the resident was not given the pre-contractual disclosure documents required by section 13(1) (see section 14(1)(b) of the RV Act).

Other ways in which the resident can terminate the residence contract (section 17) include:

  • if the resident dies; or
  • if the resident decides that they want to terminate the residence contract. Some residence contracts will include a process by which the resident informs the operator of an intention to terminate the residence contract. Under the Retirement Villages Regulations 1992 (RV Regulations) a resident cannot be required to give more than 30 days notice of an intention to terminate the residence contract. A residence contract also cannot require a resident to do anything contrary to conditions set out under sections 57, 58, 59, 62 and 63 of the Act. These grounds are explained in paragraph 5. For example, a residence contract that requires the resident to surrender the lease where the resident is unfit to care for themselves and to undergo medical examinations without consent is contrary to the requirements in section 58 of the RV Act.

4. Termination of a residence contract by the State Administrative Tribunal

The SAT may terminate a residence contract on certain grounds specified in sections 57, 58, 59, 62 and 63 of the Act. These grounds are explained in paragraph 5.

Where the SAT makes an order terminating a residence contract on any of these grounds, it also has the power to make additional orders including those relating to payment or refund of monies by the operator to the resident or by the resident to the operator.

If the SAT makes an order terminating a residence contract it must also fix a date by which the residential premises are to be vacated by the resident. The SAT may also suspend the operation of an order fixing a date by when a resident must vacate residential premises, or refuse to make an order terminating a residence contract (section 64).

A resident who does not vacate the premises by the set date may also be required to pay the operator compensation by order of the SAT.

5. Grounds for termination by the SAT

5.1 Dispute about transfer of resident to other accommodation in village – resident initiated (section 57)

A resident of a retirement village may apply to the SAT for an order in respect to a dispute between the resident and the operator of the village as to whether the resident should be transferred from one residence in the village to another.

Other dispute resolution procedures available to the resident under the Act or the Fair Trading (Retirement Villages Code) Regulations 2015 (RV Code) must have been exhausted before the resident can make an application.

For the purpose of determining an application, the SAT may, with the consent of the resident, request and have regard to various reports about the resident’s physical or mental capacity. The SAT may make one or more of the following orders in respect to an application made under this section of the Act:

  • an order that restrains the operator from transferring the resident to another kind of accommodation within the village; or
  • an order that requires the resident to transfer or the operator to transfer the resident to another accommodation; or
  • an order terminating the residence contract and setting a date by which the residential premises must be vacated by the resident.

In addition to the above orders, the SAT can make an order for the payment or refund of money:

  • by an operator to a resident; or
  • by a resident to an operator.

5.2 Medical grounds – operator initiated (section 58)

The SAT may, on the application of the operator of a retirement village, make an order terminating the residence contract of a resident where the SAT is satisfied that:

  • the residential premises occupied by the resident are unsuitable for occupation by the resident due to the resident’s physical or mental incapacity; or
  • it is otherwise appropriate to terminate the contract having regard to the circumstances of the case.

For the purpose of determining such an application, the SAT may with the resident’s consent request, and have regard to, various reports about the resident’s physical or mental capacity. The SAT cannot order termination of a residence contract under this section of the Act unless it is satisfied that the operator has given the resident (and followed any procedures specified in the RV Code or the residence contract for giving) notice of intention to terminate the residence contract and for termination of the contract.

To make an order terminating the residence contract the SAT must also be of the opinion that the residential premises are unsuitable for the resident because of the resident’s physical or mental incapacity or the circumstances of the case are such that it is otherwise appropriate to order that the residence contract is terminated.

5.3 Breach of residence contract or rules – operator initiated (section 59)

Where a resident of a retirement village has breached the residence contract or the residence rules of the village, the SAT may, on the application of the operator of the village, make an order terminating the residence contract if the SAT is satisfied that in the circumstances of the case:

  • the breach is such as to justify termination of the contract; or
  • persistent breaches by the resident are such as to justify the termination of the contract; or
  • it is otherwise appropriate to terminate the contract.

The SAT will not order a termination of a residence contract under this section of the Act if the operator has not given the resident the required notice of intention to terminate the residence contract and for termination of the contract (as set out in any applicable code or residence contract), unless the SAT thinks it is appropriate to do so in the special circumstances of the case (see ‘notice requirements’ below).

5.4 Serious damage or injury caused by resident – operator initiated (section 62)

On the application of the operator of a retirement village, the SAT may make an order terminating the residence contract where satisfied that the resident has intentionally or recklessly caused or permitted, or is likely to intentionally or recklessly cause or permit:

  • serious damage to the residential premises; or
  • injury to the operator or an employee of the operator or to any other resident.

The Act does not require the operator to give the resident a notice of intention to terminate the contract before making this application.

In addition to making an order terminating a residence contract, the SAT may make other such orders as it thinks fit (including compensation orders payable by the resident or the operator to the other party).

5.5 Undue hardship to operator – operator initiated (section 63)
On the application of the operator of a retirement village, the SAT may make an order terminating the residence contract of a resident where the SAT is satisfied that the operator would, in the special circumstances of the case, suffer undue hardship if the contract were not terminated.
The Act does not require the operator to give the resident a notice of intention to terminate the contract before making this application.
In addition to making an order terminating a residence contract, the SAT may make other such orders as it thinks fit (including an order that the operator pay compensation to the resident for the resident’s loss of rights under the contract).

5.6 Abandoned premises – operator initiated (section 68)

On the application of the operator of a retirement village the SAT may make an order that declares the residential premises occupied by a resident were abandoned by the resident on the day specified by SAT and the resident will be taken to have abandoned the premises on that day.

The operator is then entitled to be compensated by the resident for any loss caused by the abandonment. The operator does however have an obligation to mitigate any loss caused by the abandonment and is not entitled to compensation for losses that could have been avoided by the operator taking steps to mitigate the loss. The mechanism by which the operator is compensated is by an application to SAT for an order that the resident pay the operator such compensation as the SAT thinks fit.

6. Notice requirements

6.1 Notice to be given by resident

A residence contract cannot include a provision that requires the resident to give more than 30 days notice of the resident’s intention to terminate the contract. (Retirement Villages Regulations 1992 (reg. 7J(2)(b))

6.2 Notice to be given by operator

For the purpose of an application to terminate a residence contract under the following sections of the Act:

  • section 58 (termination of occupation on medical grounds); or under
  • section 59 (termination of occupation on grounds of breach of residence contract or rules).

The operator of a retirement village must give a resident at least 10 working days written notice of its intention to apply to the SAT for an order to terminate the contract.

The notice must:

  • if the termination is sought under section 58 - specify the reasons why the residential premises occupied by the resident are unsuitable for occupation by them;
  • if the termination is sought under section 59 - specify the relevant breach and give the resident a reasonable and specified time to rectify a breach that may be rectified;
  • clearly state that the residence contract cannot be terminated without an order by the SAT; and
  • advise the resident of their right to occupy the residential premises until any date of termination fixed by the SAT.

(Fair Trading (Retirement Villages Code) Regulations 2015, cl.34(1))

1 Amounts paid to secure a right to occupy premises are called a premium under the RV Act. A premium does not include an amount paid on a recurrent basis such as an amount paid monthly for rent or village operating costs.

2 Under the RV Act the operator of a village is referred to as the ‘administering body’.

3 17 working days after the date on which the pre-contractual disclosure documents are given to the prospective resident.

Consumer Protection
Schedule
Last updated 30 Sep 2015

Share this page:

Last modified: