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Retirement Homes - The Full Impact for Clients
In 2003, the Government enacted the Retirement Villages Act which requires that all Retirement Villages be registered with the Ministry of Economic Development (Companies Office), new Villages by 1 November 2007. This Act brings into force what could be construed as a “code of conduct” for retirement villages to adhere to together with more emphasis on residents’ rights.
Under the Act, Retirement Villages must file with the Ministry a Code of Practice (to be approved by the Ministry), a Disclosure statement, and an Occupation Right Agreement (the old Occupation Licence) albeit with existing Villages able to use their present Occupation Licence Agreements.
Code of Practice
Under the Code of Practice, a Village Operator must inform residents about its policies and procedures and how the operator will meet the requirements of the Code. Some of the aspects of the Code will relate to safety and personal security of residents, village staff, transfers by residents within the Village, meetings, fire protection and emergency management and procedures. The Code also impacts on the Village Operator in respect of its responsibilities in relation to the sale and disposal of units, refurbishment requirements, termination of Occupation Right Agreements etc. Further, a Code of Residents Rights came into force on 1 May 2007. This Code must be given not only to all existing Village residents but also to all prospective residents.
If any clients are contemplating purchasing into a Village that has not registered itself by 1 November 2007, then that Village is not entitled to advertise or make any representations about itself. A new village which is being developed or is developed is able, from 1 May to 31 October 2007, to advertise itself as a retirement village, but is not able to make offers of occupation rights. It can, however, make a limited statement that it intends to apply for registration as a Village under the Act, and make offers of occupation to the public. However, any statement must contain only rudimentary information about the Village.
Occupation Right Agreement
If you enter into an Occupation Right Agreement, there is now a “cooling off” period of fifteen working days from the date of the agreement whereby you are able to cancel the agreement. Additionally if the Villa or Unit is not completed within six months from the date of the agreement, again you have the right to cancel the agreement. Any notice of cancellation must be in writing. If any monies have been paid by the intending purchaser, these will be refunded in full. A stakeholder such as a Statutory Supervisor of the Village would hold these monies.
The new legislation outlines a Complaints Facility that now exists for residents. As from 1 October 2006, Village Operators must have in place procedures for acknowledging complaints, deciding on complaints made and resolving same. Again, residents should have received a copy of this procedure. However, residents can still inform the Statutory Supervisor of a Village of a complaint if need be.
Independent Legal Advice
Finally, to discourage unscrupulous operators, the Act now requires that prospective retirement village residents must:
- receive independent legal advice before signing the Occupation Right Agreement; and
- have their signature on the agreement witnessed by a lawyer, and that lawyer must certify that he or she has explained to the resident the general effect of the agreement and its implications.
The new Act does afford prospective and existing residents of Retirement Villages more protection as well as compel Village Operators to maintain their standards.