Retirement Villages

The Retirement Villages Act 2003 has introduced some important changes to the way that retirement villages in New Zealand are run. Retirement village owners as well as both current and prospective residents should become familiar with these changes, some of which are outlined below:

Ownership
The main legal ownership or occupancy arrangements for retirement villages are an Occupation Licence, a Unit Title or a Unit title together with a life interest. There are other types.

Registration under the new Act
Operators of existing villages as at 1 May 2007 have six months to apply for registration under the new Act. Those now complying with the existing Securities Act regime generally have until 1 May 2008 to continue to advertise and take in new residents while not being registered. After this date the operator must issue a disclosure statement to every resident that complies with the new Act. Once they have done this they are then able to issue an Occupation Right Agreement (“ORA”) to residents and proposed new residents.

Documentation
New comprehensive requirements have been imposed in terms of the information that must be disclosed to prospective residents. Before an ORA can be entered into, an intending resident must receive the following:

A disclosure statement – Amongst other things this must include information about the ownership and supervision of the village, the terms of the ORA, accounting information and the nature of any service charges.
A copy of the ORA itself - This agreement confers a right to occupy a residential unit and outlines the terms and conditions of this occupation.
A copy of the Code of Residents’ Rights for the village.
A copy of the Code of Practice applicable for the village.

Independent advice
The Act introduces a requirement that residents receive independent legal advice (from a lawyer who does not act for the operator) before signing an ORA. This is to ensure that residents fully understand the legal agreement they are signing – before they sign it.

Statutory Supervisor
Generally, each village must now appoint a Statutory Supervisor who is an independent expert who watches over a village’s compliance with its legal obligations and has a key role in monitoring its financial position.

Services
The services offered will vary between villages. However each village recovers the cost of providing these services by way of weekly or monthly fees. Many villages also offer additional services negotiated on a “user-pays” basis. It is important to understand what each care package includes.

Complaints and Disputes
Residents have a right to complain and to receive a response to their complaint within a reasonable period. A two-tiered dispute resolution process has been introduced involving a facility for making complaints and if that does not resolve the complaint then there is a disputes panel.

The disputes panel is obliged to hold a hearing after receiving notice of a dispute and the parties are entitled to be present and heard. If the
dispute relates to the sale of a resident’s dwelling then special rules apply. An order by the disputes panel is binding on the parties and enforceable as if it were a court order.

Contact us
If you have any queries about the changes brought in by the Retirement Villages Act 2003 or if you or a family member is going into a retirement village and you want your ORA reviewed, then contact our Retirement Villages expert Clare O’Neill, Partner.

This acticle has been prepared by cavell Leitch Law for general information purposes only and important exceptions and other relevant factors may not have been included. If understanding the legal area covered by this article as it affects your specific circumstances is important to you then please contact us for a proper legal opinion.