An Occupation Right Agreement (ORA) is the legal contract used by most retirement villages in New Zealand. It gives a resident the right to live in a specific home within the village and sets out the entry payment, ongoing fees, exit terms, and the rights and responsibilities of both the resident and the village operator.
Understanding an Occupation Right Agreement
When you move into a retirement village, you usually do not buy the home and land in the same way as a traditional property purchase.
Instead, you sign an Occupation Right Agreement (ORA) that gives you the right to live in a particular home within the village and use the shared facilities. In most villages this means you are buying a right of occupation under a licence to occupy, rather than owning the home and land outright, although some villages use other legal structures such as unit titles or leases.
How Occupation Right Agreements are regulated in New Zealand
Occupation Right Agreements are governed by New Zealand retirement village legislation, including:
- Retirement Villages Act 2003
- Retirement Villages (General) Regulations 2006
- Retirement Villages Code of Practice 2008
These rules require retirement village operators to:
- Provide a disclosure statement that explains key financial terms and other important information
- Ensure intending residents receive independent legal advice before signing an ORA
- Appoint a statutory supervisor to monitor the village’s financial position and the security of residents’ interests”
These protections are designed to help residents understand their rights and obligations before they move into a retirement village.
What an ORA includes
An Occupation Right Agreement is the legal contract between you and the village operator. It covers things like:
- The initial entry payment required to move in
- Ongoing fees for village services and maintenance
- How the exit payment is calculated when you leave
- The responsibilities of the resident and the operator
- The process for ending the agreement
Because these terms set out your long‑term costs and your rights as a resident (including what happens if you move out or need higher care), it is important to read the agreement carefully and get independent legal advice so there are no unexpected costs or obligations later.
Key things to check before signing an ORA
Before committing to a retirement village, it is important to review the agreement carefully. Key things to check include:
- The entry payment, what it covers, and whether any part is refundable
- Ongoing weekly or monthly fees, and when they can increase
- The deferred management fee or exit deduction, including the maximum percentage and how quickly it accrues
- Your responsibilities as a resident (repairs, insurance, rates, utilities)
- What happens when you leave the village or move into care, including how long you keep paying fees after you leave
Independent legal and financial advice can help you work through these points and compare different villages.
Occupation Right Agreement FAQs
Is an ORA the same as buying a home outside a retirement village?
No. An ORA is different from buying a home on the open market.
It gives you the right to live in a retirement village unit but usually does not provide full ownership of the home and land.
In some villages residents may own the home itself, but the ORA still governs how the home can be used, what fees apply, and what happens when you leave.
Can ORAs differ between villages?
Yes. ORAs can vary significantly between villages.
Differences may include:
- Fee structures
- Exit payment calculations
- Services included in village fees
- Maintenance responsibilities
This is why it is important to review each village’s ORA carefully.
Can the ORA change once I move in?
The core financial and occupancy terms of an ORA cannot be changed without your agreement.
Village rules, which are usually referred to within the ORA but set out in a separate document, may be updated over time by the operator within the limits set by the agreement and retirement village legislation.
What happens to my ORA if I need to move into care?
This depends on the village and the type of care available.
If a village has an onsite care home and you move into a care room, your ORA for independent living will usually end and the relevant exit terms will apply.
Some villages also offer care suites that operate under an ORA. In these cases a new ORA may be signed for the care suite.
Do I need a lawyer to sign an ORA?
Yes.
New Zealand law requires residents to receive independent legal advice before signing an Occupation Right Agreement. A lawyer must confirm that the agreement has been explained before it can be completed.
Sources
Retirement Villages Act 2003 Retirement Villages (General) Regulations 2006 Retirement Villages Code of Practice 2008Disclaimer:
This article provides general information. It is not financial or legal advice. Always review the disclosure statement and seek independent advice before signing an Occupation Right Agreement.
