Village Guide

Terminating an occupation right agreement: Your questions answered

At a glance

Anyone living in a retirement village must sign and abide by an occupation right agreement. But, what happens if the resident – or the operator – wishes to terminate this agreement? Read on to find out.

An occupation right agreement (ORA) is the terms and conditions of living in a retirement village. It’s a written agreement between the resident and the village operator. Each prospective resident must get the ORA checked over by a lawyer before signing it.

ORAs vary from village to village, but they almost always include provisions relating to termination, weekly charges, pets, rules of the village, and more. It’s not only a legal obligation to talk through the ORA with a lawyer, it’s also a very good idea – a legal professional can help a prospective resident determine whether the agreement is reasonable, so they can make an informed decision.

Scenarios in which an ORA can be terminated

With the right legal advice before signing – and an understanding of the agreement on both sides – there should be no issue with everyone sticking to the rules.

However, if issues arise, there may be reason for the ORA to be terminated and for residents to move out.

The following are the scenarios in which an ORA can be terminated, as laid out in the Retirement Villages Code of Practice 2008.

1. The resident wishes to terminate

A resident can terminate their ORA at any time and for any reason. This means that a resident is not locked into living in their retirement village and can leave when they wish.

A resident wanting to leave will likely be required to give some notice, the length of which should be specified in the agreement. If there’s no notice period specified, the resident must give the operator at least one month’s notice in writing.

The ORA will also automatically terminate on the death of the resident, or if there are joint resident, on the death of the last one of them.

2. The unit is damaged

This could be due to weather, a natural disaster, or any other incident that is no-fault of the resident and results in the home being uninhabitable.

In most circumstances the operator will repair or replace a home – and the terms for this will be laid out in the ORA and are covered under the Retirement Villages Code of Practice 2008.

Often, if someone wants to stay in the village, they can move to another home. However, if for any reason that’s not possible, the agreement allows for termination. If this happens, repayment to the resident will be according to the terms set out in Code of Practice or any more favourable terms in the ORA.

3. The operator wishes or needs to terminate

An ORA can be terminated by an operator under certain circumstances – this is a big part of the reason that it’s important to carefully go over the agreement with a lawyer to ensure that a potential resident considers it fair. A resident has the right to challenge a decision to terminate by the operator but will be required to move out if the decision is found to be fair.

Reasons for termination by the operator are governed by the Code of Practice can include:

  • Medical grounds, such as an assessment by a medical professional (independent of the operator) that the resident’s physical or mental health has deteriorated to a point where they can no longer safely occupy the unit, or other residents can no longer safely occupy their units. Residents can get a second opinion.
  • Material breach of the ORA by the resident. The operator will notify the resident in writing of intent to terminate unless the breach is remedied, and provide the opportunity to remedy it.
  • Abandonment of the residential unit. Termination can happen after the operator has given the resident notice in writing and has made reasonable enquiries to ensure that the resident has, in fact, permanently abandoned the unit.
  • Serious harm caused to the unit or serious harm, injury or distress caused to other people by the resident. Again, notice must be given and an opportunity for the resident to remedy the harm caused, if possible.

The ORA will outline the process (which generally includes an initial notice of intention to terminate, and a final notice of termination) which must be followed should an operator wish to terminate. As mentioned in the above examples, adequate notice must be given, with the reasons for termination and the rights of the resident specified – these include the right to take a dispute to the disputes panel, and the right to a support person or representative.

If termination by the operator goes ahead, any money owed to the resident must be paid within five days of it taking effect.

Be informed

For more detailed information regarding the right of both residents and operators to terminate an occupation right agreement, take a look at the full Code of Practice.

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