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Understanding retirement village contracts and paperwork

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At a glance

When you apply to live in a retirement village, you will be given a large stack of papers. What do all the forms mean and where should you start?

Here is a brief introduction to retirement village contracts and paperwork to help you better understand the application process.

Please note: although we have sought the advice of retirement lawyers, we are not retirement law experts. This blog is intended as a guide and all content is for informational purposes only. If you require specific assistance, please consult your lawyer.

A retirement village has to give you four main documents before you sign up:
  1. Disclosure statement
  2. Occupation right agreement
  3. The Code of Residents’ Rights
  4. Retirement Villages Code of Practice

1. The disclosure statement

It’s a good idea to start with the disclosure statement, as this is the working document that explains how the village runs from day to day and what you can expect from living here.

In the disclosure statement, you’ll find information about:

  • The village’s ownership and management structure
  • Statutory supervision arrangements
  • Charges/fees associated with living in the village
  • An estimate of what you would receive if you left the village after two, five or ten years
  • The village’s community facilities and services, including what provision is made for maintenance at the village

The disclosure statement should also outline any plans for the development of the village including the building of new units (and the effect of this on existing residents), as well as any conditions and restrictions on the sale of units, and the time it has taken to sell vacant units over the past 12 months.

Understanding what’s on the horizon for a retirement village is important. For example, if new units are built, and these new units are for sale when you move out of the village, this could impact how long it takes to sell the licence over the (older) unit you occupied. Essentially, your older unit will be competing with the brand new units.

Disclosure statements vary from village to village, so it’s a good idea to get a lawyer to look over it to make sure everything appears to be in order.

2. The occupation right agreement

The occupation right agreement is the ‘terms and conditions’ agreement between a resident and a retirement village operator.

Under the Retirement Villages Act 2003, every intending resident must receive independent legal advice from a solicitor before signing an occupation right agreement.

The agreement sets out the terms and conditions on which you will be entitled to occupy and live in a unit at the village. It includes provisions relating to termination, weekly (and other) charges, whether the charges can be increased, village rules, and even whether you can have a pet.

As with the disclosure statement, the terms outlined in the occupation right agreement can differ from village to village. Your lawyer should talk you through the paperwork, isolate anything that appears unreasonable or unusual, and ensure you fully understand the agreement.

3. Code of Residents’ Rights

The Code of Residents’ Rights set out the general terms of respect and care that the Retirement Villages Act provides for all residents.

Here are some examples of the rights:

  • The right to services and other benefits as detailed in the occupation right agreement
  • The right to information about matters that could affect your residency
  • The right to be consulted about potential changes to services, benefits and charges
  • The right to complain and receive a timely response
  • The right to a speedy and efficient process for resolving disputes, and to use a support person when dealing with the operator or other residents of the village
  • The right to be treated with courtesy and not to be exploited

4. Retirement Villages Code of Practice

The Retirement Villages Code of Practice sets out the minimum requirements that operators of a retirement village must carry out to meet their legal obligations in New Zealand.

It covers areas such as:

  • Staff qualifications and training
  • Safety and security
  • Fire and emergency procedures
  • Frequency of residents’ meetings and residents’ participation in decision making
  • How the complaints process is conducted
  • What should happen upon termination of an occupation right agreement

When to seek legal advice

You are required by law to seek legal advice before you sign the occupation right agreement. As part of this process, you should also provide your lawyer with a copy of the village’s disclosure statement.

While it’s important to be familiar with the Code of Residents’ Rights and the Code of Practice, these don’t generally require legal advice in the sense that they’re non-negotiable and all registered New Zealand retirement villages have to comply with them.

If possible, we recommend having your lawyer go over all the documents with you, ensuring you fully understand the agreement you’re entering into.

Further reading

Article: What is a licence to occupy?Article: Capital gains and losses: Key things to know Download: Leaving the village

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