Leaving a Retirement Village: Understanding Exit Fees and Resident Rights

How Departures Occur

A resident may leave a Victorian retirement village in three broad ways: by choice during their lifetime, by forced move because they need a higher level of care, or by death.

Permanent Moves During the Resident's Lifetime

A resident is always free to terminate their occupancy. The notice period and process are set out in the contract — typically 28 days' written notice. From the notice date, the operator starts the resale process and the resident plans their move. Some practical issues to think about include:

• where the resident will live until the unit is resold;
• how recurrent charges will be funded after departure;
• whether the resident's new accommodation (often an aged care facility) requires a refundable accommodation deposit that needs to be funded before the exit entitlement is paid; and
• whether bridging finance is needed and on what terms.

Move to Aged Care

Where the move is into aged care, the financial pressure is often acute. An aged care facility will usually require a refundable accommodation deposit before the new resident moves in, while the exit entitlement from the retirement village may be months — or longer — away. The Act provides protections in some circumstances, including mechanisms to access part of the exit entitlement to fund aged care. Each contract must be read carefully.

Death of a Resident

When a resident dies, the unit becomes the responsibility of the executor or legal personal representative of the estate. The operator should be notified promptly. The estate will need to:

• secure and inspect the unit;
• clear personal effects within the contractual period;
• liaise with the operator on the resale process; and
• continue to pay recurrent charges out of the estate until the unit is resold or the waiting period expires.

For more on the executor's broader responsibilities, see our guide to the duties of an executor in Victoria.

Sale and Resale Arrangements

In most Victorian villages, the operator manages the resale. The contract sets out who selects the agent, how the price is set, and whether the resident or estate has any veto right. Things to check include:

• Marketing. Whether the unit is actively listed externally or relies on the operator's existing waitlist.
• Pricing. Whether market evidence supports the listing price.
• Sales commission. Whether the operator's commission is in addition to the deferred management fee.
• Refurbishment timing. Whether refurbishment is completed before or during the marketing period.

Deferred Management Fees

The deferred management fee (DMF) is usually the single largest deduction at exit. It is calculated under the formula in the contract — a percentage of the in-going contribution or the resale price, accruing per year of residence and capped after a set number of years.

For a resident who has lived in a village for 12 years under a contract capped at 10 years, the DMF is fully "ripe": no further increases occur. A resident who leaves after three years pays only the portion that has accrued. Understanding where on the curve you sit at the point of departure helps to forecast the exit entitlement accurately.

Refurbishment Costs

Refurbishment is the second largest deduction in many exits and the most common source of dispute. The contract sets the standard. Common questions are:

• Is the unit being returned to "as new" condition or to "marketable" condition?
• Are upgrades being charged that the operator would have done in any event to maintain the village?
• Has the resident been given the chance to obtain independent quotes?
• Are the contractors at arm's length, or are they related to the operator?

Where refurbishment costs look excessive, residents and estates can — and frequently do — push back. A short negotiated reduction is the most common outcome.

Waiting Periods

The Act, and most contracts, require the operator to pay out the exit entitlement after a maximum waiting period, even if the unit has not been resold. The exact period depends on the contract and the legislation in force. Residents and estates should diarise this date and make written demand at the right time.

Common Disputes

In our experience, the most common exit disputes are about:

• excessive or duplicated refurbishment charges;
• recurrent charges continuing for longer than expected;
• delays in marketing or unrealistic listing prices;
• ambiguous capital gain or loss provisions where the resale market has moved; and
• poor communication between the operator and the resident or estate.

Most can be resolved through structured negotiation or mediation. The Act provides a tiered dispute-resolution process culminating in VCAT.

Rights of Residents and Families

Throughout the exit process, residents and their representatives are entitled to:

• clear written information about how the exit entitlement has been calculated;
• copies of refurbishment quotes and invoices supporting any deductions;
• regular updates on the marketing of the unit and any offers received;
• access to the village's internal dispute resolution process; and
• the ability to refer the dispute to VCAT if it is not resolved.

Practical Steps Before Leaving

1. Re-read the residence contract, focusing on the exit clauses.
2. Ask the operator for a written estimate of the exit entitlement.
3. Ask for a list of refurbishment items and itemised quotes.
4. Confirm the maximum waiting period and diarise it.
5. Confirm what recurrent charges will continue after departure and for how long.
6. Coordinate with any new aged-care provider or alternative accommodation in advance.
7. Take the contract — and the operator's calculations — to an independent lawyer before signing any release.

How We Help

Our retirement villages team acts for residents and estates throughout the exit process — reviewing exit calculations, negotiating refurbishment deductions, chasing waiting-period payments and, where required, running disputes through VCAT. We work closely with families and executors so that the exit is as smooth and financially sensible as the original entry was hopeful.

Related Reading

• Retirement Villages in Victoria: A Practical Guide
• What Should You Check Before Signing a Retirement Village Agreement?
• Retirement Village Contracts Explained
• Probate & Estate Administration

Frequently Asked Questions