What Should You Check Before Signing a Retirement Village Agreement?

The Documents You Should Receive

Before signing, you should receive — and properly read — at minimum:

• The disclosure statement. The statutory summary of the village, the operator, the fees, the exit arrangements and any matters that may affect a prospective resident's decision.
• The residence contract. The contract granting the right to occupy a unit, governing the entry contribution, deferred management fee, exit entitlement and resale.
• The service or management agreement. The contract dealing with recurrent charges, services, budgets and consultation with residents.
• The village rules. The internal rules governing behaviour, use of facilities, pets, visitors and similar matters.
• The last three years of financial statements and the current year's budget. Essential to understand the trajectory of recurrent charges.
• The capital maintenance fund details. Who pays into it, what it covers, who decides how it is spent.

Disclosure Documents

The disclosure statement is the single most important pre-contract document and should be read in full. Things to look for include:

• the in-going contribution and how it is treated;
• the deferred management fee formula and cap;
• whether the resident shares capital gain or loss on resale;
• refurbishment obligations;
• the waiting period before the exit entitlement is paid;
• any pending or recent disputes;
• insurance arrangements; and
• changes to fees, rules or services in the last three years.

If the disclosure statement is inconsistent with the contract itself, raise it in writing. Inconsistencies are common, and the operator usually agrees to clarify or amend before signing.

Residence Contracts

The residence contract is the core agreement. Pay close attention to:

• The nature of the interest. Lease, licence or strata title — and the practical consequences of each.
• The term. Whether the right to occupy ends on death, departure, or a fixed date.
• Entry contribution. The amount, when it is payable, and how it is treated for the purposes of exit calculations.
• Deferred management fee (DMF). The percentage, the period over which it accrues, whether it is calculated on the in-going or resale price, and the cap.
• Capital gain or loss provisions. Whether any uplift on resale is shared with the operator and, if so, in what proportion.
• Refurbishment. Who decides what refurbishment is required at exit, who pays, and how disputes about cost are resolved.
• Resale. Who markets the unit, who sets the price, and what happens if the unit does not sell within a specified period.
• Waiting period. The maximum time the operator may take to pay out the exit entitlement.

Service Agreements

The service agreement sets out what you are paying for in your monthly recurrent charge. Confirm:

• exactly what services are included;
• what services attract additional fees;
• how increases are calculated and consulted on;
• whether you have a right to attend annual budget meetings; and
• the operator's obligations to provide audited financial statements.

Recurrent Charges

The recurrent charge is the ongoing monthly or fortnightly fee. Two questions matter most:

• How has it moved over the last 3–5 years? Compare to CPI and to other villages in the area. A consistent pattern of above-CPI increases suggests future pressure.
• What happens if a resident cannot afford it? Hardship provisions vary between villages.

Recurrent charges generally continue to be payable after a resident vacates the unit but before resale. Some contracts cap the period; others do not. This can be one of the most significant practical issues in a difficult resale market.

Capital Gain Provisions

Some contracts give the resident 100 per cent of any uplift in the resale price; others split the gain with the operator, often 50/50 or 70/30 in the operator's favour. The same is true of capital losses: some contracts share the downside; others leave it entirely with the resident. Understanding which model applies and modelling several resale scenarios is essential.

Refurbishment Clauses

Refurbishment is one of the most common sources of dispute at exit. Look carefully at:

• who decides whether refurbishment is required and to what standard;
• whether the standard is "marketable condition", "as new" or somewhere in between;
• who selects the contractor and whether quotes are competitive;
• what items the resident is responsible for versus normal wear and tear; and
• the resident's right to dispute the assessment.

Exit Fees

Beyond the DMF, exit can involve sales commission, marketing fees, legal costs and ongoing recurrent charges. Ask the operator for a worked example of a three-year, five-year and ten-year departure to see the real numbers in your own contract.

Resale Provisions

Check whether:

• the operator has the sole right to market and sell the unit, or whether the resident can engage their own agent;
• the resident must agree to the resale price or whether the operator can sell at a price set by it; and
• any minimum waiting period applies before the operator is obliged to buy back the right.

Cooling-Off Rights

The Act provides a cooling-off period during which the resident can terminate without significant penalty. The mechanism, the period and any deduction the operator may apply should all be in the contract and consistent with the legislation. Cooling-off rights must be exercised in writing within the period — verbal indications are not enough.

Should Family Members Be Involved Before Signing?

Retirement village contracts are long, expensive and have consequences that often outlast the resident. Involving adult children or a trusted adviser at the review stage is almost always a good idea.

• A second set of eyes helps prevent later misunderstandings about the resident's wishes and the financial reality of the arrangement.
• Family members are typically the ones who deal with the village on exit — particularly after death — and benefit from understanding the contract beforehand.
• Reviewing the entry contribution, recurrent charges and likely exit return together helps the family plan around the resident's broader financial position.
• Independent legal advice — separate from any adviser connected to the operator — protects everyone involved.

What Happens If a Resident Dies?

Most prospective residents focus on what happens if they voluntarily leave the village. Equally important is what happens on death — because for many residents that is how the contract will ultimately end.

• Recurrent charges generally continue. Monthly fees usually remain payable from the estate until the unit is resold, even though no one is living there.
• The executor or administrator steps in. The legal personal representative deals with the operator, clears the unit, coordinates refurbishment and signs the resale documents.
• DMF and other exit costs still apply. The DMF, refurbishment costs, marketing fees and any shared capital-gain provisions are calculated and deducted from the resale proceeds in the same way as a voluntary exit.
• Resale timing affects beneficiaries. The estate cannot be fully distributed until the exit entitlement is paid, which may be months or years after death depending on the resale market and the contract's waiting period.
• Estate administration should be considered before signing. The contract's operation on death — not just on voluntary departure — should be modelled and discussed with the executor before committing.

Questions to Ask Before Signing

1. What is the actual amount I will receive at exit if I leave after three, five and ten years?
2. How has the recurrent charge moved over the past five years?
3. What is included in the recurrent charge and what is extra?
4. Who decides the standard of refurbishment, and is there a maximum cap?
5. Who markets the unit on resale, and at what cost?
6. What happens if the unit does not sell within six or twelve months?
7. Are recurrent charges still payable after I leave but before resale, and if so for how long?
8. How many residents have left in the past three years, and what was the average resale period?
9. Are there any current or recent VCAT proceedings involving the village?
10. What changes to the village rules have been made in the past three years?

Retirement Village Entry Is a Good Time to Review Your Estate Plan

Moving into a retirement village changes the resident's assets, living arrangements and the people likely to assist them in the years ahead. It is a natural moment to revisit the estate plan.

• Update the Will to reflect the new asset position and any change in beneficiaries or executor.
• Review enduring powers of attorney so a trusted person can deal with the operator if capacity declines.
• Confirm medical treatment decision-maker appointments are current and consistent with the resident's wishes.
• Consider how the retirement village arrangement interacts with future probate and deceased estate administration, including the practicalities of clearing and reselling the unit.
• Make sure family members understand the resident's wishes — both about the village contract and the broader estate plan.

A Pre-Signing Checklist

• Disclosure statement received at least 21 days before signing.
• Residence contract, service agreement and village rules reviewed by an independent lawyer.
• Three years of financial statements and the current budget reviewed.
• DMF modelled at three, five and ten years.
• Capital-gain and capital-loss scenarios modelled.
• Refurbishment and resale clauses understood.
• Recurrent-charge trend over five years compared to CPI.
• Estate planning documents reviewed — including Will and enduring powers of attorney.
• Sale of existing home properly coordinated with entry timing.
• Cooling-off period diarised.

How We Help

We review retirement village contracts on a fixed-fee basis for prospective residents and their families. Our review covers the disclosure statement, residence contract, service agreement and village rules, with a short written advice that translates the legal language into plain English and flags the practical issues that matter.

Related Reading

• Retirement Villages in Victoria: A Practical Guide
• Leaving a Retirement Village: Exit Fees and Resident Rights
• Retirement Village Contracts Explained: Common Clauses and Common Mistakes
• Wills & Estate Planning

Frequently Asked Questions