Information Centre · Retirement Villages
Retirement Village Refurbishment and Reinstatement Disputes in Victoria
A neutral overview of reinstatement and refurbishment rules in Victorian retirement villages, aligned with the Retirement Villages Act 1986 (Vic) and the 1 May 2026 reforms.
Key points
- The Retirement Villages Act 1986 (Vic) distinguishes maintenance, capital maintenance, capital replacement, reinstatement on departure and voluntary renovation — each with different cost-allocation rules; the label an operator uses is not determinative.
- For non-owner residents whose departure is governed by the current regime that commenced on 1 May 2026, the premises must be left reasonably clean and in the same condition as at commencement, subject to fair wear and tear, measured against the prescribed entry condition report.
- The reinstatement notice process is procedural: operator notice within 21 days of handback specifying works and estimated cost; a late notice has no legal effect for recovering costs; resident's written disagreement within 21 days; no disputed works until the dispute is resolved; works generally completed within 90 days after handback or a longer period agreed in writing; liability limited to the reasonable actual cost of reasonably required works.
- A resident is not required to renovate or pay for renovation on leaving; a voluntary renovation cost-sharing arrangement must contain the prescribed matters including contribution proportions, matching gain and loss proportions and a completion date.
- The post-1 May 2026 rules should not be applied indiscriminately to contracts signed before that date, owner residents or arrangements governed by owners-corporation obligations — transitional provisions of the Act apply.
- Capital replacement is not to be charged to recurrent maintenance charges and the capital maintenance fund is not to be used for renovation of vacated premises; the Owners Corporations Act 2006 (Vic) may also apply in owner-resident villages.
"Refurbishment" is not a single universal contractual liability in Victorian retirement villages. The Retirement Villages Act 1986 (Vic) distinguishes maintenance, capital maintenance, capital replacement, reinstatement on departure and voluntary renovation. This article explains those distinctions, the current statutory reinstatement-notice process for non-owner residents and the dispute pathways available.
The Categories the Act Uses
- Maintenance. Day-to-day operating cost of the village, funded through recurrent maintenance charges.
- Capital maintenance. Ongoing repair and upkeep of capital items, funded through the capital maintenance plan and fund.
- Capital replacement. Replacement of a capital item that has reached the end of its life. Not to be charged to recurrent maintenance charges.
- Reinstatement. A non-owner resident's obligation to leave the premises in the condition required by the Act on departure.
- Voluntary renovation. Renovation works agreed between the operator and resident under a compliant cost-sharing arrangement.
Departure Condition (Non-Owner Residents, Post-1 May 2026)
Under the current statutory regime commenced on 1 May 2026, a non-owner resident is required to leave the premises reasonably clean and in the same condition as at commencement, subject to fair wear and tear and the treatment of added or altered fixtures. The prescribed entry condition report is the reference point for that comparison. Owner residents sit under different arrangements, including any applicable owners-corporation rules.
The Reinstatement Notice Process
- the operator must give a written reinstatement notice within 21 days after the premises are handed back, specifying the particular works and estimated cost;
- a late notice has no legal effect for recovering reinstatement costs from the resident or estate;
- the resident may give written disagreement with the notice within 21 days after receiving it;
- disputed works may not be carried out while a timely dispute remains unresolved;
- works are to be completed within 90 days after handback or such longer period as is agreed in writing; and
- the resident's liability is limited to the reasonable actual cost of the work reasonably required, in accordance with the Act.
Renovation Is Voluntary
A resident is not required to renovate or pay for renovation on leaving. Any voluntary renovation cost-sharing arrangement must contain the current prescribed matters, including contribution proportions, matching gain and loss proportions, and a completion date. A cost-sharing arrangement that does not comply with the Act may not be enforceable.
Transitional Position
The reinstatement and renovation rules commenced on 1 May 2026 and are subject to the transitional provisions of the Act. They should not be applied indiscriminately to contracts signed before that date, to owner residents, or to arrangements governed by owners-corporation obligations. Each earlier contract must be assessed on its own terms and against the applicable transitional provisions.
Capital Maintenance and Capital Replacement
Operators must maintain a capital maintenance plan and fund on the basis set by the Act. Capital replacement is not to be charged to recurrent maintenance charges. The capital maintenance fund is not to be used for renovation of vacated premises. In owner-resident villages, the Owners Corporations Act 2006 (Vic) may also apply to relevant works; any exception under that framework must be applied on its own terms.
Evidence
Evidence relevant to a reinstatement or refurbishment dispute may include the entry condition report, dated photographs and video, the current condition report, the reinstatement notice and any written disagreement, itemised scopes of works, competitive quotations, contract clauses, records of maintenance during occupancy and any correspondence with the operator. What is reasonable is assessed against the specific work and evidence, not by any fixed formula.
Dispute Pathways
The three main pathways are the operator's village dispute procedure, free voluntary VicAssist Retirement Villages conciliation, and VCAT where jurisdiction is available. Available orders depend on the statutory power engaged in the particular application. Outcomes cannot be predicted in advance.
Related Reading
- Retirement Village Disputes and VCAT
- Retirement Villages in Victoria: A Practical Guide
- Retirement Village Contracts Explained
- When a Retirement Village Resident Dies
Frequently Asked Questions
What are 'refurbishment' and 'reinstatement'?
The Retirement Villages Act 1986 (Vic) distinguishes maintenance, capital maintenance, capital replacement, reinstatement (a non-owner resident's condition obligation on departure) and voluntary renovation. Each category has different rules on who pays and how the cost is allocated. 'Refurbishment' is not a single universal contractual liability.
What condition must a non-owner resident leave the premises in?
For contracts governed by the current statutory regime that commenced on 1 May 2026, the premises must be left reasonably clean and in the same condition as at commencement, subject to fair wear and tear and the treatment of any added or altered fixtures. The prescribed entry condition report is the reference point.
How does the reinstatement notice process work?
The operator must give the resident (or the resident's representative) a written reinstatement notice within 21 days after the premises are handed back, setting out the specific works and an estimated cost. A late notice has no legal effect for recovering reinstatement costs. The resident may give written disagreement within 21 days after receiving the notice. The operator may not carry out disputed works while the dispute remains unresolved, and works are generally to be completed within 90 days after handback or a longer period agreed in writing.
Is the resident liable for the full quoted cost?
Under the current statutory regime, liability is limited to the reasonable actual cost of the work reasonably required, calculated in accordance with the Act.
Am I required to renovate or pay for renovation on leaving?
No. A resident is not required to renovate or pay for renovation on leaving. Any voluntary renovation cost-sharing arrangement must contain the current prescribed matters, including contribution proportions, matching gain and loss proportions and a completion date.
Do the 1 May 2026 rules apply to contracts signed before that date?
The Act contains transitional provisions. The post-1 May reinstatement and renovation rules should not be applied indiscriminately to earlier contracts, owner residents or arrangements governed by owners-corporation obligations. Earlier contracts should be assessed against their own terms and the applicable transitional provisions.
Who pays for capital maintenance and capital replacement?
The Act separates maintenance, capital maintenance and capital replacement. Capital replacement is not to be charged to recurrent maintenance charges. The capital maintenance fund is not to be used for renovation of vacated premises. For owner-resident villages, the Owners Corporations Act 2006 (Vic) may also apply.
Do I have to accept the operator's chosen contractor or quote count?
The Act does not prescribe a fixed number of quotes, a mandatory tender, a specific depreciation schedule, a formula for fair wear and tear, a universal 'new for old' rule or an entitlement for the resident to choose the contractor. What is reasonable depends on the specific work, evidence and contract.
How are refurbishment disputes resolved?
Through the operator's village dispute procedure, free voluntary VicAssist Retirement Villages conciliation and, where jurisdiction is available, VCAT. Available orders depend on the statutory power engaged. Outcomes cannot be predicted in advance.
How Parke Lawyers Can Help
Parke Lawyers advises Victorian residents, former residents and estates on refurbishment and reinstatement disputes on exit from a retirement village, including VCAT applications, through our Retirement Living & Aged Care team. Speak with our team early so the contract, condition report, scope of work, costs and exit entitlement can be scrutinised before deductions are accepted.
Retirement Villages
Reinstatement or Refurbishment Notice?
We advise Victorian residents, families and estates on reinstatement notices, refurbishment scopes and the current statutory framework.
This article is general information only and does not constitute legal advice. Please obtain advice tailored to your circumstances.