- How does a retirement village exit entitlement affect funding aged care?
- For many residents, the retirement village exit entitlement is the pool of money that will fund the Refundable Accommodation Deposit (RAD), a Daily Accommodation Payment (DAP) or a combination for residential aged care. The problem is timing and amount. The exit entitlement is reduced by the departure (deferred management) fee and the other deductions allowed by the contract and the Act. For residence contracts entered into on or after 1 May 2026, section 32I of the Retirement Villages Act 1986 (Vic) requires payment by the earliest of the date fixed by the contracts, a date agreed with the resident, and 12 months after the resident permanently vacates (the exact trigger can differ for owner and non-owner residents). Contracts signed before 1 May 2026 are governed by their own terms and the transitional rules, so the timing under an earlier contract needs to be checked individually. Before payment, a non-owner resident accepted into an aged care home can ask the operator, on the approved form, to pay aged care payments direct to the home from the unpaid exit entitlement; owner residents cannot use that scheme but may request alternative accommodation payments for other accommodation. Advance payments are capped at 85% of the operator's reasonable estimate of the unpaid exit entitlement and stop on events including the resident's death. We advise on what the resident is realistically likely to receive, and when, so the family and their financial adviser can plan the aged care accommodation payment.
- Can an attorney surrender or sell a retirement village interest for the resident?
- Usually yes, provided the enduring power of attorney under the Powers of Attorney Act 2014 (Vic) is valid and covers financial matters. Dealing with the village operator, giving notice of intention to leave, signing exit documents, negotiating refurbishment scope, and dealing with sale or surrender arrangements all require the attorney to act within the scope of the appointment. Where the appointment is narrow, has been revoked, or was made when the principal lacked capacity, an administration order from VCAT under the Guardianship and Administration Act 2019 (Vic) may be needed before the arrangements can be finalised. We provide a scope-of-authority opinion for attorneys before they sign.
- Do I need a lawyer before signing a retirement village contract?
- In practice, yes — and most reputable operators expect it. The contracts are long, the fee structures are unusual, and the exit-cost exposure is often the most important number in the deal. For contracts entered into on or after 1 May 2026, the operator must give a prescribed Information Statement at least 21 days before signing, and a seven-business-day cooling-off period runs from signing. The prescribed standard-form contract became mandatory from 1 September 2026; operators could continue to use their existing forms until 31 August 2026 provided they otherwise complied. Those protections help, but they do not explain what the fee and exit terms mean for you. A short legal review before signing is far cheaper than a dispute after departure.
- What is a Refundable Accommodation Deposit (RAD)?
- A RAD is a lump-sum way of paying the agreed room price for a place in a residential aged care home. Residents can instead pay a Daily Accommodation Payment (DAP), or a combination; residents with lower means may pay a refundable or daily accommodation contribution (RAC or DAC) instead. Under the Aged Care Act 2024 (Cth) and the Aged Care Rules 2025 (Cth), only authorised amounts may be deducted from the refundable balance. For residents on the accommodation arrangements that began on 1 November 2025, these include a retention amount under section 308 of the Act of 2% a year, calculated daily over a retention period of five years, which is not refunded; residents to whom the transitional arrangements apply are not subject to retention. The balance must be refunded within the legislated timeframes when the resident leaves care or dies, and the Accommodation Payment Guarantee Scheme protects the refundable balance if the registered provider becomes insolvent. We review the legal terms of the accommodation agreement and service agreement; the choice of how to pay sits with financial advisers.
- What is a deferred management fee or departure fee?
- A departure fee (often called a deferred management fee or exit fee) is a percentage of the amount paid to move into the village, charged for each year or part-year of residence up to a cap stated in the residence contract, and deducted from the exit entitlement. A fee that was not properly disclosed is void. For contracts entered into on or after 1 May 2026, the fee must be calculated daily, stops accruing when vacant possession is handed back, and must be a percentage of the entry amount rather than the resale price; the contract must also estimate the costs payable on leaving after 1, 2, 5 and 10 years. Operators must give residents a contract check each year and within 30 days of a request. The fee is usually the largest single deduction — we translate it into concrete numbers before you sign.
- Can an attorney sign a retirement village or aged care contract for the resident?
- Usually yes, provided the enduring power of attorney is valid and the attorney acts within the scope of the appointment and in line with the decision-making principles and duties in the Powers of Attorney Act 2014 (Vic), giving effect to the principal's will and preferences where possible. Signing a contract is a financial matter; deciding where the person will live is a personal matter, so the appointment must cover the decision being made. Where the transaction is significant we check the specific appointment and provide a written scope-of-authority opinion.
- What happens if a resident dies in a retirement village or aged care home?
- The two regimes have different rules. In residential aged care, under the Aged Care Act 2024 (Cth) and rule 311-15 of the Aged Care Rules 2025 (Cth) the refundable deposit balance (after authorised deductions) must be refunded within 14 days after the registered provider is shown the probate or letters of administration or other satisfactory evidence; interest is payable if the refund is late. In a Victorian retirement village, the exit entitlement is calculated under the residence contract; for contracts entered into on or after 1 May 2026 it must be paid within the section 32I timeframe, while earlier contracts follow their own terms and the transitional rules. Any advance aged care payments stop on death. Ongoing maintenance charges depend on the contract date: for contracts entered into on or after 1 May 2026, none can be charged once vacant possession is handed back; under earlier contracts they can continue until another resident signs or moves in, or six months after vacant possession, whichever is first. We advise the executor on entitlements, timing and disputes.
- Do you provide financial planning or Centrelink advice?
- No. Parke Lawyers provides legal advice on retirement village contracts, aged care agreements, decision-making authority, estate-planning interaction and related disputes. We do not provide financial planning, Centrelink advice, tax advice or financial product advice. Where those issues arise, we work alongside your financial adviser, accountant or aged care adviser.
- How are retirement village disputes resolved?
- Disputes usually start with the village's internal dispute-resolution procedure under the Retirement Villages Act 1986 (Vic). They may then go to conciliation through VicAssist Retirement Villages (Consumer Affairs Victoria) or to an application to VCAT where the dispute is within its jurisdiction. The right pathway depends on the dispute and the contract; conciliation is not always required before going to VCAT. We advise at each stage and appear at VCAT where the matter warrants it.
