Retirement villages provide accommodation for older people who wish to live independently but in a communal setting. It is important to understand that a retirement village is not an aged care facility and is not suitable to accommodate people with dementia or other illness where a high level of care is required.  Residents who become ill and their family may have to consider termination of the retirement village contract.

The retirement village operator (“Operator“) is required by legislation to take reasonable steps to ensure that the village is safe and secure for the residents (Retirement Village Regulations 2017 Schedule 1 Regulation 1). Prior to entry to the village the Operator will make sure that the village is an appropriate place to live for a particular person and that person is capable of looking after himself/herself.

The Operator will not employ nurses for the residents’ personal care but should the need arise in the future a resident can arrange this service independently of the village. Depending on the level of care required an assessment would need to be made as to the suitability of retirement village accommodation. It may be the case that a resident is diagnosed with early stage dementia or suffers a loss of mobility. At that point the village becomes, or will become, an unsuitable place to live for that resident. The residence contract will then need to be terminated.

Termination of the Retirement Village Contract by the Resident

The Operator is often one step ahead and its staff will identify the signs that a resident is in declining health. A meeting would then be arranged with the resident and the resident’s family to discuss future accommodation needs. Most times the resident is already aware that something needs to be done about his/her care needs.

The next step would be to arrange an assessment by the Aged Care Assessment Team (“ACAT“). ACAT will meet with the resident, assess the condition of the resident, and make a decision as to what services and accommodation type would be most appropriate for the resident.

If an aged care facility is the most appropriate form of accommodation the resident will need to terminate the residence contract by providing written notice to the Operator. It is not necessary to vacate the unit as soon as the notice is given and it is usually not feasible. The resident can remain in his/her unit until a place in an aged care facility is available but he/she will need to provide access to the unit to enable the Operator to show it to prospective residents.

Release of the Entitlement

The major issue facing many residents requiring aged care accommodation is finding the funds for the aged care facility. As a general rule the ingoing contribution (less the exit fees) will not be released until a new resident has entered a contract to move into the unit. To overcome this issue the legislation provides that, in certain circumstances, the Operator can make payments to the aged care facility from the resident’s ingoing contribution. This payment arrangement can continue until the amount released equals 85% of the Operator’s reasonable estimate of the resident’s final entitlement (Retirement Villages Act 2016 s30). This allows the former resident to move into an aged care facility before the unit is sold to a new resident.

Termination of the Retirement Village Contract by the Operator

Where the Operator determines that the retirement village is not a safe environment due to the resident’s failing health it can terminate the residence contract (Retirement Villages Act 2016 s44(1)(a)). This power cannot be exercised automatically. The Operator must apply to the South Australian Civil and Administrative Tribunal (“Tribunal“) for an order to do so. The Operator must produce evidence supporting its decision and, if approved, the Tribunal will fix a period within which the resident must vacate the unit.

Termination of the residence contract by the Operator rarely occurs. In most cases the resident and his/her family are well aware of the need to find appropriate alternative accommodation and will implement a plan to achieve this.

For further information please contact Mark Lumley on 8362 6400 or email Mark LumleyJoin our mailing list to receive updates and advice on current issues.

  • Mark Lumley

    About the author: Mark Lumley

    Mark is a highly experienced and efficient commercial and property lawyer. Mark makes sure he understands his client, their business and their desired outcome. He then works hard to deliver the very best and most cost effective strategies available.

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