Retirement Village
Legal Considerations

Retirement Village Legal Considerations for Residents

Deciding to move into a retirement village — or living in one already — comes with unique legal considerations that differ from buying or renting a regular home. Whether you’re thinking about making the move or you’re already a resident, understanding your legal rights and responsibilities is crucial to protect your lifestyle and your finances.

This practical guide explains the key legal issues to watch for, what must be included in your contract, your rights under Australian retirement village laws, and the steps to take if something goes wrong. Take the time to read it carefully — and remember, always get independent legal advice before signing or changing your contract.

What Makes Retirement Village Living Different?

Retirement villages in Australia operate under special state or territory laws — like the Retirement Villages Act in your state. They’re designed to protect residents because village living is not like buying an ordinary home. In most villages, you don’t own the unit outright in the same way you own a house.

Instead, you usually pay an upfront contribution for the right to occupy a unit and use shared facilities, under specific conditions set out in a legally binding contract. Many people don’t realise these conditions can affect your pension, your estate planning and how much money you get back if you move out.

Understanding Legal Tenure Types

Knowing the legal basis of your village agreement helps you understand your rights. The main types are:

Leasehold

Common in larger commercial villages. You pay an upfront lump sum for a long-term lease (often 49–99 years). You don’t own the unit title — you lease it from the operator and your contract spells out the terms.

Licence to Occupy

One of the most common arrangements in private villages. You pay for the right to occupy the unit, but don’t own it or hold a lease. This is purely a contractual right, so your legal protections are different to owning property outright.

Strata or Community Title

Less common, but some villages are strata titled. You buy the unit title, just like a normal apartment, and you’ll pay body corporate levies. However, you still sign a village contract that may include deferred management fees and conditions on resale.

Company Title

Some older villages operate under company title. You buy shares in the company that owns the property, which gives you the right to live in a particular unit. Company title arrangements can be more complicated to sell because you usually need board approval.

Rental Villages

These villages don’t require an upfront payment — you pay a regular rent instead. Rental villages may have fewer legal protections because the Residential Tenancies Act applies instead of a retirement villages law.

Your Village Contract — What Must Be Included

Each state or territory sets minimum requirements for retirement village contracts. These usually include:

• The legal basis for your right to occupy the unit (lease, licence, title).
• Details of your financial obligations: entry payment, ongoing fees, exit/deferred management fees.
• How and when fees can be increased.
• Who pays for repairs, maintenance and upgrades — both for your unit and common areas.
• Rules for selling or transferring your interest when you leave.
• Timeframes for your exit entitlement to be repaid.
• By-laws or village rules (e.g. pets, visitors, parking, renovations).
• Your cooling-off rights and dispute resolution processes.

Key Rights and Protections

All retirement village residents in Australia have rights under their state or territory’s law. These include:

Disclosure Before You Sign

Operators must give you a disclosure statement and contract at least a specified number of days before you sign. These documents must spell out all fees, rules and your rights. Never accept verbal promises — get everything in writing.

Cooling-Off Period

All states and territories guarantee a cooling-off period (often 14 days) after signing the contract. You can withdraw without penalty during this time, although some states allow operators to charge a small administration fee.

Resident Committees

You have the right to form or join a residents’ committee, which can represent residents in discussions with the operator about budgets, maintenance and community rules.

Dispute Resolution

Every village must have an internal dispute resolution process. If that doesn’t work, you can take your issue to the relevant state tribunal or ombudsman.

Time Limits for Exit Entitlements

Some states now cap how long an operator can hold your money after you leave (e.g. if your unit hasn’t sold). This protects you or your estate from long waits for refunds.

Common Legal Pitfalls to Watch For

Some legal issues catch people off guard. Here are the big ones:

Deferred Management Fees (DMF)

Most villages charge a DMF — a percentage of your entry payment or resale value, deducted when you leave. It’s usually calculated as 2–3% per year for up to 10 years. Always check how it’s calculated and capped.

Reinstatement and Refurbishment Costs

Many contracts require you to pay to restore your unit to its original condition (reinstatement) or upgrade it to current village standards (refurbishment). This can cost thousands and eat into your exit entitlement.

Capital Gains and Losses

Who keeps the profit if property values go up? Some contracts share gains between you and the operator — others let the operator keep it all. The same applies if property values drop.

Resale Process

Find out how long it typically takes to resell a unit. Who sets the price? Are you allowed to use an independent real estate agent? Who pays marketing costs? These terms can have a big impact on your finances when you leave.

If You’re Already Living in a Village

Existing residents should review their contract and keep updated with village budgets and rules. Watch for:

• Changes to ongoing fees — operators usually need resident approval for major increases.
• Repairs and maintenance — operators must maintain common areas in good condition.
• Disputes — raise issues with management early. If unresolved, escalate through your residents’ committee or state tribunal.

Estate Planning and Your Contract

Some people forget that a retirement village contract can affect their estate. For example:

• If you pass away, your exit entitlement becomes part of your estate — but may not be paid out until your unit is reoccupied.
• Deferred fees, reinstatement costs, and resale delays can impact how much is left for your beneficiaries.

Talk to your solicitor about how your contract affects your Will and Enduring Power of Attorney arrangements.

What Happens if an Operator Sells or Goes Bankrupt?

Operators can sell villages, change management, or even go into receivership. Your contract should explain what happens in these scenarios. Most states have protections to help you maintain your occupancy rights, but it’s still wise to check:

• Is your upfront payment held in a trust account?
• How are resident funds safeguarded if ownership changes?
• What legal recourse do you have if promised services decline?

Getting Legal Help — It’s Essential

Before you sign a contract — or if you have any concerns as a resident — always get independent legal advice from a solicitor who specialises in retirement village law in your state or territory. They’ll explain the fine print in plain language, check for unfair terms, and help you negotiate better outcomes if possible.

Final Checklist — Legal Questions to Ask

• What type of legal arrangement am I entering into — lease, licence, strata, company title, or rental?
• What happens to my money if the village is sold or goes bankrupt?
• Who pays for repairs, upgrades or reinstatement?
• How much will I owe in exit fees? Is there a cap?
• How is any capital gain or loss shared?
• How long will it take to get my exit entitlement?
• What is the village’s process for handling disputes?
• Does the contract comply with my state’s legislation?

Final Musings

Moving into a retirement village — or staying informed as a resident — means knowing your legal rights and obligations. Take the time to read your contract carefully, understand the long-term costs, and get independent advice before signing or changing anything. A clear understanding today can help you enjoy village life with peace of mind tomorrow.

At OMS, we’re here to help you make informed choices about retirement living, protect your financial wellbeing and understand your legal options. Explore our other guides for more practical tips — and share this page with family or friends who may need it too!