When you’re thinking of living in a retirement village

• Search the New Zealand Law Society database to find an independent specialist lawyer in your area.
• Use your family lawyer. Ask them what recent experience they have had with retirement village law and current industry issues, as this is a specialist area.
• Ask residents in the retirement village you like to recommend a suitably experienced lawyer.
• Ask local support agencies like CAB or Age Concern to help you or refer you to lawyers they know who specialise in retirement village work.
• Try searching on Google for key terms such as 'elder law' and then add the specific region you are in, or 'retirement village lawyer' then the area you are in. See what search results appear then investigate what experience they have.
• Lawlink is a nationwide network of independent law firms with a list of elder law specialists.

These are among the most common occupancy rights agreements in retirement villages. This gives you the right to live in the unit, but it doesn't mean you own it. You typically can't borrow against the value of the unit, though some villages may offer this option.

In a village based on a unit title structure, you own your own unit. You also become a member of a body corporate that is responsible for the upkeep and maintenance of communal areas. Often the body corporate has a management agreement with the village manager (who is responsible for looking after the day-to-day operation of the village) to administer and look after the affairs of the body corporate.

If you have a cross lease, you share ownership of the land and its units, and grant leases to one another to live there. The leases include agreement about the length of the lease, the use of the land and the residents' rights to live there.

In this case, you have a lease for a unit or property in the village, which remains in place until you die or leave the village. Some villages also offer rental units.

Disclosure documents provided by retirement villages are often lengthy and hard to read. In most cases there should be a ‘key terms’ disclosure summary available to help you understand the main financial terms of the disclosure statement and occupation right agreement.

Here’s an example of the key terms template. The content of each term in the template will differ from village to village.

Before you sign up to become a resident in a village, you’ll need to discuss four key disclosure documents with a lawyer who is experienced with current retirement village practice. 

The key documents are:

• Disclosure statement
• Occupation right agreement
• Code of Practice
• Code of Residents' Rights

Every so often Retirement Villages amend their standard occupation right agreement or disclosure statement. You may have some terms in your documents that are different from other people who have been in the village for longer.

You can see the most recent amended documents for a village by searching the Retirement Villages Registry.

Capital sum

You’ll need to pay a capital sum to purchase an occupation right agreement for your unit. This gives you the right to live in your unit and enjoy the village amenities. This capital will be returned to you, or your estate, when you leave the village, less the deduction of a deferred management fee, which generally amounts to between 20 and 30% of the capital. If you leave the village within the first five years, the amount deducted may be less than the 20 – 30%.

The 20 – 30% rate is often called a ‘fixed deduction’. It is used to cover the costs of communal facilities, management or long-term maintenance. Retirement villages may use other terms in their occupation right agreements instead of ‘fixed deduction’ such as: ‘deferred management fee’, ‘capital sum deduction’, ‘depreciation’, ‘village contribution’, ‘donations’, ‘amenity’ or ‘facility fees’.

Deposit

You may need to pay a deposit before moving into the village, this deposit will be passed to the statutory supervisor, who acts as an independent stakeholder for deposits and progress payments. If there is no statutory supervisor, then this deposit will be passed to a lawyer to be held in a trust account on your behalf. The retirement village will only receive your money after a cooling-off period when you may change your mind and cancel the contract. The cooling-off period must be at least 15 working days. In some villages it is longer.

While you’re living in a village you’ll pay weekly fees. These cover rates, insurance and other operating costs as well as services such as security, gardening and maintenance. Some villages include a greater range of services in their fees or offer various personal care packages. Others leave it to you to choose and pay for the services you want or need.

In most cases, you’ll have to pay for your own telephone and power, contents insurance and medical costs, in addition to your normal household and personal expenses. Serviced apartments are an exception – generally they include these costs in one package and may cover things like food, cleaning and care services.

Usually when you terminate an occupation right agreement, you (or your estate) are repaid the original capital sum minus any deductions, such as:

• The deferred management fee, or may also be referred to as 'village contribution', 'fixed deduction', 'facilities fee' or 'amenities contribution'
• Any administration, sales or legal fee that were agreed to be deducted'
• Any specific service fees you’re charged but haven’t yet paid at the date of termination.'

It’s important to remember these deductions generally mean you will be left with less money than the original capital sum that you paid when you entered the village.'

This is particularly important if you decide to exit the village to move somewhere else. You may not have sufficient funds remaining to buy into another retirement village, or to buy another type of property if you decide you no longer wish to live in a retirement village.'

Also keep in mind that in most villages, the operator controls the sale of the unit when a resident leaves. This means you (or your estate) will usually have to wait until your unit is sold before receiving your exit repayment.'

There may be additional costs if you or your spouse need extra home help or need residential care while you are living in a retirement village. Premium care rooms will cost more, with additional daily premium charges.

Independent financial advice

You may be planning on releasing equity from your home to help pay for a retirement village unit, or rearranging other investments or estate matters. Using a financial adviser can help make decisions about your money easier if you want to become a retirement village resident.

Here's how to find a financial adviser to help with your investment decisions. The Financial Markets Authority also has helpful information on how to find and choose a financial adviser.

The following websites offer village-finding tools by region:

• Retirement Villages Association
• Eldernet
• Village Guide
• Aged Advisor

You can use the Retirement Villages Register to check a village is registered and to search their required registration documents. Here’s how:

1. Search for the name of the village on the Companies Office website.
2. Select 'Search the Retirement Villages Register', then 'Other Registers search’.
3. Tick the Retirement Village Registry, then enter a word from the name of the village. If the name of the village appears, you can look at all the recently registered documents relating to that village, including its annual return.

If you are having difficulty searching the registry, you can speak with a call centre advisor on our retirement villages information line on 0800 268 269.

Ask the operator to show you proof that the village is registered and has not had its registration suspended or cancelled.

If the village is a member of the Retirement Villages Association, ask if it has provisional membership or fully accredited membership. The RVA only accepts members who satisfy its audit and accreditation requirements, which includes the need to be lawfully registered under the Retirement Villages Act 2003.

This lists many different aspects of the retirement village lifestyle, from entry criteria, location and management through to rules, care, services and facilities offered. You’ll need to decide which ones are most important.

This checklist suggests some important questions to ask about entry, transfer, living and leaving costs, as well as questions about the retirement village's financial operations.

This lists the steps to take when signing up to enter a retirement village.

The following flowchart gives you an idea of the process if a village is damaged by natural disasters. Here’s what happens if a retirement village or unit is damaged or destroyed.

You can also hear about practical tips and information for intending residents and their families in this two-part webinar series that we recorded in 2020.