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’.
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.