Leaving a retirement village – for registered interest holders

Before leaving a village

Before leaving a village, you may wish to meet with your operator for a contract check-up meeting. At the meeting, operators are required to provide a verbal and written summary of all of the costs involved as if you were to leave the village on a set date, based on the terms and conditions of your contract.

Are you a registered interest holder?

You are a registered interest holder if you are:

• an owner in a strata or community scheme
• an owner of shares in a company title village giving your residence rights
• the holder of a registered long-term lease where you are entitled to at least 50% of the capital gain that may be made by the time you move out.

See the types of tenancy – know what you're buying section to learn more about being a registered interest holder.

Your rights when you're leaving

Your right to live in your unit only ends when:

• the sale of your unit is completed (if you’re the owner), or
• your long-term lease is ended or assigned (if you’re a holder of long term lease of 50 years or more).

Selling your unit

If you decide to sell your unit, you will need to make the necessary arrangements just like you would to sell a property outside of a village.

You can set the sale price and appoint a real estate agent to handle the sale.

If you are using an external agent, operators are required to provide any information and assistance that is necessary to facilitate the sale of the unit.

Or you can ask the operator to sell your unit on your behalf, if they hold a real estate agent licence – but you don’t have to use the operator if you prefer to use an external agent.

The person who buys your unit will need to sign a sale of land contract with you as the outgoing resident as well as a village contract with the operator.

If selling, you must refer anyone who is interested in buying your unit to the operator so they can provide the prospective resident with all necessary information about the village. In some cases, the operator may refuse to enter into an agreement with a purchaser (for example, the person is under the minimum age to live there).

Selling costs

If you decide to leave your retirement village there will be costs, fees and charges involved. These costs will be set out in your contract and might include:

• departure fees
• accrued or outstanding recurrent charges
• administration fees.

If you are entitled to keep 100% of the capital gain made on your unit, you are responsible for all costs involved in selling the unit.

Alternatively, if under the contract the operator is entitled to some of the capital gain made on your unit, the operator must also pay some of the selling costs. This amount will be in the same proportion as the capital gain is shared, which in most cases is around 50%. However, if you wish to appoint an agent to sell your unit rather than using the operator or an agent selected by the operator, you alone will have to pay any commission to that agent.

Departure fees

Also known as an ‘exit fee’ or ‘deferred management fee’, a departure fee is the amount you have to pay when you permanently leave the village.

This fee is paid to the operator when a resident leaves the village (and is usually deducted from the sale price of the unit).

This payment is often a percentage of the ingoing fee, or the sale price, and is agreed to in the contract upfront.

This fee can be a significant amount: check your village contract for details.

Departure fees are a source of income for operators which can be used for purposes not covered by recurrent charges, such as improving or expanding the village services and facilities.

Departure fees also allow for lower recurrent charges and greater flexibility with entry prices, enabling prospective residents to pay a lower upfront payment by agreeing to an amount being kept by the operator when they leave. This provides more people with access to retirement villages.

If you leave during the ‘settling in’ period

This is the first 90 days of you living in your unit.

If you move out in the first 90 days, you don’t have to pay any departure fees. You're also entitled to:

• a refund of the ingoing contribution or the proceeds from the sale of the premises
• any recurrent charges paid under the contract.

This should occur within 14 days after a new resident enters into a contract with the operator or when the operator receives full payment from a new resident for your unit. 

Ongoing charges for general services

Ongoing charges for general services (also called ‘recurrent charges’) go towards the upkeep of the village. For example, village:

• administration
• gardening
• maintenance.

You must continue to pay recurrent charges for general services when you leave your unit. Payment generally continues until a new resident enters into a contract with the operator or starts living in the unit.

If you share any capital gain made from the sale of your unit with the operator, you only need to pay for these general services for a maximum of 42 days after you leave. After this time, you and the operator share the cost of the recurrent charges in the same proportion as you share the capital gain.

You stop paying these charges as soon as you permanently vacate the premises. 

42-day cap on recurrent charges

Village operators must only charge residents for up to 42 days for general services (such as gardening, administration and cleaning) once they have permanently left the property.

A person has permanently left the premises when:

• they take all their possessions and return the key to the operator, or
• the executor or administrator of the person’s estate provides vacant possession of the person’s residential premises to the operator of the retirement village.

Note: This definition only applies when section 152 (Recurrent charges in respect of general services: registered interest holders) of the Act is being applied.

The period for recurrent service charges can be shorter than 42 days if:

• the property sells earlier
• the village contract allows for an earlier date
• an incoming resident takes up residency, or
• the NSW Civil and Administrative Tribunal (the Tribunal) terminates the contract.

Note that a shortened period means that general service payments will cease.

A registered interest holder may choose for whatever reason, to continue to live in the premises until the completion of the sale and not terminate their contract until this occurs. In this circumstance the resident would continue to pay for general services they receive.