Questions to ask before signing a retirement village contract

Choosing a retirement village is part lifestyle decision and part financial and legal commitment. Glossy brochures and display units show the lifestyle. The questions below help you uncover the rest: what you'll pay, what you'll get, how the village is run and what happens when you leave.

Take this list with you on visits, put the important questions to the operator in writing, and go through the answers with your lawyer and financial adviser. Ask for written answers wherever possible, because verbal promises can be hard to rely on later.

Questions about the contract

1. What type of contract is it? Loan and licence, lease, strata title, rental or something else?
2. What exactly do I hold? The right to live in the unit, a registered lease or a title?
3. Is there more than one contract option? For example, a different balance of entry price and exit fees.
4. Who can live in the unit with me? What happens if my partner needs to move to aged care or dies?
5. Can the operator end my contract? On what grounds?
6. What is the cooling-off period, and is there a settling-in period?

Questions about costs

Entry

• What is the entry price, and what other costs apply at entry?
• Are there any refundable or non-refundable deposits?

Ongoing

• What is the recurrent or general services charge, and what does it cover?
• How has it changed over recent years, and how are increases decided?
• What costs are not included, such as utilities, insurance of my contents, or optional services?
• Is there a capital works or sinking fund, and who pays into it?

Exit

• How is the deferred management fee calculated: rate, cap, base, and part years?
• How is capital gain or loss shared?
• What refurbishment or reinstatement costs will I pay?
• Who sells the unit, and what selling costs apply?
• How long do I keep paying recurrent charges after leaving?
• When will my exit entitlement be paid, and is there a maximum time?

Use our exit fee estimator to illustrate different exit fee terms.

Questions about services and care

• Which services are included, and which cost extra?
• Is there an emergency call system, and who responds, at what hours?
• Is there a manager on site, and when?
• What care services can I receive in my unit, and who provides them?
• If my care needs increase, what options are there? Is there an aged care home nearby or on site, and does living in the village give any priority?
• Is transport provided for shopping and appointments?

Remember that a retirement village is not aged care. If you might need care at home, read how aged care works.

Questions about the village and its management

• Who owns and operates the village, and how long have they run it?
• Is there a residents' committee, and how does the operator work with it?
• Are there any current disputes or tribunal cases?
• Are there plans to redevelop or expand the village? How would residents be affected?
• What are the village rules on pets, visitors, parking, gardens and alterations?
• How is the village's budget prepared, and can residents see financial statements?

Questions to ask residents

Current residents can tell you what the brochures can't. Ask them:

• What do you like most and least about living here?
• How responsive is management to problems and maintenance requests?
• Have fees gone up much?
• What are the social activities like, and how many people join in?
• Would you choose this village again?

Questions about location and lifestyle

• How far is it to shops, doctors, a hospital, public transport and family?
• Is the site flat and easy to walk around? Are there steps or hills?
• Does the unit suit your needs now and later? Think about stairs, bathroom access, storage and parking.
• Is there space for hobbies, visitors or a pet?

Questions for your lawyer

When you take the contract to a lawyer experienced in retirement village law, ask them to explain:

• what you are buying or leasing and your rights;
• every fee and charge, and when each applies;
• your exit entitlement under different scenarios;
• how disputes are resolved;
• anything unusual compared with other contracts they have seen.

Questions for your financial adviser

• How does the move affect my Age Pension or other payments?
• Will I have enough to cover ongoing charges and living costs?
• How would exit costs affect my estate or ability to pay for aged care later?
• Should I consider other housing options instead?

Services Australia's free Financial Information Service can help with general information about pensions and finances.

Common mistakes

• Relying on verbal answers instead of written ones.
• Visiting only once, at a time chosen by the sales team.
• Not asking what happens if your partner needs aged care.

Making sense of the answers

Once you've gathered answers from several villages, put them side by side in a simple table: entry price, recurrent charge, deferred management fee terms, capital gain sharing, refurbishment rules, exit payment timing, services included and your impressions from visits. Then estimate what you'd get back after different lengths of stay. Patterns usually emerge quickly. A village that looks cheaper to enter may cost more over time, and the reverse.

Keeping your records

After you sign, keep copies of every document you were given, your notes from visits and the operator's written answers to your questions, together with your contract. If a dispute ever arises, or your family needs to deal with the village after you leave, these records show what you were told and agreed. Tell your executor and attorney where the documents are kept, and give them a copy of the contract.

Where to find more information

Your state regulator publishes guides for prospective residents, often with checklists and explanations of disclosure documents. Moneysmart has information about retirement village costs, and Services Australia's Financial Information Service can explain how a move may affect your pension.

Key points

Ask detailed questions about the contract, entry, ongoing and exit costs, services and care, management, location and lifestyle before you sign. Talk to residents, get answers in writing, and have a lawyer and financial adviser review your options. Use your cooling-off period if you have doubts.