‘I’ve changed my mind’ – A checklist for leaving your retirement village
Assisted by Holly Pitt
You’ve moved into a retirement village but you’re no longer enjoying the lifestyle, require more assistance with daily living than what’s offered or prefer a change in location. It may also be that it has become more convenient for you to live with a friend or family member. Moving can be stressful at the best of times and I often have clients coming to me with questions about financial obligations, many wondering if the process is even worth it to begin with.
The following checklist will help you prepare and avoid any unexpected costs when you walk out the door:
Where are you going to live?
Start discussing your feelings about the future with the ones close to you. It is important that they know that you are no longer interested in living in your current village. It is equally essential that you know where you are going to live beyond the moving out process. Will you be moving in with your family or a close friend? Perhaps you will be moving to a retirement village that is closer to the people you love, or even in an area you’re more acquainted with or have a preference for? Getting these details straightened out early on can take a load off your shoulders when you’re done with your financial obligations.
Do I pay someone something?
When you moved in, it is likely that you paid the village what is known as an ‘ingoing contribution’. Now, as you are about to leave the village, it is commonplace for the operator to keep a percentage of this initial lump sum that you paid them. This is usually referred to as a departure fee and is standard across most villages. If you’re not sure how much of that initial sum of money will be kept, you need to revisit the contract you signed before moving in. Your paperwork will document what percentage the village operator will be keeping but if you’re having trouble finding the information or would like to confirm the exact figures, your lawyer can assist you.
In regards to what money you get back from the lump sum, according to the law, if you are what is called a ‘registered interest holder’ (the term will be found in your contract), then your retirement village operator should have to repay your contribution (minus their departure fee) within 14 days after the village enters a new agreement with a new resident.
This can catch out residents who are expecting to receive the money back within a short time of moving as you can be waiting significantly longer than you anticipate if the village doesn’t find someone to take your place. Plan for the worst case scenario so you aren’t short of funds when moving into your new home.
If you find that you are a ‘non registered interest holder’, all hope is not lost when it comes to receiving some of your ‘ingoing contribution’ back. It just means that the village operator must repay you within six months of you leaving the premises so again, you shouldn’t count on having the money straightaway to assist with your relocation.
What about all money I’ve been paying for services and maintenance on an ongoing basis?
The recurrent charges you have been paying for things like the general maintenance of the village, payments to staff and insurance will cease if you are a ‘registered interest holder’. However, the catch is that these payments will only cease once a new resident enters the premises you are leaving. Alternatively, if the village operator is unable to find a new resident within 42 days of you leaving, then you will be able to split the recurrent charges with the village; in that the village will pay half and you will pay half until a new resident can be secured. Bear in mind that this can be a significant ongoing outlay if your property isn’t filled quickly following your departure – especially if you are moving to another retirement village where you will also be expected to make regular payments.
Who is responsible for selling my home in the retirement village?
It might be news to you that real estate agents often don’t deal with retirement village units. In most cases, your village operator acts as the agent selling the property on your behalf. This can work in your favour as they are well-versed in dealing with retirement village contracts and, of course, it is in their best interests to receive a good return on their property. Make sure you read over the fine print in any contracts as your responsibilities for the sale may include paying commission and advertising costs. In a worst case scenario, you may also be responsible for paying for updates to the property to make it more appealing to prospective buyers.
As always, it pays (literally) to do your homework so you know exactly what costs you may be looking at. Hopefully you will be lucky and your property will be filled quickly but you should plan ahead in case your property is slow to move.
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