New law to protect retirement village residents

Will you get a fair deal in your retirement village?

Tuesday, March 26th 2002, 10:54AM

A large number of older New Zealanders live in retirement villages. Currently 4% of people aged over 65 choose to spend their retirement in a retirement village. As our population gets older the number of retirement villages in New Zealand is expected to increase.

Until now, the law has primarily dealt with buying into a retirement village as a financial investment and the disclosure requirements under the Securities Act 1978 have applied.

However, these disclosure requirements do not apply to all retirement villages and the Securities Act does not appropriately or adequately deal with occupancy issues. As a result, many retirement village residents are subject to unfair charging and management practices.

Some of the problems that have been noted are:

• Inadequate recognition of how retirement village financing and charging works;

• The exclusion of residents from decision making in relation to the management of the retirement village;

• Deductions and difficulties when a person leaves a retirement village.

To deal with these problems and the uneven application of the Securities Act 1978 to retirement villages, the government has introduced a bill, the Retirement Villages Bill, to protect older people who live in or are considering living in a retirement village.

Policy objective

The object of the proposed new law is to:

• Protect more adequately the financial and occupancy interests of retirement village residents;

• Identify areas of risk and insure that they are presented in disclosure statements that are in a form an intending resident can easily understand;

• Ensure that retirement villages recognise rights of residents and conform to good management practices, principles and quality standards;

• Provide a degree of external oversight on conditions of entry and ongoing operations.

Main features

The main features of the Retirement Villages Bill are:

• All retirement villages, irrespective of size, are covered by the new legislation;

• All retirement villages must be registered, and registration must be renewed every year;

• A retirement village cannot make any offer of occupation or advertise to the public unless it is registered;

• The new legislation stipulates the provisions and information that must be contained in an occupation right agreement;

• An occupation right agreement must contain a provision allowing the resident to cancel the agreement within 10 working days. This is known as a cooling off period;

• Before any occupation right agreement is entered into, the intending resident must be given–A disclosure statement; The resident’s code of rights; The code of practice (if applicable) and a copy of the occupation right agreement.

• Every retirement village must have a code of residents’ rights setting out the minimum rights a resident has in respect of his or her right of occupation of a unit in the retirement village;

• Every resident or intending resident of a retirement village has a right to be promptly and personally informed by the operator of the retirement village about any matter relevant to his or her occupancy;

• The Retirement Commissioner has a monitoring role under the new legislation. The Retirement Commissioner is also responsible for educating people about retirement village issues and publishing relevant information;

• Every retirement village must appoint a statutory supervisor. The role of the statutory supervisor is essentially to monitor the financial position of the retirement village;

• The new legislation introduces a mechanism for resolving disputes;

• The Minister will approve and publish a code of practice. Every retirement village operator must comply with this code of practice.

The Retirement Villages Bill was introduced into parliament on December 18. If the bill is passed, it is intended that the new law will come into force on November 1 2002.

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