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Parliament of South Australia Select Committee: Review of the Retirement Villages Act 1987 Summary of Recommendations

Taken from: Parliament of South Australia Review of the Retirement Villages Act 1987 – Final Report (Available at: http://www.parliament.sa.gov.au/Committees/Pages/Committees.aspx?CTId=3&CId=277)

A. BEFORE MOVING INTO A VILLAGE
Recommendation 1: The term ‘retirement village’ That the Act be amended to:  restrict use of the term “retirement village” to those residential complexes which fall under the Act; and  include provisions which prevent misleading and deceptive advertising, including advertising that a facility is or will be a retirement village without proper grounds. Recommendation 2: Retirement Village Resident  That the age limit for residents of retirement villages remains at 55 years.  That the requirement for a resident of a retirement village to be retired be removed from the Act.  That consideration be given to renaming the Act to more accurately reflect the current status of today‟s villages. Recommendation 3: Administering Authority  That the Act be amended to remove the definition of administering authority of a retirement village and replaced with definitions of the following:  Owner  Operator  Manager Contractual Requirements – Provision of Information Recommendation 4: Pre-Contract Disclosure  That the Act be amended to introduce a standard disclosure document, prescribed by Regulations, to assist residents in comparing villages and in understanding their rights and obligations.  That the standard disclosure document is provided to a resident along with the residence contract.  That the standard disclosure document includes information relating to: all fees and charges which residents will be responsible for: o prior to entering a village o while residing in a village o upon leaving a village;  examples of exit fee scenarios;  definitions of fees, charges and funds;  any circumstances under which a resident will be required to fund a budget deficit;  frequently asked questions; and any interest an administering authority has in services used within the village (for example, provision of electricity or internet services).  That the resident has 15 days after being provided with the disclosure document before the resident is required to sign the contract, in order to seek legal and financial advice on both the disclosure document and the contract.

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Parliament of South Australia Select Committee: Review of the Retirement Villages Act 1987 Summary of Recommendations
  That a web-based calculator be developed so residents are able to enter exit scenarios and be provided with examples of how much their refund amount would be under various scenarios. That the Property Council be encouraged to produce a set of proforma contracts that are the recommended templates for operators.

Recommendation 5: Premises Condition Reports  That an administering authority must continue to provide a prospective resident with a premises condition report as part of entering into a residence contract.  That the Act be amended to provide clarity around the date the report must be completed and provided to a prospective resident. This should include that the report must be completed and provided to the prospective resident prior to the prospective resident signing the contract as part of a disclosure document.  That the Act be amended to allow prospective residents to enter into a premises condition report for residences that are yet to be constructed on the assumption that all conditions of the report will be „as new‟. The Act should also provide recourse for these residents should the residence not be of an „as new‟ standard upon completion.  That the date at which an item is to be repaired or replaced may be an approximate date if the date needed for the report is not known and a statement included to the effect that the date is approximate. Recommendation 6: Payment of Premium  That the Act be amended to remove a monetary reference to a premium and that consideration is given to changing the definition of premium to „ingoing contribution‟ for consistency with other States.  That a term and definition is developed which is more reflective of the true transaction which is entered into between retirement village residents and operators. Recommendation 7: Holding of Premium in Trust  That the Act be amended to provide that any person or entity who receives an amount as a premium under a residence contract is required to hold this amount in trust until the prospective resident enters into occupation of the residence or until the prospective resident advises that they will not be entering and the premium must be refunded. B. LIVING IN A RETIREMENT VILLAGE Recommendation 8: Residents’ Committees That the Act be amended to:  provide a residents‟ committee with the same protections conferred under the Associations Incorporation Act 1985 but not requiring formal incorporation under that Act.  clarify the role of a residents‟ committee; and  require a residents‟ committee to audit its funds. The audit does not need to be qualified and may be undertaken by a person with the relevant skills.

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Parliament of South Australia Select Committee: Review of the Retirement Villages Act 1987 Summary of Recommendations
Recommendation 9: Residents’ Meetings That in addition to the current requirement for minutes of the annual meeting to be provided to all residences, the Act be amended to:  require that when a meeting of all residents under section 22 of the Act is called, that minutes of the meeting are made available to all residents within 14 days after that meeting in a location or manner which is easily accessible by all residents:.  allow residents to appoint persons (not being a representative or a close associate of an administering authority) as a proxy:  allows all residents the ability to vote on non-administration matters (e.g. social events) and that the voting requirements relating to administration matters remain unaltered (i.e. one vote per residence). Recurrent Charges Recommendation 10: Recurrent Charge Increases  That a unique „retirement village‟ CPI be developed.  Increases of recurrent charges above this percentage should be approved by residents.  If residents do not approve an increase in recurrent charges beyond this percentage,an administering authority can apply to the RTT for approval of the increase.  The Act be amended to allow full transparency of items included in recurrent charges. Recommendation 11: Reasonableness  That guidelines are developed through consultation with stake-holders and provided within the Act or Regulations as to what are reasonable actions in various circumstances.  Investigation of provision of more frequent financial reporting to the residents‟ committee.  That the Act be amended to clarify the required consultation with residents or residents‟ committees in relation to preparation of the annual budget. Recommendation 12: Management Fees  That the Act be amended to provide greater transparency in relation to management fees or head office costs charged to a village. An administering authority should be required to be able to show the method by which costs are apportioned between villages and costs associated with head office expenditure should be broken down to show the services to which they relate and the approximate cost of those goods and services. Recommendation 13: Charges for New Units  That the Act be amended to make administering authorities responsible for the payment of recurrent charges for newly built units, unless responsibility is clearly disclosed within a residence agreement.  That an administering authority clearly discloses any financial or contractual relationships between its villages. Recommendation 14: Financial Management

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Parliament of South Australia Select Committee: Review of the Retirement Villages Act 1987 Summary of Recommendations
 That the Act be amended to prescribe that when a surplus occurs within a village‟s recurrent charges, the charges must be used for the purposes for which they were incurred under the residence agreement. If residents wish for the surplus to be used for another purpose, consultation should be held with residents and a special resolution put to residents to vote on the alternative use (for example, reducing future charges or a special project within the village). That the Act be amended to follow those procedures undertaken in New South Wales relating to when a deficit occurs. Under this legislation, village operators are required to make good any budget deficit at the end of each financial year depending on the reasons for the deficit occurring. Residents can be asked to fund a deficit only if it is caused by increases in certain costs specified in the Regulations, such as urgent maintenance or increases in utilities.

Recommendation 15: Special levy  That the term „special levy‟ be defined, including the purposes for which a special levy can be collected from residents and the need for a special resolution remains. Recommendation 16: Clarification of Auditing Standards  The Act be amended to clarify auditing standards and that all village accounts to which residents contribute directly or indirectly are required to be audited.  The Act be amended to require residents be provided with a statement about the true financial position of the village with other financial statements provided at a meeting of all residents. Recommendation 17: Council Rates  That criteria be developed for the valuation of retirement village properties which accurately reflect the purchase of a licence to occupy under a retirement village scheme. Dispute Resolution Recommendation 18: Dispute Resolution Processes  That the current dispute resolution procedures under the Act are reviewed and amended to provide a more formalised dispute process with an emphasis on resolving matters prior to a tribunal application being made. This could include a formal process which includes a requirement for mediation or conciliation.  That the Code of Conduct be extended to encompass behavioural policies which protect operators and residents from harassment and intimidation, and that promote a safe and secure environment. Recommendation 19: Residential Tenancies Tribunal  That the Act be amended to require that those RTT members hearing retirement village matters must be legal practitioners of at least five years standing and should have a sound understanding of the Act and previous decisions.  That the Act be amended to make it clear that an unresolved dispute can still be dealt with at the RTT after a resident leaves the village.

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Parliament of South Australia Select Committee: Review of the Retirement Villages Act 1987 Summary of Recommendations
 That the RTT make its decisions publicly available.

Recommendation 20: Jurisdictional Limit  That the Act clarifies that there is no monetary jurisdictional limit on retirement village matters brought before the RTT.  That the Act be amended to allow recovery of costs on a party-party basis by solicitors commensurate with the monetary amount of the matter being heard before the RTT.  That the Minister be able to refer a question of law to the court for clarification.

Recommendation 21: Tribunal Orders  That more information and assistance is provided to residents about available options when a party has not complied with an order of the RTT. Recommendation 22: Advocacy  That the Government investigates the provision of an advocacy service to retirement village residents. Recommendation 23: Group Application to the Tribunal  That the Act be amended to allow residents to make a group application to the RTT on matters which affect more than one resident. C. LEAVING A RETIREMENT VILLAGE Recommendation 24: Vacating premises  That the Act be amended to prevent an administering authority from requiring a resident to vacate a village before the resident has been repaid their premium.  That the Government further investigates amendments to the Act to allow removal of disruptive residents with confirmation through the RTT. Recommendation 25: Arrangements if resident leaves to enter an aged care facility.  That the Act be amended to provide greater consistency with the Aged Care Act 1997 and allow greater flexibility in the way an administering authority can provide early repayment of a premium to a resident who is leaving to enter residential care at an aged care facility.  That the Act be amended to ensure that a resident is aware of their right to seek early repayment of a premium if they are leaving a retirement village to enter aged care in a residential aged care facility through the inclusion of this information in a residence contract and/or disclosure documents.  That the Act expressly states that it does not apply to Aged Care Facilities under the Aged Care Act 1997. Recommendation 26: Exit Fees  That the Act be amended to provide standard definitions of exit fees.  That a disclosure document is required to be provided to a resident prior to moving into a village, which discloses all fees and charges for which a resident is responsible, including exit fees.

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Parliament of South Australia Select Committee: Review of the Retirement Villages Act 1987 Summary of Recommendations
  That fees and charges not included in this disclosure document are not able to be charged to the resident. That any remarketing costs and conditions of remarketing are clearly disclosed in a residence contract and refer to a specific dollar amount or percentage.

Recommendation 27: Residence Valuation  That residents be able to appoint an independent valuer on vacating the village if a valuation amount is not agreed between the parties.  That the Government investigates the establishment of a register for retirement village licences. Recommendation 28: Fees Calculation  That the Act be amended to clarify the definition of Length of Occupation. D. OTHER MATTERS Recommendation 29: Object of the Act That the objects of the Act be amended to include that they:  ensure proper disclosure to a prospective resident of their rights and obligations on moving into a village;  provide a mechanism for the resolution of disputes;  strike a balance between the protection of residents and the regulation of administering authorities; and  encourage best practice management standards. Recommendation 30: Investigation and Compliance  That the Government investigate amendments to the powers of investigation and compliance under the Act, similar to those contained in the New South Wales legislation. The amendments to the powers or investigation should ensure efficient investigation of complaints, whether the Act is being complied with and the ability to obtain evidence in relation to matters which may contravene the legislation.  That the penalty amounts under the Act are reviewed and significantly increased.  That expiable offences are significantly increased in the Act for minor offences.  That the RTT can request a matter be investigated. Recommendation 31: Financial Difficulty and Mismanagement That the Act be amended to include:  the ability to appoint an administrator, receivers and managers or manager where a village is being mismanaged; and  provisions allowing a village to continue operating when in receivership. Interaction with Other Legislation Recommendation 32: Residential Tenancies Act 1995 The Committee recommends that:

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Parliament of South Australia Select Committee: Review of the Retirement Villages Act 1987 Summary of Recommendations
  further investigation be undertaken into the impacts of allowing rental tenants under the Residential Tenancies Act 1995 to reside in retirement villages; and. consideration be given to whether protections are provided under the Retirement Villages Act 1987 to residents in rental or no premium retirement villages.

Recommendation 33: Consumer Law  That fact sheets are developed to ensure residents and prospective residents are aware of all fair trading practice protections available to them including the Australian Consumer Law and unfair contract provisions. Recommendation 34: Supported Residential Facilities  That further investigation is undertaken into the impact of excluding supported residential facilities from the Act.

-E&OEProvided by the Hon Steph Key MP, Member for Ashford 407 Marion Road, Plympton SA 5038 ashford@parliament.sa.gov.au Telephone: (08) 8371 5600 www.facebook.com/StephKeyMP

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