Retirement Villages Act and Regulations - Are you doing it right?

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[Insert image here to match your presentatio n – contact Meg in BD to obtain images] Are you doing it right? A_86947v1 Friday 12 September 2014 Wai Hwoon Low, Principal Kathryn Elleman, Principal Donna Rayner, Senior Associate

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We will discuss the new 2 stage disclosure process, including the form of fact sheet and disclosure statement, and the practical issues that we have encountered in practice. We will also discuss the form of residence contract required under the Regulations and how operators should have adapted their contracts to comply.

Transcript of Retirement Villages Act and Regulations - Are you doing it right?

  • 1. [Insert imagehere tomatch yourpresentation contact Meg inBD to obtainimages]Are you doing itright?Friday 12 September 2014A_86947v1Wai Hwoon Low, PrincipalKathryn Elleman, PrincipalDonna Rayner, Senior Associate

2. Wai-Hwoon LowPrincipal 3. Factsheet when to provide> Within 7 days of request> When "promotional material" handedout or sent to retired person> 21 days before resident enters into anymanagement contract unless:> previously provided; and> no material change to information3 4. "Promotional material" ismaterial:> given to retired person or person actingon behalf of retired person; or> addressed personally to retired person orperson acting on behalf of retired person;and> intended to promote particular retirementvillage as a place in which to live; but> excludes material distributed generally inmail-out or letter-box drop4 5. Is it "promotional material"?> Key questions:> Is your material given to retired personsor persons acting on their behalf?> Is your material addressed personallyto retired persons or persons acting ontheir behalf?> If yes to either question:> Are you promoting your village?5 6. Is it "promotional material"?> Contrast with:> General letter drop or mail out> Not addressed to any person inparticular> Not promoting village but promoting aparticular activity6 7. Types of factsheets> Generic/mixed tenure village> Strata titled villages> Loan lease/loan licence village7 8. Common problems,things to note> Amounts in factsheet to be GSTinclusive unless otherwise specified> Formatting nightmare!> Some inapplicable sections may bedeleted, but sections with tick boxesmust not be deleted> Size of font cannot be changed> Lengthy document 11 to 13 pages8 9. Common problems,things to note (cont)> Inapplicable sections may be deletedentirely> Or, use "not applicable" for section no.to maintain numbering> Revisit and update every 3 to 6 months> Must revisit after AGM and newmaintenance charges fixed> Changes not allowed9 10. Factsheet 1> Factsheet 1 mixed tenure:> For villages with titled and non-titledunits, or company share> Sections of factsheet do not distinguishbetween them10 11. Factsheet 1 (cont)> Reference to in-going contributionbeing "refundable" or to be "refunded"> Applicable to non-titled units> Difficult to reconcile with titled units11 12. Factsheet 1 (cont)> Reference to "Long term maintenancefund charge"> Relevant only if LTMFC payable on arecurring basis12 13. Factsheet 1 (cont)> Recognition that OC fees in titledvillage can be included in themaintenance charge13 14. Factsheet 1 (cont)14 15. Factsheet 1 (cont)15 16. Factsheet 1 (cont)> What is the difference betweensections 11 and 12 of factsheet?16 17. Factsheet 2 titled villages> Same issues as with Factsheet 1Factsheet 3 loan/lease orlicense villages> No additional issues17 18. Kathryn EllemanPrincipal 19. Pre-contract Disclosure> Second stage of disclosure:> Pre-contract stage> New form of disclosure statement> Information as prescribed in theRegulations> Must be in a form approved byConsumer Affairs Victoria19 20. Pre-contract Disclosure> When is this?> At least 21 days before the prospectiveresident signs a residence contract ormanagement agreement> What has to be provided?> By the owner or manager - a Factsheetif it has not previously been provided,or if it has previously been provided buthas materially changed20 21. Pre-contract Disclosure> By the owner or owners agent theresidence contract> By the manager the managementcontract and village by laws> By the manager - an expanded andindividually tailored DisclosureStatement (in the form required byConsumer Affairs Victoria) which mustbe certified and signed by the manager21 22. Disclosure Statement> 6 different versions> Loan-lease/loan-licence, rental, stratatitle, company title, unit trust, general all villages> A sample of the general statement isas follows:22 23. 23 24. 24 25. 25 26. 26 27. 27 28. 28 29. 29 30. 30 31. 31 32. 324.6 Post-departure costs (cont) 33. 33 34. 34 35. 35 36. 36 37. 37 38. Pre-contract Disclosure Offence> Failure to comply:> With pre-contract disclosure - right ofrescission by the resident at any time upuntil 6 months after become aware of thebreach> Penalty fines38 39. Donna RaynerSenior Associate 40. Introduction> Regulations deal with residence andmanagement contracts in 4 ways:> Certain matters must be excluded fromcontracts> Certain matters must be addressed incontracts> Prescribed terms that must be included> Standard or prescribed layout40 41. Introduction (cont)> Regulations and preliminaryagreements - contract for sale of land;agreements to lease> Regulations and strata titled villages option to purchase and deferredpayment deedImportant note: From 1 October 2014 a new prescribed form of contract for thesale of land41 42. New Prescribed Form ofLayout of Contracts> From 1 July 2014, operators must use 1 of theprescribed forms of contract> 4 types of prescribed forms of contract:> a residence contract> a management contract> a combined residence contract and managementcontract (where the entities are the same); and> a combined residence contract and managementcontract (where the owner and manager entities aredifferent)42 43. Excluded Matters> A number of matters must be excludedfrom contracts. For example:> Must not require resident to effectinsurance other than liability insurancefor any motorised wheelchair BUT mayinclude a warning that resident shouldeffect house contents insurance43 44. Excluded Matters (cont)> Cannot have "entire agreement"provision in contract> Cannot require resident to payowner/manager costs of enforcingcontract against resident44 45. Standard or Prescribed Terms> Regulations specify a number ofprescribed terms including:> Owner/Manager obligations> Residents obligations> Residents rights> Legal matters45 46. Matters which must beaddressed> Regulations require a number ofmatters to be addressed in the contractincluding:> Basic information> Use of unit> Financial matters46 47. Matters which must beaddressed (cont)> Services> Insurance & Maintenance> Termination> By-laws of the Village47 48. Additional terms> Contracts may include additional termsprovided they are not inconsistent withthe RV Act or Regulations48 49. [SAMPLE OF PRESCRIBED FORMOF RESIDENCE AND MANAGEMENTCONTRACT (OWNER & MANAGERSAME ENTITY)]49 50. Common Questions/Queries> Adding or deleting information on page 2 ofcontract or the prescribed terms (generallyclauses 2 to 6 of contract)> Amending headings of prescribed terms ormatters> Inserting a table of contents> Why use different terminology e.g."residents premises", "maintenancecharge"> Other50 51. Failure to comply> May result in financial penalties (up to$7,000) and contract terms beingimplied or unenforceable51 52. 52QUESTIONS 53. DisclaimerThe information contained in thispresentation is intended as generalcommentary and should not be regarded aslegal advice. Should you require specificadvice on the topics or areas discussedplease contact the presenter directly.53 54. 54Wai-Hwoon LowPrincipalTelephone: 03 9609 1627Email: [email protected] EllemanPrincipalTelephone: 03 9609 1633Email: [email protected] RaynerSenior AssociateTelephone: 03 9609 1503Email: [email protected]