The importance of getting legal advice before moving into a retirement village

Anyone planning to enter into an occupation rights agreement (ORA) for a retirement village must receive independent legal advice before signing - and Christchurch-based legal specialist Kate Warren recommends doing so early in the process.

“It’s something you are required to do under the Retirement Villages Act so you might as well make the most of that and get good advice early on,” says Kate, a senior associate, property and personal law, with legal firm Tavendale and Partners.

“I cannot emphasise strongly enough the importance of fully understanding the terms of an ORA.

“Thinking about selling your family home and moving may be stressful and receiving legal advice can help people to feel more in control and confident in their decision. I love doing ORAs, getting to work with members of our elderly community and ensuring they have the information they need to make the best decisions for their future.”

Kate says the terms in an ORA can vary quite significantly between villages, so it is critical to go through all the terms and conditions and consider what each will mean.

“The village sends the ORA to us and we go through it and send the client a summary of the key points. They can then reflect on that and people will often write notes all over it. Then they come in and we go through all the key terms with them and discuss any questions or concerns they have.

“People generally go away to reflect on that and if they decide to go ahead, they come back and we witness them signing the ORA. They then have a cooling off period of 15 days to cancel without any repercussions.

“Some villages also give a 90 day period from moving in, to exit if you decide it is not for you, but that is village-dependant. It is so important to understand the terms of the individual ORA because if you don’t and want to exit after the cooling-off period that can have significant financial implications.”

Kate says the first questions people ask are often about the financial aspects of the ORA.

“People are understandably very cost conscious. They have worked very hard for what they have. We go through all the costs of the individual ORA with them, the initial entry payment, the weekly costs, the deferred management fees and transfer and marketing costs.

Kate says the deferred management fees vary between villages but it’s usually 20 to 30 per cent of the occupancy advance/entry payment that you pay when you move into your unit.

“Some villages have fixed fees but others don’t so people need to be aware about what the policy is in the village they are considering and may need to factor potential for change into their budgeting.

“You also need to be mindful of the continuum of care. For instance if a couple move into a village but one later needs more care. If that isn’t available at that village, they might have to move to a facility in a different village that may not be easy for their partner to visit, especially if they don’t drive. If you then have to move to be near your partner, that can have a financial effect through paying the deferred management fees.

“We make sure people are very well-informed. For instance, what level of care is provided in the village, is there a rest home, hospital or psycho geriatric care, and if they need to transfer to a care facility, will they have priority access to an available bed?

“For some people, knowing they can have visitors to stay or if they can take their pets with them to the village is important. We also ensure people know they can’t make alterations or additions to their village home and cannot rent it out to anyone else, the ORA is personal to the resident.”

Undertaking a lot of ORA work means Kate frequently works with elderly people who are facing major life changes.

“We see a whole range of people and situations. Some people have lost a partner, some have been quite isolated. Some are excited about the social aspects of moving into a community but some people may be reluctant.

“It is beneficial for people to have the support of family and often people will factor proximity to their children into a decision - but it is important for us to make sure it is what that person wants and needs and to ensure the village they choose offers the level of care they will need going forward.

“Often people first come to us because they are considering selling the family home and then come to us for the ORA. It works very well to be handling both because, for instance, if the family home is in a trust most villages do not allow for the purchase of the occupation right through a family trust. So, we can work through what needs to be done around that and also align the settlement dates.

“Moving home is never easy but getting sound advice from a lawyer does help reduce the stress and provides people with trust that they will be looked after properly.”