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How much reinstatement cost am I up for on moving out of my retirement village dwelling?

Richard McCullagh - Tuesday, October 18, 2011

How much reinstatement cost am I up for on moving out of my retirement village dwelling?

SHORT ANSWER

The Consumer Trader and Tenancy Tribunal (Tribunal) has recently clarified the answer to this question. 

The short answer is: subject to two exceptions, you have to pay for rectification of damage only.

More precisely, residents whose village contract commenced on or after 1 July 2000 are, if the contract requires this, liable to pay for the reinstatement of their residential premises to the condition the premises were in when they moved in, fair wear and tear excepted.

If the contract requires a greater contribution by you, that obligation is not enforceable unless - and this is the main exception - the contract was entered into prior to 1 July 2000 and either (a) you agree that the usual village tradespersons carry out the work or (b) you accept one of up to three quotes provided by the operator.

There is another more complicated exception referred to below.

PRACTICAL TIP

I suggest you request that any quote for reinstatement provided by the operator include an apportionment between 'fair wear and tear' on the one hand, and 'beyond fair wear and tear' on the other. 

If that is not provided, or it is but you find the apportionment unreasonable, get your own quote for each item of reinstatement with a reasonable apportionment noted in the quote by the relevant tradesperson (eg painter) or supplier (eg for carpet).

With this, seek to negotiate a compromise with the operator or, failing agreement within a reasonable time, apply to the Tribunal for an order with your quote to be presented as evidence.

LONG ANSWER

In Dean v Tobler P/L & Ors [2011] NSWCTTT 420 (12 September 2011) (Dean) the Tribunal decided that the resident was, in principle, liable to pay for the rectification of damage to the unit but as the evidence was so inconsistent the resident did not have to pay anything at all.

The resident moved into occupation in 2003 and permanently vacated in early 2010. The operator required the resident to contribute $24,123.44 to 'reinstatement' initially, reduced to $4,850 by the time of the hearing for carpet and painting only.

The Tribunal held that the larger figure extended to items of 'refurbishment' but that the Retirement Villages Act 1999 (Act) prohibits an operator from recovering this much from a resident whose village contract commenced after the Act did on 1 July 2000.

The smaller figure might have been recoverable but in evidence was a painting quote obtained on behalf of the resident which stated in relation to painting that the paint work was in 'ok condition' and 'nothing more than fair wear and tear'.

The Tribunal concluded, 'There is no evidence before me which details the exact nature and extent of damage to the existing carpet and paint.' (at paragraph 28) (emphasis added)

In Dean, the Tribunal appears to have cast on onus on the operator to establish the extent of wear and tear that is beyond 'fair' to justify the contribution being sought from the resident. Failing to do so enabled the resident in this case to escape any liability to contribute even though it was accepted that painting and carpet were reasonable items of 'reinstatement' in this case.

This is largely consistent with an earlier case of Vandepeer v Glenaeon Retirement Village P/L [2003] NSWCTTT 312 (24 March 2003) where the Tribunal held that the operator was not liable to replace a carpet which was damaged by a coffee stain by the resident (or a prior resident) of the dwelling.

In Dean, the resident also claimed compensation for the delay in effecting a resale of the dwelling arising from non-agreement with the operator's claims for reinstatement. In particular, the resident moved to a nursing home and interest on the amount of an accommodation bond payable to the aged care provider was claimed from the retirement village operator. This claim was rejected by the Tribunal in this case.

OTHER EXCEPTION 

The other main exception to a resident contributing to reinstatement, mentioned above, applies if (a) the operator does not attach a complying signed condition report to the village contract and (b) you are not a 'registered interest holder'. That is, your residence right is NOT under

  • strata, community or company title, or
  • a lease 
    • which is registered, and
    • is for a term of at least 50 years or for life, and
    • entitles you to at least 50% of the gross capital gain.

Examples are a licence or a short term lease.

Richard McCullagh BA LLB

Revised 26 October 2011