Print RSS

Articles

When do you 'permanently vacate' your dwelling in a retirement village, and why does it matter?

Richard McCullagh - Tuesday, November 29, 2011

WHEN do you 'permanently vacate' your dwelling in a retirement village and WHY does it matter?

WHEN?

You 'permanently vacate' your dwelling either when you, 

(a) move out or die, or 

(b) when you have, or your executor has, done all of the following:

    •  given written notice of intention to permanently vacate, if your contract requires this, 
    • removed all your belongings, 
    • ceased to reside theres and 
    • (except in the case of strata or community title) returned all keys to the premises to the operator.

WHICH?

If you are a 'registered interest holder', then (a) above applies. That is, if you occupy under strata, community or company title, or under leasehold title where (i) the duration of the lease is for at least 50 years, or your life, and (ii) the lease is registered and (iii) you are entitled to at least 50% of any gross capital gain when you leave.

Otherwise, you will be a 'non-registered interest holder' and (b) above applies. This will be the case with leases that lack any of the 3 features outlined above, and with all licences.

The significance is that (a) moving out or dying is a physical fact that may occur well before (b), which is a legal concept of giving vacant possession and involves more facts or events. For example, there is normally some time between death occurring and the executor arranging for the removal of all belongings from the dwelling.

THE LAW

A decision of the Court of Appeal of NSW held that a resident in a strata village 'moved out' even though her re-location was intended to be merely temporary while she stayed with family to recuperate from poor health: Bondi Astra Retirement Village Pty Limited v Hohman [2010] NSWCA 38 (19 March 2010). Not only did she not give any notice of intention to permanently vacate but, on the contrary, her family repeatedly assured the operator she would return as soon as her health permitted. To this end her furniture and other possessions remained in her dwelling. 

In fact, she never did return but moved on to a nursing home where she later died. The Court held that she 'moved out' when she ceased to live in the dwelling, ie when she first went to stay with her family.

Although that case concerned the lapsing of an option under section 167 of the Retirement Villages Act 1999 under strata title, the relevant statutory provision considered was one which applies to any registered interest holder, namely section 8(d) of that Act. In m view, the Consumer Trader and Tenancy Tribunal, the District Court and Supreme Court are bound by that decision until the Court of Appeal or the High Court hold otherwise by, for example, confining the application of the Bondi Astra Case to an option under section 167. 

SO WHAT?

When you 'permanently vacate' triggers a whole raft of limits on your obligations and in some cases imposes obligations on the operator.

The following limits on your obligations apply as of permanent vacation:

  • your liability to pay further departure fee ceases, even if the maximum period under your contract has not yet expired (provided your village contract commenced on or after 1 July 2000);
  • your liability to pay recurrent charges for further optional services ceases;
  • you liability to pay recurrent charges for general services 
    • ceases in 42 days if you are a non-registered interest holder, or 
    • if you a registered interest holder, is shared as from 42 days in the same proportion as you are entitled to share any gross capital gain.

You also have the right to postpone payment of further recurrent charges as from permanent vacation until a new resident moves in. This is subject to your paying interest on the balance owing at a rate not exceeding the prescribed rate, being 6% pa above the cash rate from time to time published by the Reserve Bank of Australia. 

For the operator, 

  • notice of intention to exercise any option must be given to a registered interest holder within 28 days (Bondi Astra Case), 
  • there is a liability to pay recurrent charges to the extent that a resident is relieved of that obligation as outlined above, and
  • any refund due to a non-registered interest holder must be paid within 6 months, even if no new resident has moved in by then.

WHAT TO DO?

If you are a registered interest holder, 

  • keep written records of when you leave your dwelling for any significant length of time - in case you don't return for whatever reason. It is when you 'move out' that may be the determinative event. 
  • It is still prudent to give a notice of intention to permanently vacate if your contract requires this, lest the Bondi Astra Case is read down, or confined, in the manner outlined above.
  • In the case of death, the executor should obtain an official Death Certificate from the Registry of Births, Deaths and Marriages which will disclose the date of death.

If you are a non-registered interest holder, 

  • give to the operator the written notice of intention to permanently vacate required by your contract (but 1 month is the maximum allowed by the Act), and keep a copy counter-signed by a staff member,
  • remove all your belongings from the premises, and
  • return to the operator all keys, other security devices and remote controls to appliances that are fixtures to the premises, again getting a written and dated acknowledgement of receipt from a member of staff.

Richard McCullagh 

29 November 2011