Retirement Villages
In summary, a retirement village contains two or more residential units to provide residential accommodation and/or services or facilities predominantly for people who are retired – and those people agree to pay a capital sum to live there. Note that a ‘capital sum’ can also mean periodical payments, if the payments are substantially more than would be paid to cover rent for such services or facilities.
Residents ‘purchase’ a right to occupy, or an occupation right agreement. The purchase is based on a capital investment and is a form of tenancy.
Retirement Villages Act 2003
The Retirement Villages Act, passed in 2003, strengthens consumer protection for residents and intending residents. The Act provides a regime to control and monitor retirement village operators.
For the first time there is a legal definition of ‘retirement villages’ that covers a range of operations. For a detailed description, see section 6 of the Retirement Villages Act at www.legislation.govt.nz
The definition focuses on the substance of the village, rather than the form, documentation or the title granted to a resident. The Act specifically states under section 6(5) that in determining whether a property is a ‘retirement village’, regard should be given to the nature, substance and economic effect of the operation of the property, independent of its form or description in any document.
The Act provides rights for people who live in or are considering entering such a village. It contains detailed provisions about residents’ rights in the period before an intending resident enters a retirement village, during their occupation, and after they leave.
The Act places responsibilities on all retirement village operators. These requirements replace obligations under the Securities Act 1978 that previously governed some operators.
The new requirements mean that every retirement village operator must:
- register each village with the Registrar of Retirement Villages. To register operators must lodge the following documents with the Registrar of Retirement Villages:
- application form
- disclosure statement
- title documents
- deed of supervision
- an occupation right agreement
- any other relevant documents.
- provide the Registrar of Retirement Villages with annual returns, including audited financial statements
- appoint a statutory supervisor (unless exempted from doing so)
- comply with the Code of Residents' Rights
- provide a complaints facility and dispute resolution process for residents.
- comply with a Code of Practice for Retirement Villages – when such a Code of Practice is in force
All Regulations that accompany the Act are in force. Copies of these regulations can be found at www.legislation.govt.nz or purchased at Bennetts Bookshop.
Retirement Villages (Disputes Panel) Regulations 2006
The Disputes Panel Regulations contain information on the process for resolving disputes between residents and operators. Since 1 October 2006 all retirement villages, as defined in section 6 of the Act, need to operate, or provide access to, an internal complaints facility. Any disputes that cannot be resolved at the village level can then be referred to the Disputes Panel set up under the Act.
Retirement Villages (Fees) Regulations 2006
The Fees Regulations set out the fees payable for the registration of villages and the filing of annual returns under the Act. The registration of villages started on 1 May 2007 and all villages must be registered by 1 November 2007.
Retirement Villages (General) Regulations 2006
The General Regulations provide detail on the content of the documents necessary to register a village, such as occupation right agreements and disclosure statements. The regulations also contain information about statutory supervisors of villages and their duties to residents and operators. The General Regulations came into force on 1 May 2007.
Disclosure statement template for Retirement Village operators
The disclosure statement is one of the important changes under the Act. As of 1 May 2007 all operators must issue compliant disclosure statements to intending residents before these residents can sign occupation right agreements. A disclosure statement will also need to be lodged with the Registrar of Retirement Villages as part of the registration process. All existing residents should receive a compliant disclosure statement by 1 May 2008.
Details of what should be included in the disclosure statement are outlined in Schedule 2 and schedule 5 of the Retirement Villages Act, and the Retirement Villages (General) Regulations. A disclosure statement template designed by the Department is available, free of charge, to help operators to develop these complex documents. The disclosure statement template for Retirement Village operators [Word 813 KB, 27 pages]. is a guide only and voluntary. Operators may wish to develop their own disclosure statements without using this template.
It is important to make sure that the disclosure statement is compliant with the legislation. Occupation right agreements may be void if a resident entered into the agreement without receiving a disclosure statement that complies with the Act.”
Responsibility for retirement village matters
The Department assumed responsibility for the Retirement Villages Act on 1 July 2005. Since August 2007, the Department’s responsibilities have included the promotion and publication of information about retirement villages. The promotion and publication of information was previously undertaken by the Retirement Commissioner who has formally delegated this function to the Department.
The role of the Retirement Commissioner is to monitor the effects of the legislation and Code of Practice, when in force, and the establishment and oversight of the disputes panel system.
The Registrar for Retirement Villages is located in the Companies Office in the Ministry of Economic Development. The Registrar of Retirement Villages is responsible for registration-related matters.
For more information on: