Top Legal Rights to Address Before Signing Your Retirement Village Agreement
Retirement can be exciting but the choice of where and how to live comes with important legal decisions. The retirement living options you choose can have lasting effects on your finances, rights, and health care in New Zealand. Here are five important legal rights every retiree should explore before signing on the dotted line.
Review the Occupation Right Agreement (ORA) Carefully
When you move into a retirement village, you don’t typically buy the unit outright. Instead, you enter into a legal contract called an Occupation Right Agreement (ORA). This agreement gives you the right to live in the unit but not to own it, and it forms the foundation of your legal relationship with the village operator.
ORAs can vary widely between providers, covering everything from fees and rights to maintenance responsibilities and exit conditions. Most importantly, they detail the Deferred Management Fee (DMF)—a charge often deducted when you leave the village. What’s not always clear are the hidden costs or restrictive rules that could limit your options later.
It’s crucial to hire a lawyer with experience in retirement village law to review the ORA thoroughly. Under New Zealand’s Retirement Villages Act 2003, this legal review is mandatory, but it’s important to take it seriously. A good lawyer can spot unfair clauses, explain long-term implications, and protect you from unexpected costs in the future.
Understand Your Rights Under the Retirement Villages Act 2003
The Retirement Villages Act 2003 is designed to protect residents, but many retirees are unaware of the full extent of these protections. The law ensures transparency and fair treatment, from mandatory disclosure documents to a legally enforced Code of Residents’ Rights.
Example: every retirement village must be registered and supervised by an independent statutory supervisor, and operators cannot change the core terms of your agreement without your consent. There’s also a formal dispute resolution process in place should issues arise.
Before signing anything, ask the village for two key documents: the Disclosure Statement and the Code of Residents’ Rights. Go over these documents carefully with your lawyer to understand what you are entitled to—and what your recourse will be if expectations are not met.
Understand the Real Financial Commitments
Many retirees assume moving into a retirement village is like buying a home, but this is not the case. You are paying a large upfront capital sum for the right to live there, not for ownership.
It means you won’t earn capital gains, and when you leave, the Deferred Management Fee (DMF)—which can be as much as 30%—can significantly reduce any refund to you or your estate.
There are also ongoing fees to consider, such as maintenance charges or service packages, which can add up quickly. Additionally, you typically can’t sublet or sell your right to occupy without the operator’s approval, unlike traditional property ownership.
It’s important to sit down with a financial advisor who understands retirement living to calculate the total cost over time, including entry fees, DMFs, and monthly charges. Then, compare these figures with other options, such as downsizing or moving into an aged care facility. This comparison could have a major impact on your overall retirement strategy.
Clarify What Care and Services Are Included
Retirement villages and aged care facilities offer varying levels of support, from independent living to full-time hospital care.
Some villages charge extra for daily services like medication management or cleaning, while others may not offer smooth transitions into higher levels of care. If your health declines, you may have to relocate or face additional legal challenges.
Request written clarification of what care services are included in your current agreement, what triggers extra charges, and what happens if your health needs change. The stated conditions should be clearly outlined in the ORA or a related care agreement, ensuring that your legal rights to continuous care are protected.
Plan for Disputes and Understand Your Exit Rights
Disagreements can arise—whether over fees, service quality, or the interpretation of contract terms—even with the best preparation.
The Retirement Villages Act provides a two-tiered dispute resolution process, starting with village mediation and potentially escalating to a statutory supervisor or tribunal.
Equally important is understanding your exit rights. When can you leave? How much notice must you give? How long will it take to get your money back, and what happens if you pass away? The answers to these questions should all be clearly stated in your ORA.
Create a file with all your agreements, correspondence, and legal documents, and share these details with a trusted family member or advisor. If a dispute arises, act promptly and consult your lawyer. Having an exit plan in place—and knowing how to enforce it—can help reduce stress during an already emotional time.
Conclusion
Choosing a retirement living option in New Zealand isn’t just a lifestyle decision—it’s a legal commitment that can impact your future wellbeing, finances, and peace of mind.
Its important to be informed about the legal framework, including your ORA, statutory rights, financial obligations, care entitlements, and dispute resolution options, you can approach this decision with confidence and clarity. Always consult legal, financial, and healthcare professionals before making a move.
