So you’ve decided to move into a retirement village? 5 legal matters you may need to sort out

Moving into a retirement village is often treated as one decision: choosing the village and choosing the unit.

From a legal point of view, there is usually more going on.

There is the Occupation Right Agreement, which is the main village document. There may be the sale of the family home. There may be a Will and Enduring Powers of Attorney to review, or new documents to put in place. Sometimes there is a family trust involved as well.

These pieces can all be managed, but they often overlap. The village documents, the house sale, the Will, the EPAs and any family trust may all affect one another. It helps to understand how they fit together before dates are fixed, documents are signed and money starts moving.

The Occupation Right Agreement

The Occupation Right Agreement or the licence to occupy a unit or home in a retirement village, usually called the ORA, is the main legal document for the village.

It is not the same as buying an ordinary house. In most retirement villages, you are not buying the unit or the land. You are paying for the right to occupy the unit, on the terms set out in the ORA.

The ORA deals with - amongst other things -  the entry payment, weekly fees, village rules, your obligations, the village’s obligations, what happens if your needs change, what happens if you leave the village, and what happens if you die while living there. It also explains what may be repaid to you or your estate, what may be deducted, and when repayment is made.

There is usually other paperwork as well, including a disclosure statement, village rules and information about how the village operates. Some of that information may relate to the village’s financial position, re-licensing timeframes, resident obligations and dispute processes.

Because the documents are significant, and because the arrangement is different from ordinary home ownership, intending residents are required to receive independent legal advice before signing an ORA.

That advice should give you a clear understanding of what you are signing, what you are paying, what you may get back later, and what the agreement means if your circumstances change.

Selling the family home

For many people, moving into a retirement village also means selling the family home.

That brings in timing, settlement dates, title matters and the practical question of how the sale proceeds will line up with the village payment dates.

The family home may be owned personally, jointly, as tenants in common, or by a family trust. If one owner has lost capacity, an attorney may need to be involved. If someone has died, the title may need to be updated, or probate may be needed before the sale can proceed.

There may also be matters on the title that should be understood before the home is marketed or sold. Cross lease issues, easements, consent matters, covenants or other title entries can all affect how the sale is handled.

The house sale and the village move should be looked at together. The village may require payment by a particular date. The house sale may settle later. There may be a deposit, bridging issue, trust issue or family arrangement that needs to be considered before the dates are locked in.

Your Will

A current Will is often required when moving into a retirement village.

If you do not have a Will, this is a good time to put one in place. If you already have one, it is worth checking whether it still reflects your current circumstances.

The move may change what you own and how your assets are held. The family home may be sold. The amount eventually payable from the village may become one of the main assets in your estate. The people appointed as executors years ago may no longer be the right people, or they may no longer be able to act.

Your Will should also be looked at alongside the rest of the move. If there is a family trust, the Will and the trust may need to be considered together. If the family home is being sold, the way your estate will look later may be different from when the Will was first signed. An updated Will needs to work for the position you are now in.

Enduring Powers of Attorney

You will usually be required to have Enduring Powers of Attorney before moving into a retirement village: one for property, and one for personal care and welfare.

If you already have EPAs, they should be reviewed. The attorneys you appointed may no longer be the right people. Relationships change. People move away. Adult children may have different availability. The person who was the obvious choice ten or fifteen years ago may not be the best person now.

The forms and signing requirements for modern EPAs have changed over time and tend to involve more thought about who should act, how decisions should be made, who should be consulted, and what matters to you if someone else needs to make decisions for you.

EPAs are especially important in the retirement village context because they may be needed if your health changes after moving in. They may also be relevant if an attorney needs to help with property, care, financial or village-related decisions later.

Family trusts

If there is a family trust involved, it should be checked as part of the village move.

The family home may be owned by the trust. Trust funds may be needed to pay the entry payment under the ORA. The ORA may still need to be in the resident’s personal name, even if the money is coming from the trust.

The trustees need to consider what the trust deed allows, how any payment should be treated, and how their decision should be recorded. The payment may be a distribution, loan, advance or something else. The answer should be worked out before the money moves.

This is also a good time to consider whether the trust is still needed. Some trusts still have a useful purpose. Others no longer do what they were originally set up to do, or they may create more administration, cost or tax risk than benefit.

If there are overseas trustees or beneficiaries, particularly in Australia, those issues may also need to be considered before deciding whether to keep the trust in place.

Lining up the legal pieces

A retirement village move can take several months from start to finish.

The village documents, house sale, Will, EPAs and any family trust do not need to be dealt with all at once, but they do need to be looked at together. One part of the process can affect another.

If the house is being sold, the ownership and title need to be checked. If an attorney is involved, their authority needs to be clear. If trust funds are being used, the trustees need to make and record their decisions properly. If the Will and EPAs are out of date, they should be reviewed while the rest of the legal work is being organised.

It is also worth knowing that everyone does not need to be in the same room for this process to work well. We regularly work with residents, attorneys, trustees and adult children across New Zealand and overseas, using secure systems for meetings, documents and signing. That can be helpful where someone is moving to a new town or city, or where family members are helping from a distance.

Moving into a retirement village involves more than signing the ORA. The village documents, the sale of the home, the Will, the EPAs and any family trust should all be considered together, so the legal pieces are lined up before the move is too far down the track.