|The provider of this information is LAC Lawyers Pty Ltd - Parramatta|
VILLAGE TITLE COMPARISON
Strata Title means the same as it does in the wider community in that it basically gives the Purchaser complete title to their own unit. They can buy and sell, subject to the restrictions that normally apply to the Village as far as the age of any person to whom the resident might want to sell their unit at a later time. It is sometimes common, however, for the Village Owner to have a charge registered over the title of the unit to protect the Village Owner in the event of a sale in ensuring that they receive payment of any departure fee that may be payable under the terms of whatever arrangements are entered into with regard to the Village.
The resident gets an actual title deed for the particular unit or villa that they own, which may contain specific restrictions with respect to the identity of persons to whom units can be sold dependently on the nature of the Village.
Like all other Strata Title development there is a corporate body put together to manage the common property of the Village. In New South Wales this is known as the "Owners Corporation". As in all other Strata Title Unit bodies, the Owners Corporation is responsible for such things as insurance over the buildings of the Village and Public Liability Insurance and Workers Compensation Insurance and collects levies from the resident to account for these things. This is not the same as the management of the Village as far as the services that are provided by the Village management. That is a separate issue handled by a separate entity. The Owners Corporation can decide to employ a Managing Agent to manage the affairs of the corporate body, and that can be the Village Manager provided that the Village Manager is a licensed Strata Title Managing Agent. If it is not then a separate Managing Agent has to be appointed.
Loan Lease and Loan Licence
The terms basically described what they are. With respect to "Loan Lease" the resident normally receives a long term lease (which can be anywhere between 49 years or 99 years or 199 years) over their unit or villa. This Lease is then registered against the title deed of the Village to protect the resident's rights. The resident receives the actual registered copy of the Lease but does not receive a title deed as such. The title deed is normally held on permanent deposit at the Land Titles Office to allow for registration of Leases.
In Loan Lease a sale of a unit will usually take place with by the resident surrendering their Lease on settlement with the Village Manager giving the Purchaser a new Lease for a new term. An Assignment of Lease might be given for the balance of the term of the Lease to the new Purchaser. There is no cut and dried method by which this must be achieved with each Village Manager being entitled to set their own guidelines as to how they wish it to occur.
With regard to "Loan Licence" there is not the same registrable document. The documents are somewhat simpler basically allowing the resident a right of residence in a particular unit during the particular term of the Licence arrangement.
Sometimes the resident get the opportunity to purchase a share in the company that actually owns the Village and it is ownership of the company share that has attached to it a particular licence giving the resident the right to occupy a particular unit whilst they own the company share. When they want to sell they enter into an arrangement to sell their company share which then requires them to assign their rights to occupy the unit under licence to the Purchaser of the company share. The document that they actually receive after settlement is the original share itself and the stamped and executed Licence Agreement. There is no title deed nor any registered lease.
Loan Lease and Loan Licence?
We recommend a Lease - Loan Title for the following reasons:
The N.S.W. Parliament has passed the Retirement Villages Act 1999 which took effect from 1 July 2000 once Regulations under the Act have been finalised.
Under the new legislation:
Any person looking at entering a village should ensure they retain all promotional material and Disclosure Statements given to them by a Village so that the resident's solicitor can ensure all promised conditions are reflected in the actual contract. In addition the Regulations prescribe items that must appear in the Village contract as well as matters that must not appear. The Resident's solicitor should ensure these prescribed issues are dealt with in the documentation.
Because there are no standard documents and no standard method by which a Retirement Village is established, it is essential that any person looking at taking up residence in a Village consult with professional persons with experience in these areas and to provide them with the sort of advice they need on the following issues:
What is the financial stability of the Village operator?
Does the Disclosure Document furnished by the Village operator to the Purchaser set out sufficient information about the financial stability of the Village to both satisfy the requirements of any legislation but also to answer any questions the resident might have as to the safety of their investment?
A lawyer is in the best position to advise whether or not the documents that have been presented to the Purchaser for execution satisfy the requirements of the Legislation and also as to whether they give the resident the sort of protection they want for their investment. A lawyer can best explain what sort of title the Village is under and what protection the resident will have.
Any deposit that is being paid by a resident should only be paid into a trust account. If it is being paid into a trust account of a real estate agent or a lawyer then the resident can feel some comfort in the fact that those particular persons are covered by Legislation and any misappropriation that might occur can be dealt with. A resident should be very wary in any instance where a Village operator asks for the money directly. No money should be paid to a Village operator directly until such time as settlement occurs and the Purchaser takes possession of their unit or villa.
The resident may have to supply a medical certificate before they can go into a Village. They should therefore discuss the situation with their own General Practitioner before making any decision to not only be satisfied that the doctor will be happy to give them a certificate but also that the doctor is satisfied that the type of residence they are proposing to move into is satisfactory for their immediate and predicted medical needs. Where are the local hospitals? What medical assistance is located in the near locality of the Village? Will the doctor who is local be able to provide the same sort of service that they are used to from their own G.P.?
What arrangements does the Village have with other facilities so that if a person's mental or physical condition deteriorates and they need other assistance they will be able to get it? Thus, if they are going into a self-care unit, are there serviced apartments within the same Village complex to which they can move as they get older and more infirm? Generally, there is no nursing home actually attached to Villages but often a Village operator may have an informal arrangement with local nursing homes so that if a person does need a bed and one is available in the local nursing home the Village operator might be able to make arrangements accordingly. Certainly, questions should be asked in this regard before making any final decision on moving into a Retirement Village.
Another question that can be very important for many residents is whether or not they can take their pets with them. Quite often a Purchaser will have an older dog or cat that they do not want to be parted from but quite often a Retirement Village has a ban on animals. Thus, if there is any question as to whether or not a person wants to take their pet with them they should check this situation with regard to the Village before making any final decision as even if it can be taken the resident could be asked to have the pet removed if other residents consider it unpleasant or a nuisance.
Any person looking into a Village should look very carefully at the local facilities including shops and the like and public transport options. Whilst a person may well have the ability to drive a car when they first move into a Village that ability can be lost as years progress and a person becomes more infirm. If that happens and driving is no longer an option, will the person be able to get their shopping through public transport options or because the Village itself has its own bus that takes residents to the local shops and the like?
Will grandchildren be able to visit? Generally, the answer will be "yes", but sometimes there are severe restrictions on the length of visits and if there are sporting facilities within the Village, such as swimming pools and the like, it may well be that the grandchildren are not allowed to use those facilities unless the resident is with them which can sometimes be inconvenient. Sometimes there can be restrictions on the length of stays in the Village.
You should ask what arrangements will apply if you want to go on holiday. Quite often you must give notice before leaving the unit empty for an extended period. This is not merely the Village Manager seeking to be nosy but quite often to be in the interests of the resident to ensure that if a resident is not seen for more than a few days that no one breaks into their unit looking for them. A Village Manager has the right to enter a person's unit in certain circumstances.
A Village operator should also be questioned very closely as to what services will actually be provided. The services normally fall into two different categories. There are rather basic services that are always provided and for which the resident will always have to pay. These include things such as the gardening within the common property of the Village, the emergency call button that might be in the unit, the management of the Village by the Village Manager, and the upkeep of the community room and the like. The Village Manager should be able to provide a complete list of ancillary services that can be paid for on a User pays basis. These might include such things as a dining room, podiatry services, hairdressing services, trips in the Village bus, laundry and ironing services, and various other items that a person might wish to take advantage of from time to time. In addition the Village operator should be able provide a prospective Purchaser with a Budget for the Village setting out the services that are provided and the cost of same so that an informed decision can be made on whether or not the services can be afforded as they will have to be paid for on a regular basis.
There should also an explanatory booklet provided to a Purchaser, which has been prepared by the Department of Fair Trading and answers many of the questions of a person looking to go into a Retirement Village. This booklet is also available from the Department directly at anytime that person is giving consideration of going into a Village.
Select another subtopic of this information
Need further information? Visit our legal forum where you can ask questions and search for similar topics.