Speaking at the ADLS Retirement Villages seminar, Vlatkovich & McGowan principal, Nola McGowan said that there was a trend towards people entering retirement villages from a younger age, and warned that exiting retirement villages is not easy.

People were moving into the village from the age of 55 onwards and it was notable that the fastest-growing group of older New Zealanders was those 75 years and over.

Included among the things Ms McGowan said that she discussed with clients were

• the legal structure
• the purchase price
• the accrued facility fee (including how this would be deducted from the purchase price after three or five years)
• what the client was getting in the unit and the village
• how the purchase would be financed
• how the weekly tariff would be paid
• the fact that they are purchasing a ‘lifestyle', which is not necessarily a good 'investment'
• whether a unit in the process of being built will meet their needs as they age
• the occupation licence - in particular:-
        * on a strict legal interpretation, a trust could not be party to an occupation licence
        * the need for both occupants' names to be on the occupation licence
• enduring powers of attorney

Ms McGowan said that retirement village ownership was still relatively new and she did not believe that practitioners had caught up with its implications for will drafting which included the following questions:

• In life interest wills, should account be taken of the fact that the next home a person might move into could be an occupation licence in a retirement village?
• Who would pay for the accrued facility fee?

Ms McGowan said that section 15 of the Retirement Villages Act 2003, which provided for a 15 day cooling off period, cause the most problems. As there was an ability to cancel within 15 working days, a resident could not move in until that period had passed. She said that, in her experience, most villages would not allow early possession.

"Remember that the unit that is being sold is owned by another person or estate and they will not be happy if someone moves in and then cancels and they have not received settlement funds."

Ms McGowan also noted that certification under section 27 could only be done by solicitors. Legal executives were not permitted to complete it.

Burke Melrose partner, Michelle Burke, said that the Act provided for the creation of a publicly-accessible Retirement Village Register, similar to the Register of Companies, that could be accessed through the Companies Office website.

Solicitors acting for residents should always complete a search of the village. If the operator was a company or other registered entity, a search of that entity should also be carried out.

Ms Burke said that a search of the register might reveal that a retirement village's registration had been suspended or that the village was not registered. In either case, the village must not enter into any occupation right agreements.

Section 30 of the Act set out the disclosure documents that must be provided to residents before an occupation right agreement was concluded. The Code of Residents' Rights provided a summary of the basic rights of residents under the act.

While only a two page document, it provided residents with some very broad rights over and above those contained in an occupation right agreement. The code also contained a section detailing residents' obligations to others.

Ms Burke said that the act provided for the Minister for Building and Housing to approve and publish a Code of Practice for retirement villages that was intended to deal with many of the practical aspects of village life.

It had come into force in September 2007 but had been challenged in court and was found to be invalid so there was currently no statutory code of practice.

Ms Burke said that all operators must appoint statutory supervisors for villages, unless granted exemptions under section 41. The duties and powers of supervisors were set out in sections 42 and 43, and in a deed of supervision.

In most cases, a statutory supervisor would require the operator to grant security over the village land to secure the operator's performance of its obligations to the residents and to the statutory supervisor.

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