Legislation update

‘Buy-back’ obligations to extend to freehold retirement village units

By Tracey Rundle and Ivan Orola / 04 December 2018

Key issues:

  • The Health and Other Legislation Amendment Bill 2018 was introduced in the Legislative Assembly of Queensland last month. 
  • The Bill seeks to amend the Retirement Villages Act 1999 to clarify the intention of certain provisions in the Housing Legislation (Building Better Futures) Amendment Act 2017.
  • The Bill seeks to clarify that the mandatory ‘buy-back’ provisions also extend to freehold retirement village units.

The Health and Other Legislation Amendment Bill 2018 (Bill) was introduced in the Legislative Assembly of Queensland last month. 

The Bill seeks to amend the Retirement Villages Act 1999 (RV Act) to clarify the intention of certain provisions in the Housing Legislation (Building Better Futures) Amendment Act 2017 (HLA Act).  Readers will recall that one of the changes made by the HLA Act included an obligation on a scheme operator to pay a former resident’s exit entitlement within 18 months after the termination date, regardless of whether the former resident’s right to reside was resold. The Bill seeks to clarify that the mandatory ‘buy-back’ provisions also extend to freehold retirement village units. 

In particular, the amendments to the RV Act proposed by the Bill include:

  • a requirement for scheme operators to complete the ‘buy-back’ within 18 months after the termination of the former resident’s right to occupy;
  • a mechanism for deciding the purchase price;
  • an ability for scheme operators to recover legal costs for the contract;
  • a prohibition on sales commission with respect to the ‘buy-back’;
  • a deferral of exit fees until completion of the ‘buy-back’;
  • provision for regulations to prescribe required and prohibited terms for ‘buy-back’ contracts;
  • an ability for scheme operators to apply to QCAT for an extension of time to complete the ‘buy-back’ for undue financial hardship; and
  • a transfer duty exemption for such mandatory purchases. 

A scheme operator may be exposed to a monetary penalty if it fails to comply with the mandatory ‘buy-back’ provisions. However, there is scope for a scheme operator to be excused from strict compliance with the new provisions in certain circumstances.

Scheme operators of freehold retirement villages should familiarise themselves with the new provisions as it is intended that the amendments will apply retrospectively from 10 November 2017.  This means the first 18 month period could potentially expire in May 2019. 

Should scheme operators require any more information or advice with respect to the above amendments, please contact Tracey Rundle or Ivan Orola from HopgoodGanim Lawyers’ Property team.

Authors
Ivan Orola
Special Counsel
Ivan is a Special Counsel in our Property practice.
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