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Earlier sections of this guide cover situations where a resident leaves a village because they have avoided (cancelled) the agreement after learning of a breach.

Information in the disclosure statement about termination

The arrangements for terminating the occupation right agreement will be included in the disclosure statement that an intending resident is given before signing the agreement (or that is given to existing residents by 1 May 2008). This includes:

• the position of any other people who are living in the unit after the agreement is terminated
• any charges that will continue after the agreement is terminated
• the process for finding a new resident for the unit
• the process for deciding on the sale price and how much the former resident (or their estate) will be entitled to be paid from the sale proceeds.

Estimated financial returns

The disclosure statement must also state:

• the estimated financial return the resident could expect from selling the unit two, five and 10 years after they first signed the occupation right agreement
• how that estimated return is affected by the length of time they've been living in the unit
• whether that estimated return will be affected by the fact that the resident has terminated the agreement voluntarily or by the fact that the agreement was terminated because they breached it.

Minimum requirements in the Code of Practice

The Code of Practice 2008 for retirement villages sets out minimum requirements that both the operator and the resident must follow when the resident leaves the village. These have effect as part of each resident's occupation right agreement, as well as being set out in the disclosure statement.

How can an agreement be terminated?

From 2 October 2009 a resident may terminate their occupancy right agreement by giving at least one month's notice, unless the agreement specifies a different notice period. The resident can do this at any time, and does not have to give any reason.

A resident and operator may agree to terminate the occupation right agreement if the unit is destroyed or damaged beyond repair, in specified circumstances set out in the occupation right agreement.

The operator can terminate a resident's occupation right agreement only if the resident:

• cannot live safely in the village, as certified by a doctor on medical grounds
• has significantly breached their occupation right agreement and hasn't remedied this
• has abandoned their unit, or
• has intentionally or recklessly caused or allowed serious damage to the unit or facilities, or serious injury or harm to the operator, another resident, or an employee or guest, or it's highly likely that the resident will cause or allow this to happen, and the resident hasn't remedied the damage, injury or harm.

The village's statutory supervisor must supervise the termination process, which first involves the operator issuing a notice to terminate to the resident. This includes the grounds, process and timeframes involved, as well as the resident's right to information, to involve a support person or representative, to be consulted, and to make a complaint and take a dispute. When the operator terminates a resident's occupation right agreement, they must pay all amounts due to the resident within five working days of termination.

Sales process

When the operator is responsible for selling the unit, they must:

• promptly start the process of finding a new resident in a timely manner and for the best price obtainable, including marketing the unit and responding helpfully to enquiries
• consult with the former resident about marketing the unit and keep them informed of progress at least monthly, with a written report after three months, and then monthly reports if the unit is still unsold
• obtain and pay for an independent valuation if the unit isn't sold after six months and market the unit at that price, considering any second valuation obtained by the former resident
• not favour selling new units.

If the unit remains unsold nine months after becoming available, the former resident may give a dispute notice.

A resident may introduce a new resident at any time. If they buy the unit the sales costs charged to the resident must be only the actual costs incurred.

At any time the operator may agree in writing to buy the former resident's unit at the price offered by a prospective buyer or the fair market price determined by an independent valuation, whichever is higher. 

Refurbishment

If the resident is free to sell their unit, they may choose whether and how to refurbish their unit.

If the resident is responsible for refurbishing their unit after termination, with the work to be carried out by the operator, their agreement must clearly set out the process. This includes the cost and who decides what work is to be done. For contracts signed after 25 September 2006 that includes a refurbishment clause. The work done must be no more than is necessary to return the unit to the condition it was in when the resident entered it, less fair wear and tear.

If the operator is responsible for refurbishing the unit, the operator must carry out the refurbishment.

Payments due

The operator must:

• stop charging the resident for personal services when they stop living in the unit
• reduce by at least 50% the outgoings charged to the former resident if there is no new resident at six months after the termination date, or at any later date on which the former resident stops living in the unit
• Fixed deductions must not accrue past the date on which the resident is paid for their share of the proceeds of the unit ( for contracts entered into after 25 September 2006)
• pay all money owing to the former resident on the settlement date or no later than five working days after a new occupation right agreement has been entered into for which the operator has received payment.

Resolving problems

Former residents can make a complaint or take a dispute to a disputes panel if there are problems about any of these matters, including problems relating to charges or deductions. There are special procedures for disputes about selling or otherwise disposing of their former unit.

Disputes about selling a unit

If, in disposing of the unit, the operator breaches a former resident's right in their occupation right agreement or the Code of Practice, the former resident (or their estate) can give a dispute notice. They must wait nine months after the unit becomes available to be disposed of by the operator before they can start the dispute procedure - but they don't have to first make a complaint.

The operator must tell the village's statutory supervisor if there's a dispute about this.

There are special rules for who sits on the disputes panel for this kind of dispute - the panel must have at least three members and be chaired by a retired judge or experienced lawyer.  See the provisions relating to taking a dispute in the section on 'Complaints and disputes'.

What can the disputes panel do?

In addition to its usual powers, the panel can order the operator to:

• market the unit in a particular way or at a particular price
• pay compensation to the former resident
• pay interest to the former resident
• if none of those options is appropriate, buy the former resident's interest in the unit at a certain price and within a certain time, or, if they don't have an interest in it, pay them a certain amount within a certain time.

In deciding this, the disputes panel must take into account:

• the relevant real estate market
• the age and condition of the village
• the effect on other residents and on the financial stability of the village.