Why don't retirees seek advice before moving into a retirement village?
For many years we have covered the issue of retirement villages, and in particular the terms and conditions that apply both on entry and exit - emphasising that coming to a clear understanding of the financial implications associated with entering into a contract that will often exceed $500,000 can be complex. That complexity arises by virtue of the nature of the transaction - the interest being purchased - and in many cases the retirement industries inability or unwillingness to effectively simplify their contract structure, despite having made public promises to do so for a number of years.
The federal and state governments also deserve their fair share of criticism - retirement villages, unlike aged care accommodation, are a state responsibility, and that's why we have an an ugly pattern of different legislative standards (or low standards) across Australia. Nothing stops the federal and state governments agreeing on a nationwide standard in terms of legislation, except tardiness and disinterest.
So, while the retirement village industry is complicit in much of the negative publicity that now surrounds it, there needs to be appreciation that many of the people complaining about their situation - particularly with respect to exit fees - chose not to seek professional advice prior to entering into a village. Had they done so, I am absolutely certain that many would have either not proceeded to enter the retirement village or, or have done so in a clear understanding of the terms and conditions.
On a personal note, something like a decade ago my mother was considering entering a retirement village and part of the research involved seeking details of the terms and conditions associated with entering a newly established village in her geographical area of interest. Astonishingly, that villages first response to the inquiry was that detailed terms and conditions "would only be provided after a deposit was paid". That was a "try on" by real estate agent engaged by the private developer which was quickly withdrawn, but it shows that predatory behaviour absolutely exists in the industry. A draft contract was then provided which was around 120 pages and it was, to be kind, basically unintelligible and you couldn't but come to any conclusion other that it was drafted in that fashion designed to confuse any prospective buyer.
So, there are undoubtedly some operators in the retirement village industry who are, very commercially focused and could be regarded as "ethically challenged" - they are the operators who hide behind complex and unintelligible contracts with high, subtly hidden exit costs. However, any liaison with a reasonably experienced local solicitor or financial planner would throw up significant warnings - and no one, appropriately advised, would proceed to participate in such a contract.
So, it remains perplexing that individuals who might spend weeks researching what car or refrigerator they might buy, think they are experienced enough to understand legal documents and the financial implications of entry into a retirement village. Why don't they seek advice - often it simply comes down to not wanting to spend money and this is an extreme case of "penny wise pound foolish". Bluntly, in what world is choosing not to spend a few thousand dollars on having a document reviewed, in advance of a transaction that will often be worth more than $500,000, sensible?
The best advice we can offer to individuals looking to move into retirement village is to have any contract reviewed by an appropriately experienced, local solicitor, prior to any commitment being made - and a financial planner if your circumstances are complex.
As a postscript, my mother moved into a retirement village and her experience, over the last 10 years, has been almost wholly positive - the terms and conditions provided by the non-profit organisation were fair, and they have been responsive to her requirements and needs throughout her time in the village. There are very good retirement village operators, you just need to commit to doing proper research and seek advice where appropriate.