From 1 March 2012, Exit Fees for all new resident contracts must be calculated on a daily basis. This follows a change to the Retirement Villages Act by the Queensland Government.
Existing residents will also be entitled to have their Exit Fees calculated on a daily basis, unless their contract provides for another method.
This has significant implications for the financial models of most retirement village operators as only part of the "last year's" Exit Fee can be recovered. It has the potential to significantly reduce the total Exit Fee the operator can collect.
Operators not wanting to be caught out by the change will need to:
- Check their current agreements to ensure that the daily basis calculation does not apply to them;
- Complete any in progress agreements by February 2012 to lock in the existing Exit Fee structure;
- Review their financial models in relation to exit fees before 1 March 2012 and adjust them to accommodate the change to daily adjustments; and
- Update their resident contracts and PIDs.
Those operators that fail to factor in these changes risk missing out on Exit Fees they had forecast to collect.
Operators should also be aware that the Office of Fair Trading is in the process of updating the format of the PID and will need to use the new version once it becomes available.
This newsletter is intended to provide a general summary only and should not be relied on as a substitute for legal advice.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.