10 Reasons to read and understand your Occupation Right Agreement before signing
Moving into a retirement village represents one of life's most significant transitions, often involving substantial financial commitment and long-term lifestyle changes. In New Zealand, Occupation Right Agreements (ORAs) govern this unique form of housing arrangement, yet many prospective residents underestimate the complexity and legal implications of these documents.
Ask yourself: would you ever sign a Sale and Purchase Agreement without a lawyer’s advice? For most, the answer is an immediate ‘of course not.’ An Occupation Right Agreement ORA deserves the same level of care and due diligence, it’s just as significant, if not more so.
As experienced property lawyers in Christchurch, Weston Ward and Lascelles have witnessed countless situations where inadequate understanding of ORA terms has led to disputes, civil litigation, and financial hardship – sources of avoidable and unnecessary stress for residents and their families. Seeking legal advice before you sign on the dotted line remains your best defence against unexpected complications. Don't let the excitement of finding your perfect retirement home cloud your judgment regarding this crucial legal document.
Here’s how Weston Ward and Lascelles property lawyers help you:
1. Understand your visitor rights and restrictions
Your ORA will detail specific provisions regarding visitors, including overnight stays, duration limits, and approval processes. Some villages impose strict restrictions on how long guests can stay or require advance notice or approval for extended visits. These limitations could significantly impact your social connections potentially limiting precious time with grandchildren or access to support during illness. It’s crucial these terms support your lifestyle.
2. Know what modifications you can make to your living space
The ability to personalise your unit varies dramatically between villages. Some agreements prohibit any alterations whatsoever, while others allow minor modifications with prior approval. Understanding these restrictions is essential, particularly if you have specific accessibility needs or wish to create a comfortable living environment that reflects your personality. Failure to comply with modification restrictions typically results in costly remedial work at your expense when you eventually leave.
3. Clarify pet ownership policies and procedures
Pet policies in retirement villages range from complete prohibition to conditional acceptance with specific requirements. Your ORA should clearly outline whether pets are permitted, what types and sizes are acceptable, and any associated fees or deposits.
Some residents only realise too late that their pet isn’t allowed, leaving them with the difficult choice of rehoming or finding alternative accommodation. Conversely, if you’re not a fan of animals, it’s important to appreciate your neighbour may have a pet you’re uncomfortable with. Seeking professional property law advice helps you negotiate pet clauses to safeguard both your interests and your pets, ensuring clarity and harmony for all involved.
4. Identify financial obligations and fee structures
ORAs contain complex financial arrangements extending far beyond the initial entry payment. Service charges, maintenance contributions, utilities, and activity fees are typically ongoing; however, some villages impose fixed fees, while others allow annual increases tied to inflation or other indices.
Understanding whether fees are capped, what services are included, and your liability for unexpected costs is crucial for long-term financial estate planning. Some residents are shocked when fee increases substantially exceed their pension or superannuation income growth – forewarned is forearmed.
5. Understand resale processes and your level of control
Unlike selling a property traditionally, residents typically have limited control over the marketing and sale of their unit. The ORA states who handles the resale process, associated marketing costs, and timeframes for settlement. Some agreements allow the village operator complete control over pricing and marketing strategies, potentially leaving you waiting months or years for your capital to be released.
6. Calculate true exit costs and deferred management fees
Exit costs represent one of the most significant financial considerations in retirement village living. Deferred Management Fees typically range from 20-30% of your entry payment and may increase over time. Additional exit costs might include refurbishment expenses, legal fees, and marketing costs. These combined expenses can substantially reduce the capital available to fund future accommodation or care needs.
7. Know termination conditions and your rights
ORAs specify circumstances under which either party can terminate the agreement, including health-related relocations, behavioural issues, or financial default. Understanding these termination clauses protects you from unexpected displacement and ensures you know your rights if disputes arise. Some agreements grant villages broad discretionary powers to terminate occupancy, while others provide stronger resident protections. Professional legal advice identifies potential problematic clauses and suggests protective amendments.
8. Establish maintenance responsibilities and standards
Maintenance obligations vary significantly between villages and can include substantial ongoing costs. Your ORA should clearly define who is responsible for interior maintenance, exterior upkeep, garden care, and emergency repairs. Some villages require residents to maintain units to specific standards at their own expense, while others include comprehensive maintenance in service fees. With clarity about your obligations, you can budget accurately and avoid disputes.
9. Evaluate future care provisions and transition procedures
Many residents enter retirement villages expecting seamless access to higher levels of care as their needs change; however, ORAs do not necessarily guarantee care availability, and transition procedures can be complex and expensive. Some agreements allow villages to relocate residents to care facilities with different fee structures, potentially doubling accommodation costs. Understanding care provisions and associated financial implications is crucial for long-term planning.
10. Understand dispute resolution mechanisms and your legal protections
Despite best intentions, disputes can arise between residents and village operators. Your ORA should outline clear dispute resolution procedures, including mediation processes, timeframes for responses, and escalation mechanisms. Understanding these procedures and your legal protections under the Retirement Villages Act 2003 means you can seek help without compromising your occupancy rights.
Weston Ward and Lascelle: protecting your investment and lifestyle
Retirement village living offers many benefits, including community connection, security, and access to services. However, the financial and legal complexity of ORAs should not be underestimated.
If you're considering retirement village living or have already received an ORA for review, contact our experienced property law team in Christchurch. If you have already signed and are within the 15-working day cooling off period provided under New Zealand law, we urge you to contact us as a matter of urgency. We provide detailed agreement analysis, plain-English explanations of terms and conditions, and practical advice to help you make informed decisions about this important life change. If you have already signed and are over the 15-working day limit, contact us for jargon free details of the contract – what your obligations are, and what theirs are to you. Your future comfort and financial security deserve nothing less than expert legal protection.
Contact Weston Ward and Lascelles today and speak to a Christchurch legal team who understand the unique challenges facing retirees and the village living experience. Book your appointment now and gain peace of mind. Call 03 379 1740.
Legal services
