Termination of Resident’s Contract
A resident of a retirement village unit governed under the Retirement Villages Act 2016 (SA) (Act) will sign a Resident’s Contract (“Contract”), which normally provides for an occupation license for the unit to be granted to the resident in consideration of the resident making of a loan to the Operator. The loan is usually payable soon after the signing of the Contract.
A Contract will usually provide for the termination of resident’s rights by the Operator in case of a breach of the contract or a certain period of notice being given. Often this period of notice is 14 days or thereabouts. In the case of a breach of the Contract by the resident, the Contract usually allows the Operator to terminate the Contract on the basis of the resident having committed a breach of the Contract or the rules. Sometimes this breach arises because the resident has been unable to pay the loan amount required to be paid under the Contract. Typically this will happen where the resident has been unable to sell a house which needs to be sold in order to pay the loan amount.
The termination of a Contract and, arising from this, the requirement for the resident to vacate the unit, will potentially be distressing for the resident. The question is, what rights does the resident have in these circumstances?
Section 44 of the Act provides that a resident in a retirement village has a right of occupation that cannot be terminated unless the resident commits a breach of the Contract or the rules and the Operator terminates the resident’s right of occupation on that ground. A Contract also might be terminated where the resident acts in a manner that adversely affects the health and safety of persons working in the retirement village or that seriously disturbs the peace or comfort of other residents of the retirement village.
A failure to pay the loan amount when due would ordinarily be a breach of the Contract.
However Section 44(8) of the Act provides that the Operator’s decision to terminate a resident’s right of occupation is ineffective unless the Tribunal (being the South Australian Civil & Administrative Tribunal), on the application of the Operator, is satisfied on proper grounds, which are sufficiently serious to justify termination of the right of occupation, exist and confirms the Operator’s decision.
If the Tribunal confirms the Operator’s decision then it must fix a period of time within which the resident must vacate the residence.
Under Section 44(12) if the Operator decides to terminate a resident’s right of occupation the Operator must give the resident notice:
- Setting out the grounds of the decision;
- Providing the resident with a copy of the Operator’s dispute resolution policy;
- Informing the resident that the decision is subject to review by the Tribunal; and
- Informing the resident of his or her rights with regard to such a review.
A failure to follow this procedure may result in a prosecution with a maximum penalty of $10,000.
Section 45 of the Act requires an Operator to have a dispute resolution policy and it must be provided on request to the resident.
Section 46 of the Act provides that a party to a dispute between an Operator and a resident may apply to the Tribunal for a resolution. However an application should not be made to the Tribunal unless the parties have made reasonable attempts to resolve the dispute. This means that where there is the delay in paying a loan amount it is necessary and reasonable for the Operator and the resident to try and resolve the dispute regarding the payment. A resolution of the dispute may involve the payment of interest. At a hearing the Tribunal may make such orders as it thinks appropriate including an order for the payment of the amount under the Contract or the payment of compensation for loss or injury. Alternatively the Tribunal may confirm the Operator’s decision to terminate a right of occupation.
The various provisions of the Act make it clear that a retirement village Operator cannot just terminate a right of occupation where there is a delay or a breach in the payment of a loan amount on the due date. There is a process to be undertaken before the Operator can lawfully terminate a right of occupation of a retirement village unit.
DW Fox Tucker Lawyers are able to advise on resident rights and Operator rights under the Act.
