Legal matters

Buying into a retirement village is different from buying other residential property. The financial structures and legal titles can vary from village to village, so it's important to talk to your lawyer so that you understand their implications. That way you will be better placed to choose a village that best suits your needs now and in the future.

Get independent legal advice before you sign up with a retirement village. You will be required to do this once the Act comes fully into force. Find a lawyer with experience in retirement villages, who is independent of the village you're thinking about. If your lawyer doesn't have this experience, ask them or go to the Law Society to find a lawyer experienced in retirement villages.

In this section, you'll find information about:

• Legal titles
• Key documents

Legal titles

There are four basic legal titles commonly used for retirement villages:

• Licence to occupy
• Unit title
• Cross lease
• Lease for life

Some villages combine the features of 'licence to occupy' with 'unit title' to create their own type of title.

If you have a unit title, cross lease or lease for life, you can usually borrow against your interest in the property. This is not, however, necessarily the case with a licence to occupy. In addition, village operators usually control the sale of the unit when you leave no matter what kind of legal title you have.

After the Act comes fully into force, all legal titles must include a 'memorial' that protects a resident's interest in their unit and helps to ensure the village's continued operation.

Licence to occupy

Over half of New Zealand's retirement villages offer licences to occupy. A licence to occupy gives you the right to live in the unit, but it doesn't mean you own the unit. This usually means that you can't borrow against the value of your unit, though some villages may offer this option.

Unit title

In a village based on a unit title structure, you own your own unit. You also become a member of a body corporate that is responsible for the upkeep and maintenance of communal areas. Often the body corporate has a management agreement with the village manager (who is responsible for looking after the day-to-day operation of the village) to administer and look after the affairs of the body corporate.

Cross lease

If you have a cross lease, you share ownership of the land and its units, and grant leases to one another to live there. The leases include agreement about the length of the lease, the use of the land, and the residents' rights to live there.

Lease for life

In this case, you have a lease for a unit or property in the village, which remains in place until you die or leave the village.

Key documents

When the Act comes fully into force, the village manager must give you the following documents before you can sign up:

• Disclosure statement
• Occupation right agreement
• Code of Residents' Rights
• Code of Practice

The disclosure statement

The disclosure statement must include information about:

For more information about the disclosure statement, read the Guide to the Act.

The occupation right agreement

This written agreement gives you the right to occupy a unit and to use services and shared facilities in the retirement village. This agreement also sets out the relevant terms and conditions. The agreement must be clear and unambiguous, and may include more than one document.

For more information about the occupation right agreement, read the Guide to the Act.

The Code of Residents' Rights

The Code of Residents' Rights is a summary of your basic statutory rights. It includes some obligations, contact details for the village manager and details of other people you might need to contact if you want information about your rights or to make a complaint.

The Code of Practice

From September 2007, retirement villages will have to comply with a Code of Practice. It sets the minimum requirements to be included in every resident's occupation right agreement, covering the following matters: