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Retirement Villages Act changes passed by Parliament

On 25 October 2017, the Queensland Parliament passed the Housing Legislation (Building Better Futures) Amendment Bill 2017 (the Bill), which amends a number of Acts including the Retirement Villages Act 1999 (Q) (RV Act). While some amendments were made to the original version of the Bill, these were mainly either minor changes or designed to further enhance consumer protection. A number of significant issues raised by industry during the consultation period were not addressed.

Our September 2017 Retirement Villages article summarised the proposed changes to the RV Act under the Bill as introduced and can be found here. The relevant changes made to the Bill before it was passed are as follows:

Sale or transfer of retirement villages

Where control of a retirement village’s operation is to be transferred from one person to another, a 90 day timeframe has been introduced for the Department of Housing and Public Works (DHPW) to decide whether to approve a proposed transition plan. This 90 day period begins either when DHPW receives the proposed transition plan or when DHPW receives any further information it reasonably requests, whichever is the later.

If DHPW fails to make a decision within this timeframe, the proposed transition plan is taken to be approved. However, DHPW will still have the right under new Section 41G, either on its own initiative or on the application of the operator, to direct the operator to revise an approved transition plan.

A new grandfathering provision has been included, meaning that the requirement for an approved transition plan will not apply to contracts for the transfer of control of a village's operation that were executed before the new provisions commenced.

Redevelopment of retirement villages

When an operator applies to DHPW for approval of a redevelopment plan, DHPW must, before deciding the application, notify each resident, invite residents to make submissions, give residents a copy of the proposed redevelopment plan upon request and have regard to any submissions made by residents.

A 90 day timeframe for DHPW's decision has also been inserted, similar to the timeframe for transition plans.

Closure of retirement villages

Similar provisions for the approval of closure plans concerning notice to residents and a 90 day timeframe for DHPW’s decision have also been inserted.

Valuations

Where an operator must pay an exit entitlement under the new mandatory 18 month buy-back period (despite there being no resale of the right to reside), the operator must obtain a valuation of the right to reside not more than 14 days before the operator is required to pay the exit entitlement (unless the parties have otherwise agreed on the resale value).

The original Bill provided for the cost of this valuation to be shared between the operator and the resident. That provision has now been deleted. Accordingly, the Bill is now silent as to who bears the cost of the valuation. The Resupplied Explanatory Notes appear to indicate an intention that operators must bear the cost, though they are somewhat inconsistent in this regard.

False and misleading information

Section 86 of the RV Act prohibits operators from giving a resident or DPHW a document containing information the operator knows is false or misleading. While the original Bill slightly expanded this prohibition, the provision has now been completely replaced.

Under the new provision, operators and their representatives must not engage in conduct that is misleading or deceptive or is likely to mislead or deceive. A representative of an operator includes the operator's employee, agent or executive officer.

In doing so, the Bill has removed the element of knowledge or intent to mislead. Accordingly, conduct which unintentionally misleads or deceives (or is likely to do so) breaches this section and constitutes an offence.

A breach of this section carries a pecuniary penalty. It also entitles a resident to apply to QCAT for an order setting aside their residence contract where the resident is materially prejudiced.

These provisions assume additional importance as, under Section 224 of the RV Act, an act or omission by an operator’s representative within the scope of the representative's actual or apparent authority is taken to be an act or omission of the operator, unless the operator proves it could not, by the exercise of reasonable diligence, have prevented the act or omission. Operators will therefore need to ensure that their employees, contractors and agents are appropriately trained and provided with adequate resources, including in respect of the scope of their authority when dealing with residents.

Maintenance Reserve Fund (MRF)

Under the Bill, the MRF contribution will no longer form part of the general services charge.

The Bill has been amended to ensure that certain provisions relating to the general services charge will also continue to apply to MRF contributions, i.e. former residents’ continuing liability under Section 104 (including the 90 day and 9 month caps) and the operator's obligation under Section 105 to pay those amounts for units that have not been occupied or for which there is no residence contract in force.

Unfortunately, the new provision requiring operators to pay these amounts for units “under construction” has not been amended or deleted, despite the recommendation of the Public Works and Utilities Committee.

Exit Entitlements

A new provision has been inserted requiring the Minister to commence an independent review of the operation of the mandatory 18 month buy-back period within two years after those provisions commence.

Other issues not addressed by the amended Bill

The amendments to the original Bill also failed to address the following issues:

  • Difficulties with the new reinstatement and renovation provisions;
  • There are still no specified criteria to which DHPW must have regard in making decisions about proposed transition plans, redevelopment plans and closure plans; and
  • The anomaly introduced in the 2006 amendments, by which the 14 day cooling-off period may not commence until a condition (e.g. the sale of the resident's home) is satisfied has not been rectified.

Timing of commencement

The provisions of the Bill relating to the mandatory 18 month buy-back period and new behavioural obligations will commence on the date of assent.

All other provisions of the Bill relating to the RV Act will commence on a date to be fixed by proclamation.

Action required

Many of the changes arising from the Bill will depend on the approved forms and regulations that are yet to be released. The Bill provides that, until an approved form is available, any requirement under the RV Act to use that approved form does not apply.

However, many of the changes introduced by the Bill do not depend on an approved form or new regulations and will therefore take effect immediately upon commencement of the relevant provisions. Now that the final form of the Bill is known, retirement village operators should, with their professional advisors' assistance, begin preparing appropriate amendments to their template documents and procedures in order to comply with the proposed amendments and, where possible, ameliorate their effect.

If you wish to discuss this article or any other retirement village issues in more detail, please contact Stuart Lowe.

 

"The content of this publication is for reference purposes only. It is current at the date of publication. This content does not constitute legal advice and should not be relied upon as such. Legal advice about your specific circumstances should always be obtained before taking any action based on this publication."