In a retirement village

Enquiries are often received about who should pay for maintaining or replacing items of capital in a retirement village. This information outlines the responsibilities of residents and operators.

Note: Some of this information does not apply to common property in a strata scheme or association property in a community scheme.

Most items in a retirement village are capital items, including: 

• buildings and structures
• machinery or equipment used in the village
• the village infrastructure
• fixtures, such as built-in cupboards, stoves, hot water systems and floor coverings
• fittings, such as taps and light fittings
• furnishings, such as curtains and blinds
• non-fixed items, such as whitegoods, tables and chairs.

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The operator must ensure that all items of capital in the village for which it is responsible are maintained in a reasonable condition. What is ‘reasonable’ depends on:

• the age of the item
• the prospective life of the item
• the money paid to the operator by the residents under a village contract.

If it is not practical to maintain an item, it may need to be replaced. A village operator is not responsible for:

• capital items owned by a resident
• common property in a strata scheme
• association property in a community scheme.

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From time to time an item of capital in a resident’s unit, such as the hot water system or stove, may need to be repaired or replaced. Residents are not responsible for arranging for the repairs or replacement of these items (unless the resident owns the item). Residents are required to notify the operator when an item in their unit needs to be repaired or replaced. Residents can be required to reimburse the operator for damage the resident caused to an item of capital (other than fair wear and tear).

Residents are responsible for arranging and paying for repairs or replacement of any items that they personally own, such as fridges, microwave ovens or an air conditioning unit the resident has installed in their unit. In a strata or community scheme, the resident is responsible for fixtures and fittings they own, and the strata owners’ corporation or community association is responsible for common property or association property.

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It is the responsibility of the operator to allocate a sufficient amount for capital maintenance when preparing a proposed annual budget. This includes maintenance and repairs to capital items in the village and those items inside each resident’s unit for which the operator is responsible. Examples of maintenance include:

• cleaning carpets
• servicing air conditioners
• painting the village
• servicing the village bus
• fixing cracks in paths
• replacing tap washers
• replacing faulty stove elements.

The costs of capital maintenance can be paid from the recurrent charges or from the village’s capital works fund, if it has one. A capital works fund must be set up if any recurrent charges are going to be set aside for longer term maintenance. However, recurrent charges and the capital works fund cannot be used to substantially improve a capital item beyond its original condition or to maintain or repair an item of capital that it would be more cost effective to replace.

If an operator intends to use recurrent charges or the capital works fund for capital maintenance, the annual budget must list the proposed items of work and their expected costs, and include any quotes obtained.

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The operator pays for the cost of replacing capital items for which they are responsible. Examples include replacing carpets that have worn out or replacing hot water systems and stoves.

The operator must arrange and pay for the replacement of such items out of its own funds. Proposed annual budgets cannot include an allowance for replacing such items, either directly or through depreciation. The only exception is where an operator did not charge an ingoing contribution for residents to gain entry to the village before 1 March 2010. In these cases, the recurrent charges paid by residents can be used to fund the cost of replacing capital items.

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A village operator is required to attend to residents’ requests for repairs within a reasonable time. What is considered to be a ‘reasonable time’ will depend on the circumstances and the nature of the repair. Residents and operators are encouraged to discuss and agree on when work should be done.

In the case of certain urgent repairs, a resident is able to arrange for the work to be done and be reimbursed for the reasonable costs. The resident must first notify the operator of the need for the repair and give the operator a reasonable opportunity to carry out the work. Any work arranged by a resident must be done by a person with the proper qualifications for the work, such as a licensed electrician or plumber. A resident can apply to the Consumer, Trader and Tenancy Tribunal for orders if the operator does not reimburse them.

What is an urgent repair?

An urgent repair is work required to fix:

• a burst water service
• a blocked or broken toilet
• a serious roof leak
• a gas leak
• a dangerous electrical fault
• flooding or serious flood damage
• serious storm or fire damage
• a breakdown of essential services for hot water, cooking, heating or laundering
• a fault or damage causing an urgent safety or security risk.

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If a resident considers that the operator is not maintaining or replacing items of capital for which it is responsible when necessary, they can apply for an order from the Consumer, Trader and Tenancy Tribunal. The Tribunal has the power to order the operator to carry out maintenance or replacement within a specified time.

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If you have any questions about the rights of retirement village residents or operators contact the Fair Trading Specialist Support Unit on 9895 0297 or toll free on 1800 625 963 or get a copy of the Retirement village living booklet.

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