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/Factsheet_print/Tenants_and_home_owners/Residential_land_lease_community_home_owners/Moving_into_a_residential_land_lease_community/_Voluntary_sharing_arrangements.pdf
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Standard fact sheet.
/Factsheet_largeprint/Tenants_and_home_owners/Residential_land_lease_community_home_owners/Moving_into_a_residential_land_lease_community/_Voluntary_sharing_arrangements.pdf
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Large print fact sheet.

Voluntary sharing arrangements 

In a residential land lease community  

When you move into a land lease community, the operator may offer you a voluntary sharing arrangement. This is when, instead of buying a home outright and paying only site fees, you may choose to agree to another financial arrangement. For example, in return for lower site fees you may agree to the operator receiving a percentage of any profit when you sell your home.

As the sharing arrangement is voluntary one, you have the right to:

  • choose not to accept the arrangement
  • negotiate any aspects of the arrangement with the operator to get a better deal.

Be aware that only certain types of voluntary sharing arrangements can be legally offered to you.

Make sure you will receive a lower site fee or some other benefit that justifies the arrangement. Before accepting it, it is strongly recommended that you seek independent advice to help you determine if the arrangement will work for you.

What is a voluntary sharing arrangement? 

Voluntary sharing arrangements provide alternatives to the traditional option of buying a home outright and paying only site fees. This may help to make land lease community living accessible to more people.

These arrangements can encourage both home owners and the operator to have a shared interest in the upkeep and appearance of the community. Allowing the parties to share any financial benefit from the sale of a home onsite recognises that part of its value is attributable to its being situated in the community. Another income source for operators may also take pressure off land lease community closures and rising site fees.

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What types of voluntary sharing arrangements can be offered? 

The following types of voluntary sharing arrangements can be offered to you:

  • Share of capital gain: A voluntary sharing arrangement could specify that you agree to pay a percentage of any capital gain to the operator (for example, 20%). The ‘capital gain’ is the difference between the price you pay for your home and the price you receive for your home when you later sell it on site. If the price you receive for your home when you move out is less than what you paid, there is no capital gain and no fee would be payable. If you agree to share the capital gain, you cannot be required to pay an on-site sale premium.
  • On-site sale premium: An on-site sale premium is an alternative to sharing capital gain. Under such an arrangement you agree to pay the operator an agreed percentage (for example, 10%) of whatever your home sells for when it is sold onsite.
  • Entry fee: An entry fee is an amount that you agree to pay to the operator when you sign your site agreement, or at another time specified in your agreement such as when you move in. For example, you may agree to pay the operator an entry fee of $3,000. This fee is separate and in addition to the price you pay for your home. An entry fee is not refundable.
  • Exit fee: An exit fee is a fixed amount (for example $5,000) set out in your site agreement that you agree to pay the operator when your home is sold onsite or removed from the site.
  • Deferred site fees: This arrangement allows you to put off paying some or all of the site fees to a later date specified in your site agreement. This may be useful where you have a limited income or where most of your money is tied up in an asset, such as your former home.

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Who can be offered a voluntary sharing arrangement? 

Voluntary sharing arrangements can be offered to prospective home owners before they enter into a site agreement. Details of the proposed arrangement must be set out in the disclosure statement. Voluntary sharing arrangements can also be offered to existing home owners if they want to enter into a new site agreement.

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What should I get in return for a voluntary sharing arrangement?  

The operator can decide on the incentives to encourage you to agree to a voluntary sharing arrangement. This could be reduced site fees or a discount on the home price if you are purchasing it from the operator. You should negotiate with the operator about what they are willing to offer. If a reduction in site fees is offered make sure you know how long this will last for.

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Must I be offered a choice? 

If you are buying a home from an existing home owner the operator must offer you the option of a 'rent only' site agreement. This is simply a standard site agreement that does not contain any voluntary sharing arrangements. The site fees under this agreement must be no higher than the fees being paid by the current home owner, unless they have been discounted for some reason (in which case they cannot be higher than those sites of a similar size and location in the community).

A site agreement with a voluntary sharing arrangement must contain a written declaration (signed by both you and operator) that a 'rent only' agreement was offered and declined. The declaration must also state that you received independent advice about the voluntary sharing arrangement or waived this right. Should this not occur the voluntary sharing arrangement will be considered null and void.

When an operator/owner is selling a new home (or re-selling an existing home they purchased from a former home owner) they do not have to offer you the option of a ‘rent only’ agreement.

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When and how is a voluntary sharing arrangement paid? 

Most voluntary sharing arrangements will become payable once you sell your home onsite. If the operator is acting as your selling agent they can deduct the amounts owing from the sale proceeds. Otherwise you have 14 days from the date the sale is finalised in which to pay. Any agreement to share capital gain or to pay an on-site premium is not enforceable if the home is removed and sold off site or is bought by the operator.

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What if I change my mind or later think the arrangement is unfair?  

If you enter into a site agreement that has a voluntary sharing arrangement remember there is a 14 day cooling-off period if you change your mind. You just need to let the operator know in writing that you no longer want to go ahead with the agreement. This right ceases if you are a new home owner and you move into the home.

If at a later time you believe the arrangement you entered into is harsh or unfair you may have remedies under the Australian Consumer Law or the Contracts Review Act 1980. Seek advice in these situations about your options.

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Voluntary sharing arrangement scenarios  

Sue and Daryl

Sue wants to sell her home to Daryl who has offered to pay $200,000 for it.

When Daryl approaches the operator he is offered two site agreements. Under the first agreement Daryl is offered lower site fees than currently exist for the site, in return for agreeing to enter a fully disclosed sharing arrangement with the operator.

Under the second agreement Daryl is offered a 'rent only' arrangement whereby he continues to pay the site fees as per the existing arrangement with Sue. He is told that he has an absolute right under the law to accept the second agreement should he wish to do so.

Daryl decides that he can afford the existing site fees and wants to obtain maximum value for the property when he sells it. As such he takes up the second 'rent only' agreement.

Brian and Madeleine

Brian is looking to sell his home to Madeleine. Both agree that the home is worth $200,000. However Madeleine is concerned she may not have enough money upfront to pay for the home as she can only afford to pay $180,000.

Instead of walking away from the deal Madeleine approaches the operator to see if an alternative arrangement can be struck. The operator informs Madeleine that by law she has the right to a 'rent only' agreement, paying the same site fees as Brian is paying.

However, the operator is also willing to put forward $20,000 to help pay for the house in return for an agreement stating that they will receive 10% of the sale price when the house is later sold by Madeleine.

Madeleine agrees to this arrangement and purchases the house from Brian. Without the possibility of a sharing arrangement this sale may not have occurred.

Joe and Roger

Joe is interested in selling his home to Roger for $200,000.  Roger has the money upfront to pay for the house from his savings. However, Roger is on a fixed income and is worried that he may not be able to afford the site fees on an ongoing basis.

He may have to walk away from the deal if he cannot negotiate lower site fees, so Roger approaches the operator with this issue. The operator informs Roger that he has an absolute right to a 'rent only' arrangement, but that there is also the possibility that the operator can lower the site fees if a sharing arrangement can be agreed upon.

The two parties proceed to negotiate and come to an agreement beneficial to both parties. Roger informs Joe that he can now proceed with the sale.

Mollie

Mollie has put her property on the market. After showing her house to several prospective residents the highest offer she has obtained is $200,000. However, the operator of the park also learns that Mollie is interested in selling.

The operator is interested in the property knowing that if they own it they can sell it to a future resident under a sharing arrangement. After learning that the highest offer was $200,000, the operator offers to beat this by $10,000, to which Mollie agrees.

Because a new bidder was introduced to the market Mollie has been able to sell her home at a higher price than previously would have been possible.

Greg

Greg is an existing resident who has resided in the same land lease community for 10 years. Greg has a fixed income and is worried that his site fees are starting to become unaffordable.

Greg likes the community lifestyle and does not want to be forced to move out, so he approaches the operator to see if they can reach a sharing arrangement that will lower Greg’s site fees to a level he can afford.

After negotiating with the operator the two reach an agreement. Greg can now afford the site fees on an ongoing basis meaning that he can continue to live in his home.

 

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