What is an Occupation Right Agreement?
Due to an aging population, Retirement Villages are becoming a popular living option for the elderly. New Retirement Villages are popping up everywhere, and with this increase it is important that potential purchasers are aware of what an Occupation Right Agreement (an “ORA”) is, and what is involved when purchasing at a Retirement Village.
What is an Occupation Right Agreement?
An ORA is a contract you enter into when you purchase a Villa, Townhouse, Unit or Serviced Apartment at a Retirement Village. Rather than purchasing the Property itself, you are instead purchasing the ‘Right to Occupy’. This Right to Occupy allows you to occupy the Property and live there for your life subject to conditions of the Agreement.
How is an Occupation Right Agreement different from a Property Title?
When purchasing at a Retirement Village, you do not own the underlying Title for the Property itself, you instead own the right to live there.
An ORA is different to a Property Title in that you cannot:-
- Put your name on the Title to the Property or register any interests against the Title;
- Take out a mortgage on the Property; or
- Sell the property yourself.
You however receive the benefit of living there for your life and not having to worry about Property maintenance.
How do I enter into an Occupation Right Agreement?
The first step is to sign an Application for the property through your chosen Retirement Village. The Village will then send the ORA and associated documents through to your solicitor. Your solicitor will meet with you to provide the required legal advice and explain the ORA. The signed ORA is then sent back to the Village and held until your chosen settlement date when the purchase price is paid and you move in. A copy of the fully signed ORA will then be provided to you.
The ORA sets out terms of your purchase including: –
- The purchase price and move in date;
- Conditions for living at the Village (such as having current Wills and Enduring Powers of Attorney in place, keeping your Property tidy and in good condition, whether pets are allowed, etc.);
- Whether you can make alterations to the Property;
- Time frames for guests staying; and
- The process for termination of the Agreement.
What are the costs involved?
Generally, the costs involved are:-
- The purchase price which includes a deposit due on signing the Application, and usually a further deposit after the ORA is signed;
- A weekly fee to pay for general services such as maintenance and any additional services you may select such as meals, laundry, cleaning etc.;
- The Deferred Management Fee which is a percentage of the purchase price the Village deducts once your Agreement comes to an end. This is usually between 20 and 30% of the purchase price and accrues over a 4-5 year period;
- Legal fees for your purchase.
You are not responsible for payment of rates or Property insurance. You will be responsible for contents insurance, and utilities such as electricity and internet.
If you are considering purchasing at a Retirement Village, please get in touch with us and we can assist you with providing thorough advice and ensuring a smooth, stress-free purchase.
