Moving into a retirement village can be one of the biggest lifestyle and financial decisions you’ll ever make. Unlike buying a regular home, retirement village living usually means you enter into a specific legal agreement with the village operator. That agreement — your contract — sets out your rights, responsibilities and the fees you will pay during your stay and when you leave.
It’s essential to understand exactly what’s in your contract, how different legal structures work, and what protections you have under Australian law. This guide explains what you need to know about retirement village contracts so you can make an informed decision and protect your finances for the long term.
A retirement village contract is a legally binding agreement between you and the village operator. It spells out:
Your contract must comply with your state or territory’s retirement village legislation. Each state and territory has slightly different rules about what operators must include and how contracts must be presented to residents.
There isn’t just one type of retirement village contract. The structure affects your rights, who owns the unit, and what happens when you leave. Let’s look at the main types.
Leasehold
Common in many modern villages. You pay a lump sum for a long-term lease — often 49 or 99 years — which gives you the right to occupy the unit and use village facilities. You don’t own the property title. The operator remains the landlord. A deferred management fee (DMF) usually applies when you leave.
Licence to Occupy
Very common in private villages. You pay an entry contribution for the licence to live in the unit. Technically, you have no lease or title but a contractual right to occupy. Again, you usually pay a DMF when you exit.
Strata Title
Less common but some villages are strata titled, just like a block of units. You buy the unit outright and own the property. You’ll pay body corporate levies for shared costs and may still have a DMF. Reinstatement costs, resale restrictions and village by-laws all apply.
Company Title
Older style, but you may come across it. You buy shares in the company that owns the village. The shares give you the right to occupy a specific unit. You have shareholder rights — but reselling your shares often needs board approval.
Rental Villages
Instead of paying a big upfront fee, you pay weekly rent. There is usually no DMF. Renters may still pay for services like meals or cleaning. This model can be simpler but you don’t have the same legal protections or asset security.
Under state laws, operators must give you detailed information before you sign. This includes:
You must also be given a cooling-off period after you sign — usually 14 days but it varies by state. During this time, you can change your mind and cancel without penalty (though some administration costs may apply).
Most contracts include:
Some contracts also include:
Some contract terms can be surprising. Look closely for:
Deferred Management Fees (DMF)
How is it calculated? On your ingoing price or resale value? Is it capped? How quickly does it reach the maximum? Many DMFs are 2–3% per year for up to 10 years (so a 20–30% fee).
Reinstatement and Refurbishment
Does the contract require you to cover costs to reinstate the unit to its original condition? Or to upgrade it to current village standards? This can run to tens of thousands of dollars.
Capital Gains or Losses
Do you share any profit or loss on resale with the operator? Some contracts say you get 100% of the capital gain; others share it 50/50 or even 70/30. Some give you no share at all.
Selling Process
Who is responsible for selling your unit? Do you have a say in the price? What happens if it doesn’t sell quickly? Are there marketing costs or agent fees?
Time to Refund
Some states cap how long operators can hold your exit payment. In some contracts, your money may be tied up until a new resident moves in — so check timeframes.
Each state has legislation to protect residents. Some key protections include:
But remember: you still need to read your contract carefully. Laws provide a framework, but your contract spells out exactly how things work for your village.
Imagine two villages:
Village A: Licence to occupy. Entry fee $400,000. Ongoing fees $600/month. DMF 3% per year, capped at 30%. 100% capital gain to resident. Reinstatement costs paid by resident.
Village B: Strata title. Buy unit outright for $500,000. Strata levies $400/month. No DMF. You pay for all maintenance inside unit and share of building insurance. 100% capital gain or loss yours. Marketing costs and agent fees on exit are yours too.
Over 10 years, Village A may look cheaper upfront but cost more on exit. Village B costs more upfront but you own an appreciating asset — if property prices rise. If they fall, you bear the loss.
Always get independent legal advice from a solicitor experienced in retirement village law in your state. They can check your contract for hidden risks and explain any complicated clauses. A good adviser will also explain how the contract could affect your pension or eligibility for means-tested care fees in the future.
Moving to a retirement village can bring freedom, security and connection — but only if you go in with eyes wide open. Understanding your contract is the best way to protect your lifestyle and your nest egg.
Always read every page, ask questions, and get legal and financial advice. When you know your rights and responsibilities, you can enjoy village life with peace of mind and avoid surprises later on.