The Government has recently introduced to Parliament a Retirement Villages Bill to provide more security and protection for residents of Retirement Villages. The Bill is currently (April, 2002) at the Parliamentary Select Committee stage and public submissions on the Bill will be heard in August this year (2002).

The present law governing Retirement Villages requires village owners to register a prospectus and to give intending residents an Investment Statement disclosing the main terms of the arrangement. However, the main problems with this law are that only 45% or so of village owners actually comply with the requirement to register a prospectus and give disclosure of information and, furthermore, there is no ongoing statutory protection for residents once they are living in the village.

The proposed new law will change the form of disclosure which a village owner must give to intending residents, it will ensure that all residents receive security for their investment, and it will guarantee that the resident receives certain minimum rights.

Security will be achieved by requiring the Land Registrar to enter a memorial on the title to the village land declaring the land to be a retirement village. While that memorial is on the title, a secured creditor of the village owner or a receiver/liquidator of the village owner will not be able to sell the land except as an operating retirement village and they will not be permitted to evict a resident or reduce or cancel any services provided to the residents.

The resident's minimum rights will be set out in a Code of Residents Rights which the village owner must register with the Company's Office. This Code must include the right for a resident to be treated with respect and dignity, to be kept promptly informed of matters affecting the day to day operation of the village, and to have any dispute resolved in a speedy and efficient manner.

Another feature of this Bill is that a village owner is required to appoint a Statutory Supervisor who will have extensive duties and powers to oversee the operation of the village and to ensure, on behalf of the residents, that the village owner carries out its obligations to the residents.

The Bill also gives extensive remedies to residents against the village owner and its directors should they fail to deliver the services and facilities to which the residents are entitled. For example, residents will have the right to have any disputes referred to a Disputes Panel at the cost of the village owner as well as being able to enforce their contractual rights in the normal Courts. Furthermore, the Bill will prevent a village owner from reducing or cancelling the services promised to residents unless all of the residents in the village have consented in writing after receiving independent advice. This provision will no doubt operate to restrain village owners from attracting residents with promises of future amenities which it has no realistic chance of fulfilling, and will give residents greater assurance that promised amenities will in fact be delivered.

© The Lawlink Group Ltd 2002

Every effort has been made to ensure that this information is accurate. However, it is general introductory information only. It does not constitute legal advice and should not be relied on as such. Specialist legal advice should be sought in particular matters. Any reference to law and legislation is to New Zealand law and legislation.

Brian Coburn is a specialist in Retirement Village law and is a partner in the Auckland Lawlink firm of Hesketh Henry.

Web site: Hesketh Henry
Email: brian.coburn@heskethhenry.co.nz