Retirement villages – What are the pitfalls

QUESTION

There was a scary segment on ABC’s 7.30 program recently about retirement villages. It told of a woman who bought a strata title unit about eight years ago, and died two years ago. Because she owned the unit outright, the only way for the family to get the money is to sell the unit but there are 19 for sale in a complex of 35 units and NO BUYERS. The poor family are stuck with paying all the costs of the unit until they find a buyer. What is the solution?

ANSWER

It’s a bit of a Catch 22. The group that run the units claim that it is essential for them to charge these fees because, if they did not charge them to vacant units, they would be forced to reduce services, or increase fees to all the old people who are living in the other units.

As Rachel Lane and I point out in our book Aged Care Who Cares, there is no easy choice. If you opt for a lease or licence arrangement, you accept the buyback price that is written into the contract when you purchase the unit in the first place. If you opt for strata title, you or your estate is stuck with trying to sell it.

It’s a warning to anyone moving into a retirement village to really take advice on the implications of the contract you sign. Unfortunately, I have seen these contracts and they’re nearly as thick as a phone book.

I don’t know any area which is as complex as aged care. This is why taking advice is essential
Read more: http://www.theage.com.au/money/ask-an-expert/blogs/ask-an-expert/retirement-villages-20140524-38ttd.html#ixzz35cDA4E4b



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