My mother has been looking to buy a property in a Retirement Home in NSW. As an only child, I have assumed that upon her death I would inherit the property, but in some of the villages that she has looked at, a proportion of the sale goes back to the Retirement Home. Is this Legal? And is it the same for most Retirement Homes?
Buying into a Retirement Village can be complex and confusing with fees and charges varying from Retirement Village to Retirement Village.
The most important thing you can do for your mother if she is considering buying into a Retirement Village, is ensure that she receives expert legal advice on the Contract to buy the property.
This is because the Contract will set out all the fees and charges that your mother will have to pay to the Retirement Village before and after her death. It will also set out the amount, if any, of the proportion that will need to be paid back to the Retirement Village, after the property is sold. This payment is commonly referred to as a deferred management fee and will vary depending on the Retirement Village.
The deferred management fee is legal and is charged by most Retirement Villages, which is why you and your mother really need to do your homework and understand exactly what proportion of the proceeds, from the sale of the property will have to be paid to the Retirement Village. One area to be careful on is whether the Retirement Village is also entitled to a proportion of any capital gain.
As well as a deferred management fee, Retirement Villages will also charge a management fee which can be weekly, fortnightly or monthly. These management fees are for the upkeep and maintenance of the Retirement Village. One thing to be careful about management fees is that, they may continue to be charged even after your mother dies and the property is waiting to be sold!
There have been numerous public complaints about the complexity of the Contracts used for Retirement Villages and how it is difficult to determine, what the actual cost will be when they are sold. To ensure that your mother’s decision to buy a property in a Retirement Village does not impact on your inheritance, you should ensure that expert legal advice is sought before your mother signs any documents from a Retirement Village. This advice will ensure that your mother is fully aware of what the impact of buying the property will have on her Estate once she is gone.
If you need advice on your inheritance and dealing with Retirement Homes you need to seek legal advice from an Expert Wills & Estates Lawyer. You need to speak to the expert lawyers at Sydney Wills Lawyers on how to make sure that your inheritance is not vulnerable if your parent buys property in a Retirement Home. We specialise in Wills & Estate Law and pride ourselves on our open and honest communication with clients.
Call today for an appointment at our Macquarie Street Office on 9221 2779, conveniently located near public transport.