Retirement village exit rules changed

New legislation means that NSW retirement village contracts will now include a timeframe that ensures timely payments for a former resident’s exit entitlements.

These changes apply only to registered interest holders with a long-term registered lease that gives them at least 50% of any capital gain.

They do not apply to:
• registered interest holders who own a lot in a strata or community scheme village or own shares in a company title or trust village that gives them their resident right; or
• unregistered interest holders.

New retirement village laws started in January 2021. The changes reflect complaints made about how exit entitlements were previously managed and provide a timeframe for former residents to receive their exit entitlements. Summarised, the changes:
• enable residents to receive exit entitlement money before their unit sells (if the sale has been ‘unreasonably delayed’);
• provide an option for residents to fund their move into aged care by accessing part of their estimated exit entitlement money;
• ensure residents no longer have to pay ongoing charges for general services for more than 42 days after they leave the retirement village (commences on 1 July 2021 onwards).

New legislation has been introduced which affects existing and all new retirement village contracts. Previously registered interest holders had to wait until a new resident either moved into or leased their old unit before they were able to receive their share of the sale proceeds (the “exit entitlements”). This could mean that if the village operator delayed the sale of a unit after the resident left, the former might not receive their exit entitlements for anywhere between two and five years.

Under the new legislation, a registered interest holder can apply to the Secretary of the Department of Finance, Services and Innovation for an exit entitlement order directing the village operator to pay the exit entitlements to the former resident even though the unit has not sold. The order can require payment after six months for Sydney metropolitan, Wollongong and Blue Mountains residences and within one year anywhere else in NSW. This order will only be made if the village operator has “unreasonably delayed” the sale considering the time taken to refurbish the unit and whether the operator as selling agent has performed all their duties within reasonable time.

Such an application can only be made by a former resident but not their estate. If the order is made, the exit entitlement must be paid with 30 days of the order.

If the registered interest holder moves out of the retirement village into a residential aged care facility and has not received their exit entitlement, the resident may ask that the operator make one or more daily accommodation payments to the facility on behalf of the resident within 28 days of the resident’s request. As more than 60% of residents move directly into aged care, their move can be delayed if they do not have access to funds to pay the daily accommodation payments to the facility and the unit does not sell quickly. These amendments are intended to make the transfer easier for residents and family members.

For more detail, see Fair Trading website, https://www.fairtrading.nsw.gov.au/about-fair-trading/legislation-and-publications/changes-to-legislation/changes-to-retirement-village-laws

Serious Incident Response Scheme begins in aged care facilities

With the release of the final report of the Royal Commission Into Aged Care, one of its most frightening details is that in 2019-20, over 851 alleged sexual assaults were reported in aged care facilities. However, as resident-on-resident assaults for the most part go unreported, the real figure is likely “as high as 2,520, or almost 50 per week”.

Despite such high statistics, the report’s 148 recommendations make no specific recommendations as to how that issue that predominantly affects older women should be managed.

The issue is expected to be managed by an enhanced reporting system known as the Serious Incident Response Scheme (SIRS) that begins on 1 April.

The scheme requires aged care providers to identify, record, manage, resolve and report all serious incidents that occur, or are alleged or suspected to have occurred.

Aged care providers also need to have in place an effective incident management system to manage all incidents, respond to incidents, and take steps to minimise the risk of preventable incidents reoccurring. The incident management system covers a broader range of non-reportable incidents and includes incidents that involve staff or visitors.

Under the existing system, aged care providers do not have to report incidents that involve a perpetrator who has a cognitive impairment and the operators have got strategies in place because it is felt that an impaired person cannot be successfully prosecuted.

“In some cases, family members encourage their loved ones to move into residential care because they felt that it would be safer for them”, the report notes. “But, on the contrary, people living in residential aged care likely face a much higher risk of assault than people living in the community.”

Under SIRS, there is a wider range of serious incidents that are reportable than those reported under current compulsory reporting requirements. Importantly, providers will have to report incidents of abuse and aggression between consumers, including where the resident who commits the incident has a cognitive or mental impairment.

Under the SIRS protocol, aged care must report all ‘Priority 1’ incidents within 24 hours to the Aged Care Quality and Safety Commission. ‘Priority 1’ incidents include those that cause or could reasonably have caused physical or psychological injury or illness requiring some form of medical or psychological treatment. Instances of unexplained absence from care and any unexpected death of a consumer are always to be regarded as Priority 1 reportable incidents.
From 1 October 2021, all ‘Priority 2’ incidents, that is reportable incidents that do not meet the criteria for ‘Priority 1’, must also be reported within 30 days.

In addition, the SIRS requires every residential aged care service to have in place an effective incident management system – a set of protocols, processes, and standard operating procedures that staff are trained to use.

For further information, refer to the Aged Care Quality and Safety Commission website, https://www.agedcarequality.gov.au/sirs