We will discuss the new 2 stage disclosure process, including the form of fact sheet and disclosure statement, and the practical issues that we have encountered in practice. We will also discuss the form of residence contract required under the Regulations and how operators should have adapted their contracts to comply.

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Are you doing it
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Friday 12 September 2014
A_86947v1
Wai Hwoon Low, Principal
Kathryn Elleman, Principal
Donna Rayner, Senior Associate

2. Wai-Hwoon Low
Principal

3. Factsheet – when to provide
> Within 7 days of request
> When "promotional material" handed
out or sent to retired person
> 21 days before resident enters into any
management contract unless:
> previously provided; and
> no material change to information
3

4. "Promotional material" is
material:
> given to retired person or person acting
on behalf of retired person; or
> addressed personally to retired person or
person acting on behalf of retired person;
and
> intended to promote particular retirement
village as a place in which to live; but
> excludes material distributed generally in
mail-out or letter-box drop
4

5. Is it "promotional material"?
> Key questions:
> Is your material given to retired persons
or persons acting on their behalf?
> Is your material addressed personally
to retired persons or persons acting on
their behalf?
> If yes to either question:
> Are you promoting your village?
5

6. Is it "promotional material"?
> Contrast with:
> General letter drop or mail out
> Not addressed to any person in
particular
> Not promoting village but promoting a
particular activity
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7. Types of factsheets
> Generic/mixed tenure village
> Strata titled villages
> Loan lease/loan licence village
7

8. Common problems,
things to note
> Amounts in factsheet to be GST
inclusive unless otherwise specified
> Formatting nightmare!
> Some inapplicable sections may be
deleted, but sections with tick boxes
must not be deleted
> Size of font cannot be changed
> Lengthy document – 11 to 13 pages
8

9. Common problems,
things to note (cont)
> Inapplicable sections may be deleted
entirely
> Or, use "not applicable" for section no.
to maintain numbering
> Revisit and update every 3 to 6 months
> Must revisit after AGM and new
maintenance charges fixed
> Changes not allowed
9

10. Factsheet 1
> Factsheet 1 – mixed tenure:
> For villages with titled and non-titled
units, or company share
> Sections of factsheet do not distinguish
between them
10

11. Factsheet 1 (cont)
> Reference to in-going contribution
being "refundable" or to be "refunded"
> Applicable to non-titled units
> Difficult to reconcile with titled units
11

12. Factsheet 1 (cont)
> Reference to "Long term maintenance
fund charge"
> Relevant only if LTMFC payable on a
recurring basis
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13. Factsheet 1 (cont)
> Recognition that OC fees in titled
village can be included in the
maintenance charge
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14. Factsheet 1 (cont)
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15. Factsheet 1 (cont)
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16. Factsheet 1 (cont)
> What is the difference between
sections 11 and 12 of factsheet?
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17. Factsheet 2 – titled villages
> Same issues as with Factsheet 1
Factsheet 3 – loan/lease or
license villages
> No additional issues
17

18. Kathryn Elleman
Principal

19. Pre-contract Disclosure
> Second stage of disclosure:
> Pre-contract stage
> New form of disclosure statement
> Information as prescribed in the
Regulations
> Must be in a form approved by
Consumer Affairs Victoria
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20. Pre-contract Disclosure
> When is this?
> At least 21 days before the prospective
resident signs a residence contract or
management agreement
> What has to be provided?
> By the owner or manager - a Factsheet
if it has not previously been provided,
or if it has previously been provided but
has materially changed
20

21. Pre-contract Disclosure
> By the owner or owner’s agent – the
residence contract
> By the manager – the management
contract and village by laws
> By the manager - an expanded and
individually tailored Disclosure
Statement (in the form required by
Consumer Affairs Victoria) which must
be certified and signed by the manager
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22. Disclosure Statement
> 6 different versions
> Loan-lease/loan-licence, rental, strata
title, company title, unit trust, general –
all villages
> A sample of the general statement is
as follows:
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4.6 Post-departure costs (cont)

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38. Pre-contract Disclosure –
Offence
> Failure to comply:
> With pre-contract disclosure - right of
rescission by the resident at any time up
until 6 months after become aware of the
breach
> Penalty fines
38

39. Donna Rayner
Senior Associate

40. Introduction
> Regulations deal with residence and
management contracts in 4 ways:
> Certain matters must be excluded from
contracts
> Certain matters must be addressed in
contracts
> Prescribed terms that must be included
> Standard or prescribed layout
40

41. Introduction (cont)
> Regulations and preliminary
agreements - contract for sale of land;
agreements to lease
> Regulations and strata titled villages –
option to purchase and deferred
payment deed
Important note: From 1 October 2014 –
a new prescribed form of contract for the
sale of land
41

42. New Prescribed Form of
Layout of Contracts
> From 1 July 2014, operators must use 1 of the
prescribed forms of contract
> 4 types of prescribed forms of contract:
> a residence contract
> a management contract
> a combined residence contract and management
contract (where the entities are the same); and
> a combined residence contract and management
contract (where the owner and manager entities are
different)
42

43. Excluded Matters
> A number of matters must be excluded
from contracts. For example:
> Must not require resident to effect
insurance other than liability insurance
for any motorised wheelchair BUT may
include a warning that resident should
effect house contents insurance
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44. Excluded Matters (cont)
> Cannot have "entire agreement"
provision in contract
> Cannot require resident to pay
owner/manager costs of enforcing
contract against resident
44

45. Standard or Prescribed Terms
> Regulations specify a number of
prescribed terms including:
> Owner/Manager obligations
> Resident’s obligations
> Resident’s rights
> Legal matters
45

46. Matters which must be
addressed
> Regulations require a number of
matters to be addressed in the contract
including:
> Basic information
> Use of unit
> Financial matters
46

47. Matters which must be
addressed (cont)
> Services
> Insurance & Maintenance
> Termination
> By-laws of the Village
47

48. Additional terms
> Contracts may include additional terms
provided they are not inconsistent with
the RV Act or Regulations
48

49. [SAMPLE OF PRESCRIBED FORM
OF RESIDENCE AND MANAGEMENT
CONTRACT (OWNER & MANAGER
SAME ENTITY)]
49

50. Common Questions/Queries
> Adding or deleting information on page 2 of
contract or the prescribed terms (generally
clauses 2 to 6 of contract)
> Amending headings of prescribed terms or
matters
> Inserting a table of contents
> Why use different terminology e.g.
"resident’s premises", "maintenance
charge"
> Other
50

51. Failure to comply
> May result in financial penalties (up to
$7,000) and contract terms being
implied or unenforceable
51

52. 52
QUESTIONS

53. Disclaimer
The information contained in this
presentation is intended as general
commentary and should not be regarded as
legal advice. Should you require specific
advice on the topics or areas discussed
please contact the presenter directly.
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54. 54
Wai-Hwoon Low
Principal
Telephone: 03 9609 1627
Email: whlow@rk.com.au
Kathryn Elleman
Principal
Telephone: 03 9609 1633
Email: kelleman@rk.com.au
Donna Rayner
Senior Associate
Telephone: 03 9609 1503
Email: drayner@rk.com.au