Retirement Homes Legal Structure The majority of retirement villages in New Zealand offer the resident one of the following: - a unit title under the Unit Titles Act 1972;
- a cross-lease of the unit (ie, a 999 year lease of the unit and an undivided share in the reversion);
- a licence to occupy the unit;
- a lease of the unit for life.
Unit title Most unit title arrangements follow a similar pattern to that which is used for residential unit title development. There will be a separate unit title for each unit (including apartments). There may be a separate title for the community centre and facilities, or these may be treated as common areas. The Unit Titles Act 1952 provides for the creation of Body Corporate Rules. These Rules will provide for the appointment of a manager and will usually nominate who that manager is to be. The manager is often the original developer, and is the person or body who will manage the operation of the village, and is likely to retain ownership of the community facilities unless these are owned by residents. When a resident purchases a unit, the resident will agree to enter a management contract. The contract sets out details regarding: - the ongoing management of the village by the manager;
- the duties of the manager including the manager's obligation to provide and maintain community facilities, and to ensure that all services are provided;
- the fee to be paid to the manager when vacating the village;
- establishment of a management advisory committee comprising residents;
- the manager is to procure a sale of a unit when requested by a resident to do so;
- a similar agreement is signed by all purchasers.
All management contracts differ but they normally contain details regarding voting requirements. The manager usually maintains overall control of the Village. Sometimes management contracts provide for an option to purchase the resident's unit. Details regarding circumstances and the calculation of price are set out in the management contract. The resident's obligations under the management contract, and may be under any option agreement, will be secured by way of a Memorandum of Encumbrance in favour of the manager and this will be registered against the resident's unit. Cross-lease Where as cross-lease is being used, either the lease will include an undivided interest in the community facilities or such facilities will be leased to the village operator. Management will be vested in the operator by means of an irrevocable power of attorney. There may be an option to purchase granted to the operator and if so a Memorandum of Encumbrance will be registered to secure the residents obligation. Contractual licence A large number of villages operate under a contractual licence structure. The developer or his or her successor in title will own both the units and the community facilities, licensing the occupation of units to residents. The developer or his or her successor will manage the community facilities or employ an operator to manage on their behalf. Lease for life This is almost identical to the Contractual Licence with the exception that if resource consent is obtained and surveys done then the Lease is registrable under the Land Transfer Act 1952. The information on this web site is of a general nature only. Readers are advised to establish the applicability of information in relation to specific circumstances and not to rely solely on the information provided here.
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