Retirement Village broken aircon has elderly couple facing bankruptcy

Two Australian pensioners claim they feared losing their home after being issued a bankruptcy notice just before Christmas, two years after losing a legal battle against their retirement village over an air conditioning unit.

Difference between retirement villages and lifestyle communities

 

Lifestyle Villages heavily criticised

Are Lifestyle Communities a Financial Prison

 

In a recent feature on the ABC 7.30 Report program claims were made that living in a Lifestyle Village was like a 'financial prison'.

Feature of the report -

'When retired policeman Geoff Gauci packed up his old life and moved to an over-50s gated community on Melbourne's northern fringe, he pictured his next chapter as peaceful.

After spending 36 years investigating shoplifters, drug trafficking, burglary, fraud and deception, it was time for the quiet life.

Seduced by promises of low maintenance and resort-style living at an affordable price, he bought into a Lifestyle Communities development at Wollert, impressed with its high-security cameras and boom gates that guarded a manufactured urban landscape of neat rows of uniform houses and perfectly manicured fake lawns.

It was a setting reminiscent of the Hollywood movie The Truman Show.

"The way it was presented to me and my wife, I expected everything to be above board, knowing that I'm dealing with Lifestyle, a publicly listed company," he says.

"I did my homework, and I checked on them. And I would have assumed that everything was kosher."

But 18 months later, earlier this year, he and two other residents, Thom Meads and Steve Doudle, found themselves investigating the utopia they thought they'd bought into.

"To me, it's like I'm in a financial prison," Gauci says.

"I've got to bail myself out in order to get out, and it's just wrong." '

See the full story here - https://www.abc.net.au/news/2024-07-15/lifestyle-communities-faces-challenge-over-land-lease-exit-fees/104091890

Retirement Villages are a Get Poor Quick Scheme

Retirement villages swallow vulnerable people’s money.

In an article published by The Senior online magazine, one person who suffered at the hand of a village operator described retirement villages as a "Get Poor Quick Scheme".

Their summary of the ordeal was - “The whole thing from go to whoa, was opaque in terms of the charges, the contracts, the complexity of the arrangements, the fees, the ongoing fees after my aunt passed away. It created a very complex picture on what should have been a pretty simple exercise”.

Another person described their own ordeal as -  “To be paying what amounts to a fairly high rent effectively per month on top of the capital you invested in purchasing the unit and then pay a fee of a third of your capital when you leave seems to me to be a recipe for financial disaster so I decided I should get out,”   

The article can be seen in full here - https://www.thesenior.com.au/story/5415806/the-retirement-villages-that-swallow-vulnerable-peoples-money/                                                                                                

Retirement Villages - Don't Mess with Old People

The following is an article published in the September newsletter of the consumer and advocate body Residents of Retirement Villages Victoria. 

The article comes with the heading - Don't mess with old people! 

It shows how things can go wrong in a retirement village over just 4 years and for such a large amount of money. There are some 467 retirement villages in Victoria with some 36,000 retirees residing in them. It would be naive to think that the problems outlined by this particular resident are not occurring in any of the other 466 Victorian retirement villages. 

The name of the village resident and the name of the village operator are confidential under the terms of the settlement agreement. 

The article details the actions of the operator the resident contended were invalid, together with the terms of the mutually agreed settlement. 

The article as published - 

"In May 2023, one of our members settled a long-running case with a village operator for $935,000. The terms are confidential except for the details revealed in this article. 

This article is the story of an RRVV member who challenged the financial practices of a village operator in the face of legal and personal challenges. It warns operators who think old people have no fight left in them to think again. 

Around four years ago, our member pointed out their operator was charging a service fee higher than the amount permitted by law and asked for a refund. 

The dispute could not be settled, and our member filed a claim with the Victorian Civil and Administrative Tribunal (VCAT). By this time, COVID was again spreading, and VCAT was only holding hearings via ZOOM. VCAT's case backlog was growing.

At the first hearing, the VCAT presiding member ruled that the resident had not made out the case adequately but provided an opportunity to present a fuller case at another hearing in six months. 

Our member asked us for assistance at this point. During our early discussions, we learned our member was also concerned, amongst other things, the operator was charging the village a fixed proportion of various head office overheads. 

At the second hearing, the VCAT member accepted the amended points of claim and ordered the parties to attend a compulsory conference. This order introduced another six month delay. 

The parties did not settle at the compulsory conference, and the operator's barrister argued that part of the claim was invalid. The VCAT member set a date for a case hearing, and gave our member leave to submit an amended claim. 

By this time, our member was feeling the strain but managed to file the amended points of claim before the deadline. 

Just before the operator’s deadline for filing its points of defence, it approached our member with an offer to discuss a settlement. This approach reinvigorated our member. 

Here the resident included even further issues. 

It was contended that – 

1. The operator had used the village’s major maintenance fund to pay for unit renovation costs which were the operator’s responsibility. The fund was some $400,000 in deficit. 

2. The operator used village staff to renovate those units for resale. The responsibility to pay those wages fell directly on the operator, not the residents. 

3. The operator included in resident fees the operator’s cost for legal services incurred in this matter, some $45,000. 

4. The operator levied across all residents’ costs where some residents had a direct contractual obligation to pay those costs. 

5. The operator failed to provide sufficient information in their financial reporting. This is contrary to s34.3b of the Act and prevents residents satisfactorily identifying valid or invalid charges levied on them. 

6. Contrary to s38.2, the operator levied a maintenance charge greater than the CPI calculated adjusted maintenance charge without the authority of the residents under s38.4. 

7. The operator used simple averages and percentages plus a mixture of village and aged care costs when calculating the ‘management and administrative’ services charges levied on the village residents. 

The parties settled the matter on the following terms. 

1. At its cost, bring the major maintenance fund back to zero from a negative $400,000. 

2. The operator committed to paying unit renovation costs, including staff wages, for those units where the resident did not have a contractual obligation to do so. 

3. Maintenance and replacement costs plus staff costs to be levied against residents with a direct contractual obligation to pay those costs when not choosing a private contractor. 

4. The operator is to refund the cost of their some $45,000.00 in legal fees, and to adjust the village financial report to reflect that. 

5. The operator committed to using the s38 and s38AA statutory methodology to set service fees. 

6. The operator committed to using the most accurate methodology to calculate charges for village management and administrative services. 

7. The operator committed to providing financial reports and budgets in line with the provisions of s34.3b. 

8. The operator committed to spending, some $500,000.00 on capital improvements to the village. 

The residents have the controlling vote on which project. 

Whilst the resident surrendered their individual monetary claim, they achieved a broader benefit for all village residents in the short and long term."

Retirement Villages = Destruction of Retiree Capital

From Michael West Media -

 "New research from retirement village analyst Les Scobie shows the dominant financial model for retirement villages, the loan/lease model, is causing a significant transfer of capital from retirees to retirement village operators. In many cases, elderly Australians would be considerably better off if they just stayed at home". 

 Read the full article- Retirement Villages : The Destruction of Retiree Capital

Abuse Reported by Over 40% living in Retirement Villages

 A report from the NSW Retirement Village Residents Association shows over 40% of people in retirement villages have experienced abuse.

"The Retirement Village Residents Association (RVRA) developed and distributed a survey on psychological abuse to all its members and some 120 retirement villages throughout NSW. The RVRA is not aware of any previous studies of the impact of psychological abuse solely within retirement villages that excluded external triggers such as financial abuse and neglect. Other studies psychological abuse with a broader range of elder abuse topics, and cover the broader senior cohort of aged care, community housing and general over55 living situations. 

Over 40% (n=512) of the respondents reported experiencing at least one type of abuse. The proportion of females reporting abuse was higher (44%) than for males (34%). The percentage of the younger age groups in the sample reporting abuse was much higher (48%) when compared with the older groups (28%)."

See the full report here - https://www.rvra.org.au/news/news-articles/2023-06-15

55 Plus Retirement Community Problems Universal

Whilst American this video shows that the general issues with 55+ retirement villages are universal. It does not cover the more serious issues more relevant to a particular village or operator.

 Why retirement village residents seek an industry Ombudsman. The VCAT system is failing them.

This is the detail of a real situation over 4 years of village operation. The resident contends that these matters are all contrary to the provisions of Retirement Village, Contract and Consumer Law.

1. In 2020 the operator declared residents voted for a special increase in fees without counting the votes to substantiate the necessary resident support as required by statute. Total cost to residents in that year some $22,000.00.

2. Commencing in 2020/21 the operator incorrectly calculated resident fees. Cost to residents some $80,000.00 to date then compounding by cpi for every year into the future.

3. From 2019/20 the operator charged for ‘services’ claimed to have been provided but stating only the total amount. No details, no itemisation. Residents denied statutory right to examine validity of charges. In the order of $200,00.00 per annum.

4. In 2021/22 residents were charged for the cost of the operator’s own legal expenses. Total cost to residents in that year some $46,000.00.

5. From 2019/20 the operator failed to verify that the fee levied on residents met their statutory obligations. Total cost to residents accumulated to date, some $236,000,00.

6. From 2019/20 the operator overdrew the resident’s Major Maintenance Fund to pay costs that were the contractual responsibility of the operator to pay. Overdrawn balance of the fund to date, some $390,000.00.

7. From 2019/20 the operator included in resident monthly fees the wages cost of village maintenance staff for the refurbishing of village units owned by the operator and being prepared for resale. Most units were the contractual responsibility of the operator to pay those costs. $ uncosted to this time

8. From 2019/20 the operator included in the monthly fees of those residents without a contractual obligation to pay, staff wages plus the replacement cost of fittings, fixtures and furnishings for the unit maintenance where the occupying resident had a contractual obligation to pay the direct costs incurred. $ uncosted to this time

9. From 2019/20 new village residents on the operator’s new contracts were charged a monthly ‘maintenance charge’ greater than the statutory allowable maintenance charge. Total cost across all new residents in the order of $153,000.00 to date.

10. The total amount in dispute over just 4 years of village operation is $1,727,000.00 plus.