Retirement Villages

VILLAGE TITLE COMPARISON

Strata Title

 

Strata Title means the same as it does in the wider community in that it basically gives the Purchaser complete title to their own unit. They can buy and sell, subject to the restrictions that normally apply to the Village as far as the age of any person to whom the resident might want to sell their unit at a later time. It is sometimes common, however, for the Village Owner to have a charge registered over the title of the unit to protect the Village Owner in the event of a sale in ensuring that they receive payment of any departure fee that may be payable under the terms of whatever arrangements are entered into with regard to the Village.

 

The resident gets an actual title deed for the particular unit or villa that they own, which may contain specific restrictions with respect to the identity of persons to whom units can be sold dependently on the nature of the Village.

 

Like all other Strata Title development there is a corporate body put together to manage the common property of the Village. In New South Wales this is known as the "Owners Corporation". As in all other Strata Title Unit bodies, the Owners Corporation is responsible for such things as insurance over the buildings of the Village and Public Liability Insurance and Workers Compensation Insurance and collects levies from the resident to account for these things. This is not the same as the management of the Village as far as the services that are provided by the Village management. That is a separate issue handled by a separate entity. The Owners Corporation can decide to employ a Managing Agent to manage the affairs of the corporate body, and that can be the Village Manager provided that the Village Manager is a licensed Strata Title Managing Agent. If it is not then a separate Managing Agent has to be appointed.

 

Advantages

 


  • Capital Replacement (i.e., the replacement of buildings and other significant items within the Village not belonging to the resident) can be recovered through the Owners Corporation Sinking Fund.

  • Freehold title is considered by some developers to be a marketing advantage as the resident receives a title deed for their unit.

 

Disadvantages

 


  • Full conveyancing stamp duty is payable by the Purchaser on the purchase price.

  • As the residents own the Village the documentation is considerably more complex.

  • Residents will likely have to pay all GST on recurrent charges as the Australian Taxation Office will not treat it as residential rent where the Resident is the legal owner of their unit.

  • There could be differences in interpretation between the Strata Schemes Management Act 1996 (as amended) and the new Retirement Villages Act 1999 and its Regulations because of the different priorities and rationales behind each Act.

  • As a result of the Fernbank decision it is generally necessary to have a separate licensed Strata Manager as part of the Management structure.

  • The only asset available to a Village operator is the management rights.

 

Read on about Retirement Villages.

 

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