It is extremely important that retirement village operators regularly audit their contracting documents - i.e. their village contract, annexures to the village contract and any mandatory pre-contractual disclosure documents - on a regular basis and promptly in response to significant events such as a change in law or risk event arising in the village. This article explores some of the questions that need to be answered as part of the audit process.

1.   Are the documents legally up to date?

The retirement villages industry is highly regulated. While requirements differ between jurisdictions and retirement village structures, operators are typically required to make mandatory pre-contractual disclosures (which may require use of prescribed forms) and use a prescribed form of village contract. Prescribed forms and/or terms may be amended by legislation from time to time, and it is important to ensure that your village’s templates are updated to reflect these changes as at the date the changes come into effect.

The village contract may also contain additional terms to what is prescribed by legislation. It is important to ensure these terms are not inconsistent with the retirement villages legislation or any other applicable laws. Court and Tribunal decisions may support different interpretations of these laws over time - for example, case law may be released that supports a different interpretation to a law to what is reflected in an additional term in your organisation’s standard village contract. In these circumstances, your organisation should seek urgent legal advice as to what steps ought to be taken in light of this recent case law - including what changes ought to be made to the village contract.

2.     Are the documents factually up to date?

It is not unusual for the village to change over time - e.g. changes to village rules, amenities, history, contact information and services. It is important to ensure that all contracting documents are accurate and up to date, to ensure that there is no inadvertent misrepresentation to a resident before they enter into the village contract. Providing false or otherwise inaccurate information can result in civil penalties and a range of other consequences.

3.     Are the documents readable?

It is everyone’s best interest to ensure that contracting documents are clear, complete and easy to understand to avoid the risk of misunderstandings, distrust and disputes.

As noted above, certain content may be prescribed whereas other content such as additional terms and village rules wordings may be non-prescribed. For non-prescribed content, some practical ways of ensuring the content is easy to understand include:

• using plain and simple language;

• using short and simple sentences;

• using active language; and

• avoiding unnecessary repetition. 

We also recommend reviewing a hard copy of the document itself to consider what else could be done to improve readability - even simple changes like increased font size and appropriately placed page breaks can make all the difference.

4.   Should changes be made in light of recent events?

As part of a broad continuous improvement strategy, we recommend auditing all contracting documents (and other appropriate documents, such as policies and procedures) each time a risk, dispute or other adverse event occurs and asking the question: Is there any change we could make to stop this happening again?

For example, you might identify as part of your audit that it is appropriate to make changes to:

• the village contract - e.g. clarifying any terms which on reflection were poorly drafted and created a misunderstanding, or inserting additional terms; or

• the village rules attached to the village contract.

If you do identify a proposed change, you should then assess whether the proposed change is clear, comprehensive, legally enforceable and not inconsistent with the retirement villages legislation and any other applicable laws. You may wish to seek legal advice before implementing the change.

Your 2020 strategy

Having robust contracting documents working in conjunction with other appropriate risk mitigation strategies (e.g. policies, procedures and well-trained staff) are essential to ensure that your village can appropriately manage risk, improve efficiencies, support staff in their duties and maintain positive relationships with residents during their stay.

Your organisation can implement this strategy internally – e.g. via your in-house counsel and a systems review committee.  Or – if your organisation does not have the internal expertise or resources to manage this process – the best strategy may be to seek external assistance from suitably skilled professionals, for example by engaging a retirement villages lawyer to draft and maintain your organisation’s contracting documents.

We hope that this article assists you and your team and wish you all the best for 2020.  If you have any questions or would require our assistance, please call us on 02 9199 4563.

This blog post does not constitute legal advice and should not be relied upon as such. It is a general commentary on matters that may be of interest to you. Formal legal or other professional advice should be sought before acting or relying on any matter arising from this communication.