An Occupation Right Agreement (“ORA”) is a contract between a resident and a retirement village that sets out a resident’s right to occupy their chosen independent, semi-independent unit or care suite in a retirement village.
A resident in a retirement village doesn’t own the unit they are living in. The unit remains the property of the village, and the resident has a contractual right to occupy that particular unit.
Given that the resident doesn’t own the unit, they do not receive a Record of Title for the property, and they cannot register a mortgage or a caveat to protect their rights. The resident’s right to occupy the unit is instead protected by the statutory supervisor of the village and by a s21 memorial on the Record of Title of the particular village.
Generally, a discretionary trust will not be able to purchase an ORA and the resident would need to purchase in their personal name. If an existing family home is owned by a trust, depending on the circumstances, a trust may advance money to a beneficiary by way of capital distribution or loan in order for the beneficiary to personally purchase the ORA.
An ORA should set out information such as, but not limited to;
- the resident’s rights and obligations;
- the village’s rights and obligations;
- management of the village;
- administration of the village;
- what happens when the resident vacates the unit;
- ending the ORA;
- deferred management fees;
- transfer to another unit;
- rights to cancel the agreement;
- entry and exit payments; and
- any additional regular contribution, such as outgoings and dispute resolutions procedures.
To find out more about ORA’s, please do not hesitate to contact one of our experienced Property team members at email@example.com or 03 441 2743.