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A court win for a group of retirement village occupants has reaffirmed laws giving resident-owners the right to control the sale of their units. Retirement village legislation in NSW and Victoria bars the practice of village managers insisting on naming the selling agent and setting the price.

A court win for a group of retirement village occupants has reaffirmed laws giving resident-owners the right to control the sale of their units. Retirement village legislation in NSW and Victoria bars the practice of village managers insisting on naming the selling agent and setting the price.

In the past, such practices were criticised for creating a conflict of interest where an operator-appointed sales agent might work hard to sell units where the operator was entitled to a bigger slice of the sale proceeds but have other units lingering on the market.

There were also complaints about low sale prices and high selling costs.

In this recent NSW Supreme Court case, in which the residents were strata-title owners, Justice Paul Brereton ruled that provisions in contracts aimed at giving the manager sole agency to sell village lots were unenforceable under that state's Retirement Villages Act.

While most villages now operate under leasehold rather than strata arrangements, solicitor Peter Hill of Hill & Co Lawyers, who has represented other village residents in other court cases, says the case is still an important reminder of the law in this area.

It reinforces the fact that village operators can't "contract out" of their obligations under retirement village legislation by writing such provisions into agreements, Hill says.

"Where this is tried by an operator, the provisions will have no effect and not operate to benefit them as they're intended, to the extent of their inconsistency with the legislation," he says. "The legislation clearly gives a resident the right to choose who can be appointed as an agent to sell their unit and they cannot be forced to confer such a right on the operator."

They may well appoint the operator of their choice later on.

The NSW case was brought by 70 residents of the Castle Pines Retirement Village in the Sydney suburb of Baulkham Hills. The first defendant was Premier Holdings Pty Ltd, which was manager until June last year. Gregg Ritchie & Associates, which subsequently bought the management rights, was second defendant.

The court heard that people entered into individual deeds with the current manager as they became residents and, while these evolved over time under various managers, many of the deeds the court considered still contained provisions requiring the resident to give the manager sole agency for 90 days and joint agency after that. While other deeds did not require that, they still gave the manager the power to set the price (though at "not less than fair value").

Justice Brereton ruled the clauses unenforceable as they conflicted with sections 168 and 169 of the NSW Retirement Villages Act. Section 168 says residents can set the sale price and appoint a selling agent.

Section 169 says a village operator, if not the selling agent, can't interfere in the sale. The defendants intend to appeal against the decision.

Key points

- Resident-owners of retirement villages are entitled to control the sale of their units.

- They're also entitled to set their selling price.

- Contracts that say otherwise are unenforceable.

- They can appoint the manager to arrange the sale but only if they want to.


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