Unit Trusts
Residents purchase units in a Unit Trust which carry with them an entitlement to occupy a specific unit in the Village and the use and enjoyment of common areas and facilities. The legal owner of the Village is the Trustee of the Trust, who holds it for the benefit of unit-holders under the terms of the Trust. This is a complicated structure and one that should be avoided in the absence of very complete legal advice regarding the Trust, including:
- the duties, obligations and appointment of the Trustee
- comprehensive information regarding the finances, ownership, control and management of the Trust
- the existence and contents of any long term management contract that may have been concluded with the operators of the Village.
It is rare for Retirement Villages to now be structured on this basis; unit trust, community and company title schemes reportedly apply to less than 2% of villages, and these are probably now confined to a selection of older villages.
Financial: Entry and Exit
Residents purchase accommodation through the purchase of trust units. If they are purchasing an existing unit the price is paid directly to the existing owners of the unit at settlement; less any departure fees. If the unit is new and new trust units have been issued by the Trustee, then the price is paid directly to the Trustee.
We address Exit and Departures fees in more detail elsewhere and they can apply in relation to unit trust purchases.
Ongoing Costs
The same potential costs apply as with Lease and License accommodation, including management fees, but also for legal and other compliance costs associated with maintaining and administering the trust structure.
If you would like to arrange professional advice in relation to the above matters, please complete the Inquiry form below providing details and you will be contacted accordingly. You will receive a fee quotation in advance of any advice or services being provided.