Departure fees for the departed

Posted on July 27th, 2017

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In the case of Estate of Madeline Cozma v Milstern Retirement  Living Pty Ltd t/as Golden Lifestyles [2016] NSWCATCD 56 a retirement village resident died in 2005.  Arrangements were made to sell the deceased’s legal interest in the village (she held a long lease in a unit at the time of her death) and the executors of the deceased’s estate agreed with an agent to market the unit.  Initially, the agent was linked with the village operator.  

After 10 years the unit remained unsold.   Nevertheless, the village operator claimed recurrent charges and departure fees so that the debt owed to the village operator after 10 years had grown to $160,000.00. The NSW Civil and Administrative Tribunal found as a matter of law that the operator could charge the recurrent fees until the unit was sold ($110,000).

However, the Tribunal accepted the evidence from the Executors that no effort had been made to sell the unit, that the agent had failed to effectively market and promote the sale and failed to co-operate with an independent agent appointed in 2011.  As a result, the Tribunal ordered that the departure fee be limited to 10% of the sale price being the percentage of the sale price the village operator would have been entitled to had the unit been sold within one year of the resident’s death.

The important lesson here is to understand how recurrent charges apply before signing a contract for entry into a village and also how the property will be marketed on departure.

Felicity Wardhaugh, Special Counsel at Mullane & Lindsay Solicitors, NewcastleFelicity Wardhaugh is Special Counsel at Mullane & Lindsay Solicitors and practises extensively in  Wills and estate planning, Commercial dispute resolution and other litigation.  If you require any assistance in these areas please contact Felicity Wardhaugh to arrange a consultation or contact our Newcastle office. 

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