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You are not buying a home.
An Occupation Right Agreement gives you a licence to occupy a unit owned by someone else. Understanding this fundamental difference is the first step to making an informed decision.
The Key Distinction
An ORA gives you a licence to occupy a unit - it does not give you ownership. The village operator owns the unit, the building, and the land. You are paying for the right to live there under the terms they have set.
What this means for you.
Cannot Sell Yourself
You cannot sell the unit yourself. When you leave, the operator controls what happens next and manages the resale or relicensing process.
Cannot Leave to Anyone
You cannot leave the unit to whoever you choose. Your beneficiaries inherit your contractual right to receive proceeds, not the unit itself.
Cannot Make Changes
You cannot make changes without approval from the operator. Even internal modifications may need consent.
The Deferred Management Fee Explained
The DMF is money you do not pay upfront, but that will be deducted from your capital when you leave.
How the DMF Works: $700,000 Example
$700,000
-$70,000
-$140,000
-$210,000
Maximum return when you leave (before other costs)
$490,000
$210,000 deducted regardless of whether you stayed 3 years or 15 years
How It Works
The DMF accrues over time, usually reaching its maximum (usually 20-30%) within 3-5 years. Once fully accrued, it does not increase no matter how long you stay.
Typical Percentages
Most major operators charge 30% of the original capital sum. Some charge less, some more. How it's calculated matters as much as the percentage.
When It's Payable
The DMF is deducted when you leave and the unit is resold or relicensed. You do not receive your capital back immediately.
Capital gains and losses.
Different ORAs handle property value changes differently. This can significantly affect what you receive when you leave.
No Share of Gains or Losses
You receive your original capital sum back, minus the DMF and other deductions. If the unit value increased, you do not benefit. If it decreased, you do not lose.
Share of Capital Gain Only
You receive your capital plus a percentage of any value increase, minus DMF. You are protected from decreases. The percentage shared varies.
Share of Gains and Losses
Your return reflects actual market movement. You benefit from increases but bear some risk of decreases. Less common but does exist.
Exit & Refund Timing
The Waiting Period
Most ORAs tie your refund to the village finding a new resident for your unit. In a slow market, this can take months or even years. Some ORAs have a backstop date (e.g., 24 months) after which the operator must pay regardless. Others do not. Check yours carefully.
Legislative Change Coming
The Government has announced reforms requiring operators to repay residents net termination proceeds within a 12-month statutory timeframe, with interest payable after six months. An amendment bill is expected by July 2026. However, these changes will not apply to existing ORAs until the law passes.
Myth vs. Reality
"This is a standard agreement"
There is no single standard. Different operators have different terms. What is standard for one village may be unusual for another. Every ORA should be reviewed on its own terms.
"The village will look after me"
Villages provide services and facilities. But the operator is running a business. Your interests and their interests are not always aligned, especially around fees and exit timing.
"I am buying a property"
You are buying a licence to occupy. The unit remains owned by the operator. This affects your rights, your exit options, and your estate.
"My children will inherit the unit"
They will inherit your contractual right to receive proceeds from the ORA exit process. They will not own the unit and cannot live in it.
The 15 Working Day Cooling-Off Period
The Retirement Villages Act provides a mandatory 15 working day cooling-off period from when you sign the ORA. During this time, you can cancel without penalty.
Use this time to discuss the terms with family, consider whether this is definitely the right move, and ask any remaining questions.
Key Takeaways
An ORA is a licence to occupy, not property ownership.
The Deferred Management Fee (usually 20-30%) is deducted when you leave.
Your refund may take months or years - tied to finding a new resident.
Weekly fees can and do increase over time.
The 15 working day cooling-off period lets you cancel without penalty.
Independent legal advice is required and worth every cent.
Related Guide
Understand your rights and the process of moving into a retirement village.
Read the Retirement Villages GuideRelated Reading
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