o introduce a range of requirements and procedures necessary to give effect to the regulatory and monitoring regime for retirement villages:

Transcription

1 Retirement Villages Bill Government Bill Explanatory Note General policy statement The Bill introduces a range of administrative, reporting, and procedural requirements for retirement village operators for the purpose of specifically protecting the interests of residents and intending residents of retirement villages, and to enable the development of retirement villages under a readily understandable legal framework. The new requirements replace existing requirements for those retirement village operators required to comply with the Securities Act 1978 (and its associated exemption regime). The provisions of the Bill are intended to--- o promote an understanding of the financial and occupancy interests of retirement village residents and intending residents: o provide an industry-focused regulatory and monitoring regime for retirement villages in which compliance costs are minimised: o provide an external oversight on conditions of entry for retirement villages and their ongoing operations: o introduce a range of requirements and procedures necessary to give effect to the regulatory and monitoring regime for retirement villages: o provide an environment of security and rights protection for retirement village residents. The Bill contains--- o an inclusive definition of a retirement village: o a requirement for retirement villages to register with the Registrar of Companies as retirement villages: o a requirement for all retirement village operators to comply with an industry code of practice (intended to be developed by the industry and approved by the responsible Minister) that will set minimum operational and management standards: o a process for disclosure of all essential information on retirement village ownership, management and operational processes, terms and conditions of residence, and charging regime, to be made available in a standard format to all intending residents: o a requirement for all retirement villages, whether under development or already established, to appoint a statutory supervisor approved by the Securities Commission to represent the collective interests of residents: o a requirement for all retirement village operators to have a disputes procedure to resolve disputes with residents, or between residents: o a requirement for the dispute resolution procedure to comply with the requirements outlined in the Bill: o enforcement and remedies provisions aligned with those that apply under file:///s /BILLS/PDF/ txt (1 of 58) [19/12/ :20:35]

2 the Fair Trading Act 1986: o a requirement that each retirement village must have in effect a code of residents' rights that outlines the minimum rights of residents: o a requirement that contractual arrangements for entry into a retirement village are consistent with the code of practice and code of residents' rights, and contain other prescribed provisions: o a requirement that the occupancy rights of retirement village residents be given priority over mortgagees and other creditors. The Bill will extend the functions of the Retirement Commissioner to enable monitoring and reporting on the effect of the legislation to the responsible Minister. The Retirement Commissioner will also undertake a public education function with regard to retirement village issues. Clause by clause analysis Clause 1 relates to the Title. Part 1 Preliminary provisions Part 1 contains preliminary provisions including--- o provisions in clause 2 for clauses 10 to 34 to come into force by Order in Council, and the rest of the Act to come into force on 1 November (The reason that clauses 10 to 34 come into force on a date appointed by Order in Council is to allow a sufficient period for planning the transition from the existing regulatory regime for retirement villages under the Securities Act 1978 to the new regulatory regime under this Bill. It is not clear at this point how long that transition period needs to be): o a purpose clause (clause 3): o a provision stating that the Act binds the Crown (clause 4): o 2 provisions setting out key terms (clause 5, which relates to interpretation, and clause 6, which defines retirement village): o a statement of the obligations of the operator (clause 7): o a statement concerning the liabilities of an operator of a retirement village (clause 8), and rules about the liability and the granting of relief by a Court in any proceedings (clauses 9 and 10). Part 2 Registration, occupation right agreements, and related requirements and rules Part 2 sets out the requirement that every retirement village be registered. Applications for registration must be lodged with the Registrar of Companies. Clauses 10 to 19 of the Bill set out the requirements for, and consequences of, registration, including transitional arrangements. Provision is also made for the suspension and cancellation of registration in certain circumstances. Clauses 20 to 22 provide for the notification of registration to the Registrar-General of Land and the entry of memorials on certificates of title of retirement villages. Clause 21 sets out the effect of those memorials (which place limitations on the rights of holders of a security interest) and clause 22 provides for the removal of those memorials in the event that registration of the retirement village is cancelled. Clause 23 requires receivers and liquidators of property that includes a retirement village to ask the statutory supervisor to represent the file:///s /BILLS/PDF/ txt (2 of 58) [19/12/ :20:35]

3 interests of residents. Clause 24 prohibits any operator of a retirement village from advertising or making an offer of occupation if the retirement village is not registered. Clause 25 imposes other restrictions on advertising. Clauses 26 to 29 deal with occupation right agreements and include requirements as to the information that they must contain and their form (clause 26), provision for a cooling-off period (clause 27), requirements relating to the holding of deposits (clause 28), and pre-conditions concerning the enforcement of agreements (clause 29). Clauses 30 to 32 require retirement villages to have a code of residents' rights in the form set out in Schedule 3. There is no ability to amend the code and it may be enforced as a contract by a resident. Clauses 33 and 34 set out other rules relating to occupancy rights. Part 3 Retirement Commissioner and statutory supervisors Part 3 (clauses 35 to 39) confers functions on the Retirement Commissioner and creates the office of statutory supervisor. The functions of the Retirement Commissioner are--- o to monitor the effects of the Bill and the regulations and code of practice made under the Bill (once enacted): o to advise on issues relating to retirement villages, when requested to do so by the Minister or required by the Bill: o to promote education about retirement village issues and publish information about those issues: o to collect and publish information relating to any of the functions referred to in clause 35: o to perform any other function conferred by the Bill or regulations made under the Bill (once enacted). The functions of the statutory supervisor are--- o to operate and make known to residents a facility for dealing with complaints by residents; and o to provide a stakeholder facility for intending residents who pay deposits or progress payments in respect of uncompleted residential units or facilities at the retirement village; and o to monitor the financial position of the retirement village; and o to report annually to the Securities Commission and residents on the performance of its duties and exercise of its powers; and o to perform the other duties that are imposed by any Act, any regulations made under the Bill (once enacted), and any documents of appointment. Part 3 also imposes obligations on auditors of retirement villages or their operators to answer questions put to them by the Registrar of Companies, the Retirement Commissioner, or the statutory supervisor, and to supply information requested by those persons. Part 4 Dispute resolution, enforcement, and penalties file:///s /BILLS/PDF/ txt (3 of 58) [19/12/ :20:35]

4 Dispute resolution Part 4 of the Bill (clauses 40 to 64) establishes a dispute resolution procedure, creates offences, and provides for civil remedies. The dispute resolution procedure will be available to residents or former residents of a retirement village or their personal representatives in relation to any decision of an operator--- o affecting the resident's occupation right or right to access services or facilities; or o relating to changes to charges for outgoings or access to services or facilities imposed or payable under the resident's occupation right agreement; or o relating to the charges or deductions imposed as a result of the resident's occupation right coming to an end for any reason. The dispute resolution procedure is also available to resolve disputes between residents or persons lawfully in another resident's unit with their permission. Clauses 43 to 53 relate to the appointment of a disputes panel, regulate the conduct and hearings of the disputes panel, and set out rules relating to the enforcement of decisions of the disputes panel and rules about the payment of costs. Enforcement of remedies Clause 57 makes it an offence to contravene certain provisions of the Act. Clauses 58 to 64 also provide for the issue of injunctions by the High Court to prevent the contravention of certain provisions of the Act, and make provision for the issuing of remedial orders by the High Court, District Court, and Disputes Tribunal. Part 5 Code of practice and miscellaneous matters Part 5 (clauses 65 to 77) requires the Minister responsible for the administration of the Bill to approve or prepare and approve, and publish a code of practice. While a code of practice is in force it--- o must be complied with by every operator of a retirement village and every receiver or liquidator of an operator or the property of the operator; and o is enforceable as a contract by a resident and prevails over any inconsistent provision in his or her occupation right agreement; and o must be given effect to in any occupation right agreement offered to a resident. Part 5 also contains provisions relating to the maintenance of a registered office by retirement villages, addresses for service, powers of inspection by the Registrar, the application of certain provisions of the Companies Act 1993, regulation-making powers, and consequential amendments. Schedule 1 sets out requirements relating to the registration of documents under the Act and the keeping of registers of those documents. Schedule 2 sets out the required information to be contained in occupation right agreements. Schedule 3 sets out the code of residents' rights. Schedule 4 sets out the powers and duties of statutory supervisors and contains related provisions. Schedule 5 sets out the minimum requirements in relation to certain specified topics to be included in the code of practice that will be binding on all retirement villages. file:///s /BILLS/PDF/ txt (4 of 58) [19/12/ :20:35]

5 Regulatory impact and cost compliance statement Statement of problem and need for action Retirement villages are an increasingly popular option for older New Zealanders, and at present some 4% of people over 65 choose this option for their retirement. It is also a sector that is growing rapidly and is expected to develop further with the ageing population. Projections based on forward plans by retirement village developers indicate that growth, both in the number of retirement villages and the size of retirement villages, will continue for the foreseeable future. A survey conducted in 2000 by the Retirement Villages Association indicated a growth rate of 13% in the number of retirement villages, and 27% in the number of units, over the previous 2 years. Over one-third of retirement villages were reported as having expansion plans, with an 18% increase in the number of units indicated for the next 3 to 4 years. Until now, buying into a retirement village has been regarded primarily as a financial investment, and the provisions of the Securities Act 1978 (and the associated exemption regime) relating to disclosure apply. These provisions do not apply to all retirement villages. They also have not been appropriate or adequate to address the occupancy issues that arise from retirement village tenure, with the result that some older people in retirement villages are subject to unfair charging and management practices. These can include--- o inadequate recognition of the nature of retirement village financing and charging: o the exclusion of residents from decision making in relation to retirement village management: o deductions and difficulties on exiting units when a person leaves the retirement village. The present uneven application of the Securities Act 1978 to retirement villages does not address directly many of the risks residents face, which stem from the lack of property ownership inherent in the complex legal arrangements that are involved in retirement villages. People using other accommodation options have protection under other enactments. Residential tenants have the Residential Tenancies Act 1986 to provide protection to consumers. Residents of boarding houses are protected by measures administered by local bodies. It is anomalous that older people in retirement villages, who may be more vulnerable than people who have residential tenancies and boarding houses, should not be protected in respect of those aspects where they are most at risk. Statement of the public policy objective The policy objective is to provide a regulatory framework within which older people can consider entering a retirement village and be confident that there are statutory protections in place to--- o protect more adequately the financial and occupancy interests of retirement village residents: o identify areas of risk and ensure that they are presented in disclosure statements in easily understood form: o ensure that retirement villages recognise residents' rights and conform to good management practices and principles and quality standards: o provide a degree of external oversight on conditions of entry and ongoing operations. Statement of options for achieving desirable objective file:///s /BILLS/PDF/ txt (5 of 58) [19/12/ :20:35]

6 Non-regulatory measures Self-regulation The Retirement Villages Association of New Zealand (RVA), to which approximately 50% of retirement villages belong, has a code of practice and an accompanying accreditation process. However, it relies on voluntary membership and, while it has ensured that quality standards among member retirement villages are met, it does not have the capacity, authority, or power to be effective in lifting the threshold of quality standards for those outside the RVA. Public education A better informed public would contribute to better decision making with respect to choice of retirement village. Public education alone will not address the risks associated with the complexity of alternative legal arrangements and the uncertainty regarding the application of the Securities Act Nevertheless, it is proposed to improve public and professional education on retirement village matters as part of the overall exercise and implementation of the proposed legislation. The increasing awareness of the issues surrounding retirement villages, especially among organisations representing the interests of older people, will give impetus to the dissemination of information that will inform people as to how to make good choices in selecting a suitable retirement village. Regulatory measures While securities law is adequate for exposing risks associated with the establishment and developmental phase of retirement villages, it does not address the ongoing issues that arise as a result of the retirement village representing the resident's home. There is also uncertainty about its application to all retirement villages. The Law Commission is of the view that legislation, separate from the Securities Act 1978, is required. The Securities Commission supports protection for residents of all retirement villages regardless of tenure arrangements, and in informal discussions the Securities Commission has indicated that it is not averse to the proposal for separate legislation. The non-regulatory measures examined in relation to retirement villages cannot give the certainty to the checks and balances that people buying into retirement villages, often with most of their life savings at risk, wish to see and, by comparison with protections from other kinds of risk, have a right to expect. The proposal involves, with respect to occupancy issues, replacing the Securities Act 1978 as the means for protecting the residents of retirement villages by legislation that not only addresses the specific financial risks encountered by people entering a retirement village, but also some of the ongoing issues and risks that relate to retirement village living. Statement of net benefits of this proposal The proposal will provide a regulatory framework that is tailored to the specific needs of residents of retirement villages. The proposed policy and principles are designed to--- o address, directly and specifically, the financial risks associated with entry and residence in a retirement village: o introduce and enforce quality standards in the operation and management of retirement villages: o make: empower older people in the considerations and choices they may wish to file:///s /BILLS/PDF/ txt (6 of 58) [19/12/ :20:35]

7 o reduce unnecessary compliance costs to the industry. The proposal--- o affords residents the benefits of protection of their occupancy rights through regulatory measures specific to retirement villages: o clearly defines responsibilities for the industry and provides for them within a consumer protection framework, utilising existing reporting processes for companies and related entities: o uses a code of residents' rights and code of practice to ensure that retirement villages adopt good operational and management arrangements and procedures that will minimise discord within retirement villages and the need for external intervention: o relieves retirement villages of the costs of producing Securities Act 1978 documentation where that documentation does not contribute to the protection of prospective and existing residents. The establishment of a regulatory regime for retirement villages is expected to enhance public confidence in the industry and promote investment in the accommodation options they provide. The expansion of the sector is subject to public perceptions of the advantages and risks associated with retirement villages as a whole. The implementation of legislative measures that directly address the specific risks associated with entry and ongoing residence will provide a framework within which the industry can expand and develop with public support and confidence. The impact on retirement villages will be that they will need to revise their current disclosure documentation, currently normally contained in the prospectus and investment statement, into the proposed disclosure statement template format and, where they do not already have them, introduce disputes resolution and consultative processes. Many retirement villages, especially smaller and mature ones, will be able to dispense with the prospectus. Good management practices resulting from the legislation will benefit both retirement village owners and residents by reducing the opportunities for discord between residents and retirement village owners. The implementation regime will address the application of the legislation to new retirement villages, new entrants to existing retirement villages, and existing retirement villages. It will improve the position of intending residents in the short-term, but will not intrude into the relationship between existing retirement village residents and retirement village owners other than to ensure good practices are introduced over a transition period. Business compliance cost statement Sources of compliance costs The new costs faced by retirement villages will be--- o o o the preparation of disclosure statements: charges from the Companies Office relating to registration: the ongoing cost of compliance enforcement: o the cost of statutory supervisors for those retirement villages that do not currently have them. Parties likely to be affected All retirement villages will experience the costs of the proposal. However, the nature of the industry, and its funding arrangements, are such that costs are likely to be passed on to consumers. As the residents themselves are expected to benefit from the protections the legislation affords, it is not file:///s /BILLS/PDF/ txt (7 of 58) [19/12/ :20:35]

8 inappropriate that they should meet the cost of the measures. Estimated compliance costs of proposal The estimates of costs to retirement villages are that--- o the introduction of the disclosure statement in a standard format will involve reconfiguration of the investment statement by retirement villages subject to the Securities Act In the case of retirement villages not subject to the Securities Act 1978, the preparation of the disclosure statement will be a new cost, but might be expected to develop from information that needs to be collected and presented for the on-selling of empty units: o the registration fee is likely to be approximately $515 (including GST) for initial registration, $190 for renewals, and $75 for interim changes to documents: o the ongoing costs of compliance will be on a cost recovery basis through a renewal fee that will be set 2-yearly based on actual costs: o the approximate cost of a statutory supervisor is $1,000 to $10,000 a year, plus transaction fees. The cost can vary depending on the size of the retirement village and the extent to which the retirement village owner or the residents utilise the statutory supervisor in the management of the retirement village: o there will be some additional costs in preparing financial statements for the operator and the village in a form that complies with the Financial Reporting Act Offsetting these additional costs, in respect of some retirement villages, will be savings arising from the discontinuation of the need to prepare prospectuses by longstanding retirement villages. This saving is expected to range from $1,500 to $12,000 a year, and will be ongoing. (The setup cost of preparing a prospectus is in the range of $20,000 to $70,000.) Other savings will arise from--- o improved management practices (which will reduce the need for external intervention in some retirement villages): o reduced transactional costs for the industry, and in respect of organisations such as the companies office, securities commission, and statutory supervisors, that arise from unclear responsibilities and from not having retirement village specific protection. Longer term implications of the compliance costs The replacement of the prospectus and investment statement under the Securities Act 1978 by a standard disclosure statement format will involve redesigning or reformatting the disclosure statement from the current investment statement into the standard disclosure statement format. This will have a cost in the short term but is expected to be easier and less costly to maintain over time than the current documentation. Discontinuing the prospectus will particularly advantage smaller retirement villages where such costs are shared across small numbers of residents. Level of confidence of compliance costs estimates The cost estimates have been made using the best information available. The cost of compliance enforcement cannot be estimated at this stage, but it is expected that the emphasis on disclosure and the adoption of quality standards will ensure that the costs are kept to a minimum. Key compliance cost issues identified in consultation Key issues raised in consultations have been addressed. file:///s /BILLS/PDF/ txt (8 of 58) [19/12/ :20:35]

9 Overlapping compliance requirements Retirement village owners will still need to comply with the Securities Act 1978 for financial investment purposes other than in respect of occupancy rights. The requirements of the Companies Act 1993, the Incorporated Societies Act 1908, and the Financial Reporting Act 1993 will still apply to those owners. Steps taken to minimise compliance costs The consultation undertaken sought to identify areas of potential reduction in compliance costs. Registration fee The proposed registration fees are based on similar charges by the Companies Office in respect of other legislation. The registration process will be aligned, as far as possible, with processes for other functions relating to companies and incorporated societies. Annual renewal fee The recovery of the cost of compliance action through the annual renewal fee will be a new cost but one that the emphasis on disclosure, the residents' rights agreement, and the code of practice is expected to keep to a minimum. Statutory supervisors Currently, a statutory trustee or supervisor is not required in respect of those retirement villages that have separate titles issued for each unit or villa. The requirement for all retirement villages to have a statutory supervisor will assist in managing their financial risks. It will have a compliance cost for retirement villages that currently do not have a statutory supervisor. Consultation Consultation on the principles and broad measures proposed has been undertaken with the RVA, financiers, and others with an interest in retirement villages. Government departments consulted in the preparation of this Bill include Ministries of Economic Development, Consumer Affairs, Environment, Justice, Treasury, Housing, Maori Development, Pacific Island Affairs, Health, Women's Affairs, and Land Information New Zealand and the Securities Commission. Hon Lianne Dalziel Retirement Villages Bill Government Bill Contents 1 Title Part 1 Preliminary provisions 2 Commencement 3 Purpose 4 Act to bind the Crown 5 Interpretation file:///s /BILLS/PDF/ txt (9 of 58) [19/12/ :20:35]

10 6 Meaning of retirement village 7 Obligations of operator 8 Operator and director, trustee, or office holder of operator not to be exempt from liability 9 Power of Court to grant relief in proceedings for negligence, etc Part 2 Registration, occupation right agreements, and related requirements and rules Registration of retirement villages 10 Retirement villages to be registered 11 Registration is not approval 12 Registration of existing retirement villages 13 Annual renewal of registration 14 Registration to be continuous 15 Certification of registered documents 16 Operator to notify change of circumstances and documentation 17 Suspension of registration 18 Cancellation of registration Suspension of registration Cancellation of registration 19 Further requirements as to registration and keeping registers Memorials 20 Memorial on certificates of title of retirement villages 21 Effect of memorial 22 Memorial and loss of registration Statutory supervisor to act as representative 23 Receiver or liquidator Offer and advertising prohibited if retirement village not registered 24 No offer of occupation or advertising unless retirement village registered Other restrictions on advertising 25 Restrictions on distribution of certain advertisements 26 Occupation right agreements Occupation right agreements file:///s /BILLS/PDF/ txt (10 of 58) [19/12/ :20:35]

11 27 Cooling-off period and cancellation for delay 28 Deposits and other payments must be independently held 29 Information to be provided Code of residents' rights 30 Retirement villages to have code of residents' rights 31 Restrictions on amendment of code of residents' rights 32 Distribution and enforcement of code of residents' rights Other information relevant to occupancy 33 Right to be supplied with information relevant to occupancy Rights of residents in relation to occupancy right 34 No legal impediments to occupation Part 3 Retirement Commissioner and statutory supervisors Retirement Commissioner 35 Retirement Commissioner to monitor, etc, effect of this Act Statutory supervisors 36 Who may be statutory supervisor 37 Statutory supervisor must be appointed 38 Provisions applying to statutory supervisors Auditor must answer questions and supply information 39 Auditor must answer questions and supply information 40 Operator Part 4 Dispute resolution, enforcement, and penalties Disputes resolution 41 Who may apply for dispute resolution 42 How to apply for dispute resolution 43 Operator to engage and allocate disputes panel to resolve dispute 44 Disputes panel must disclose interests and previous involvement 45 Operator's duties to secure independence of disputes panel 46 Meaning of previous involvement in dispute 47 Conduct of hearing 48 Hearing must be held file:///s /BILLS/PDF/ txt (11 of 58) [19/12/ :20:35]

12 49 Evidence and attendance 50 Record of hearing 51 Powers of disputes panel 52 Effect and enforcement of dispute resolution decisions 53 Costs on dispute resolution 54 Jurisdiction of High Court Enforcement and penalties 55 Jurisdiction of District Courts 56 Jurisdiction of Disputes Tribunal 57 Contraventions of certain provisions and offence 58 Injunctions may be granted by Court for contravention of certain provisions 59 Order to disclose information or publish advertisement 60 Other orders 61 Monetary limits and exercise of jurisdiction 62 General provisions relating to section 60 orders 63 Defences 64 Finding in proceedings to be evidence Part 5 Code of practice and miscellaneous matters Code of practice 65 Code of practice must be prepared and published 66 Duration and variation of code of practice 67 Status of code of practice 68 Registered office Registered office of retirement village Address for service of retirement village 69 Change of registered office 70 Address for service Address for service of retirement village Registrar's powers of inspection 71 Registrar's powers of inspection file:///s /BILLS/PDF/ txt (12 of 58) [19/12/ :20:35]

13 72 Disclosure of information and reports 73 Certain provisions of Companies Act 1993 apply 74 Regulations 75 Fees and charges 76 Acts not to apply 77 Amendments to Financial Reporting Act Amendment to Securities Act 1978 Schedule 1 Registration and register Schedule 2 Occupation right agreements Schedule 3 Code of residents' rights Schedule 4 Provisions applying in respect of statutory supervisor Schedule 5 Matters to be included in code of practice The Parliament of New Zealand enacts as follows: 1 Title This Act is the Retirement Villages Act Commencement Part 1 Preliminary provisions (1) Sections 10 to 34 come into force on a date to be appointed by the Governor-General by Order in Council. (2) The rest of this Act comes into force on 1 November Purpose The purpose of this Act is--- (a) to protect the interests of residents and intending residents of retirement villages: file:///s /BILLS/PDF/ txt (13 of 58) [19/12/ :20:35]

14 (b) to enable the development of retirement villages under a legal framework readily understandable by residents, intending residents, and operators: (c) for the purposes in paragraphs (a) and (b),--- (i) to promote understanding of the financial and occupancy interests of residents and intending residents of retirement villages: (ii) to provide an industry-focused regulatory and monitoring regime for retirement villages in which compliance costs are minimised: (iii) to provide external oversight of the conditions of entry into, and the continuing operations of, retirement villages: (iv) to introduce requirements and procedures necessary to give effect to the regulatory and monitoring regime referred to in subparagraph (ii): (v) to provide an environment of security and protection of rights for residents of retirement villages: (vi) to confer on the Registrar of Companies, Retirement Commissioner, and Securities Commission powers, functions, and duties relating to this Act. 4 Act to bind the Crown This Act binds the Crown. 5 Interpretation In this Act, unless the context otherwise requires,--- advertisement means any publication to the public or to any section of the public or to any individual of any words, whether written or printed, spoken, or in any electronic form, or of any pictorial representation or design or device, used to promote a retirement village, and includes a disclosure statement code of practice section 65 means a code of practice approved by the Minister under code of residents' rights Schedule 3 means the code of residents' rights described in disclosure statement, in relation to a retirement village, means a written document that--- (a) contains all the information that it is required to contain by the applicable code of residents' rights, the applicable code of practice, and regulations made under this Act; and Act (b) states that it is a disclosure statement for the purposes of this facilities, in relation to a retirement village, means facilities of a communal kind provided in the retirement village for the benefit of residents of the retirement village and includes recreational facilities and amenities file:///s /BILLS/PDF/ txt (14 of 58) [19/12/ :20:35]

15 intending resident means a person who has indicated to an operator of a retirement village that he or she is interested in becoming a resident of the retirement village Minister means the Minister of the Crown who is, with the authority of the Prime Minister, for the time being responsible for this Act occupation right agreement means any written agreement or other document or combination of documents that--- (a) confers on a resident or an intending resident the right to occupy a residential unit within a retirement village; and (b) specifies any terms or conditions to which that right is subject offer of occupation means an offer made to any person to become a resident of a retirement village operator, in relation to a retirement village, means any person who is 1 or more of the following: (a) a promoter or owner of the retirement village: (b) a person developing a retirement village: (c) a person managing the retirement village: (d) a person who exercises effective management and control of all or part of a retirement village because the person is the legal or beneficial owner or lessee of a part of the retirement village (other than a residential unit that the person occupies as a resident): (e) a holder of a security interest who has exercised a power to take effective management or control of the retirement village: (f) a receiver of the property comprising the retirement village or the liquidator of an operator of the retirement village register means the register maintained under Schedule 1 registered document means, in respect of any registered retirement village, any document registered in accordance with Schedule 1 Registrar 1993 resident means the Registrar of Companies appointed under the Companies Act means any of the following: (a) a person who enters into an occupation right agreement with the operator of a retirement village: (b) a person who, under an occupation right agreement, is, for the time being, entitled to occupy a residential unit within a retirement village, whether or not the agreement is made with that person or some other person: (c) if the occupation right agreement so provides or with the consent of the operator of the retirement village, the spouse or partner of the person referred to in paragraph (b) who is occupying the unit with that person or after that person's death or departure from the retirement village residential unit means a building, or part of a building, that is a house, file:///s /BILLS/PDF/ txt (15 of 58) [19/12/ :20:35]

16 flat, townhouse, unit, serviced unit or apartment (whether or not it has cooking facilities), villa, or similar dwelling erected, or currently used, primarily and principally as a self-contained residence in a retirement village; and includes any land, improvements, or appurtenances belonging to the unit or usually enjoyed with it Retirement Commissioner means the Retirement Commissioner appointed under the Retirement Income Act 1993 retirement village has the meaning specified in section 6 Securities Commission Securities Act 1978 means the Securities Commission established under the security interest, in relation to a retirement village, means an interest that a person (other than as an intending resident or resident of the retirement village) has in all or any part of the retirement village as a consequence of the person holding a debt security (within the meaning of the Securities Act 1978) over that part of the retirement village services means services provided or arranged by the operator of a retirement village of 1 or more of the following kinds--- (a) gardening, repair, or maintenance services: (b) nursing or medical services: (c) the provision of meals: (d) shops and other services for the provision of goods: (e) laundry services (not being the provision of facilities for residents to carry out their own laundry): (f) services (for example, hairdressing services) for the personal care of residents: (g) transport services: (h) services for recreation or entertainment: (i) security services: (j) other services for the care or benefit of residents statutory supervisor, in relation to a retirement village, means a person appointed under section Meaning of retirement village (1) In this Act, but subject to subsections (2) to (4), retirement village means any property or premises that contains 2 or more residential units that provide, or are intended to provide, residential accommodation together with services or facilities, or both, predominantly for persons in their retirement, their spouses or partners, and regardless of whether--- (a) a resident's right of occupation of any residential unit is provided by way of freehold or leasehold title, cross-lease title, unit title, lease, licence to occupy, residential tenancy, or other form of assurance, for life or any other term; or file:///s /BILLS/PDF/ txt (16 of 58) [19/12/ :20:35]

17 (b) the consideration for that right is a lump sum payment or deduction, a periodic payment or deduction, or any combination of such payments or deductions, whether made before, during, or after occupancy; or (c) the resident makes an additional payment for any services or facilities. (2) A retirement village includes any common areas and facilities to which residents of the retirement village have access under their occupation right agreements, but does not include any part of the property or premises that--- (a) is a home licensed under the Old People's Homes Regulations 1987 or a rest home within the meaning of the Health and Disability Services (Safety) Act 2001; or (b) a hospital licensed under the Hospitals Act 1957 or a hospital care institution within the meaning of the Health and Disability Services (Safety) Act 2001; or (c) provides services that are licensed under the Health and Disability Services (Safety) Act (3) For the avoidance of doubt, the following are not retirement villages for the purposes of this Act: (a) kaumatua flats (being flats on, or adjacent to, a marae and administered by a marae committee or similar body, and acknowledged by the marae as accommodation for kaumatua): (b) owner-occupied residential units registered under the Unit Titles Act 1972 or owner-occupied cross-lease residential units that do not provide services or facilities to their occupants beyond those commonly provided by the unit plans or rules of bodies corporate, or the flat plans or lease terms for similar residential units: (c) boarding-houses, guest-houses, or hostels: (d) halls of residence associated with educational institutions. (4) Regulations made under this Act may declare specific property or premises, or property or premises of a specified class or kind, to be or not to be retirement villages for the purposes of this Act. (5) Whether or not a property is, or any premises are, a retirement village must be determined according to the nature, substance, and economic effect of the operation of the property or premises and other facts, and independently of its or their form or description in any document. 7 Obligations of operator If obligations are imposed on the operator of a retirement village by this Act,--- (a) each operator of that retirement village must perform the obligation or ensure that it is performed; and (b) each director, trustee, or office holder of that operator must ensure that the obligation is performed. file:///s /BILLS/PDF/ txt (17 of 58) [19/12/ :20:35]

18 8 Operator and director, trustee, or office holder of operator not to be exempt from liability (1) This section applies to any provision in any agreement or other document that directly or indirectly has the effect of involving the residents of a retirement village in--- (a) exempting any operator or any director, trustee, or office holder of an operator from any liability that, by virtue of any rule of law, would otherwise attach to him or her in respect of any negligence, default, breach of duty, or breach of trust of which he or she may be liable in relation to the retirement village; or (b) indemnifying any such operator or director, trustee, or office holder against any such liability. (2) Except as provided in subsection (3), any provision to which this section applies is void. (3) Nothing in subsection (2) deprives any operator or director, trustee, or office holder of an operator of any exemption or right to be indemnified in respect of anything done or omitted to be done by him or her while any such provision was in force if the exemption or indemnity was in existence on or before 18 December Power of Court to grant relief in proceedings for negligence, etc (1) Subsection (2) applies if, in any civil proceeding for negligence, default, breach of duty, or breach of trust against an operator or director, trustee, or office holder of an operator in connection with a retirement village, it appears to the Court hearing the case that--- (a) the person is or may be liable in respect of the negligence, default, breach of duty, or breach of trust; but (b) that he or she has acted honestly and reasonably; and (c) having regard to all the circumstances of the case, the person ought fairly to be excused for the negligence, default, breach of duty, or breach of trust. (2) If this subsection applies, the Court may relieve the person referred to in subsection (1), either wholly or partly, from the person's liability on any terms that the Court thinks fit. Part 2 Registration, occupation right agreements, and related requirements and rules Registration of retirement villages 10 Retirement villages to be registered (1) The operator of a retirement village must ensure that it is registered. file:///s /BILLS/PDF/ txt (18 of 58) [19/12/ :20:35]

19 (2) The operator of a retirement village must lodge with the Registrar an application for registration in the prescribed form together with the following: (a) the disclosure statement; and (b) a full legal description of the property or premises comprising the retirement village, together with copies of any certificates of title, plans, deeds, leases, or other documents evidencing that description, and identifying any computer registers on which the certificates of title are recorded; and (c) the name of the statutory supervisor, a copy of the statutory supervisor's consent to act, and a copy of the terms of appointment; and (d) the form of the occupation rights agreement; and (e) the code of residents' rights; and (f) the prescribed fee for registration; and (g) any other matter prescribed by regulations. (3) The Registrar must--- (a) not register any retirement village if, in the opinion of the Registrar, the application or any information supplied contains a statement that is false, misleading, or confusing, or omits any material particular: (b) register the retirement village if the circumstances in paragraph (a) do not exist, and all prescribed fees have been paid, or satisfactory arrangements have been made for their payment. (4) The Registrar may refuse to consider an application for registration or an amendment to registered documents if arrangements for the payment of prescribed fees are not in place. 11 Registration is not approval Registration of a retirement village does not imply approval by the Registrar or the Crown of the retirement village or any of the matters in the application. 12 Registration of existing retirement villages (1) If a retirement village has 1 or more residents at the commencement of this Act,--- (a) an application for registration must be lodged under section 10 no later than 31 May 2003: (b) No offer of occupation may be made after 30 November 2003 unless the retirement village is registered under this Act. (2) Nothing in this section exempts any operator from the obligation to issue a disclosure statement that complies with this Act to any intending resident after 31 May file:///s /BILLS/PDF/ txt (19 of 58) [19/12/ :20:35]

20 13 Annual renewal of registration (1) An operator of a retirement village must renew the registration of that retirement village every year. (2) An operator of a retirement village applies to the Registrar for renewal of the registration of that retirement village by--- (a) lodging an application for renewal in the prescribed form that contains the prescribed information for the prescribed period; and (b) lodging the certificate referred to in section 15; and (c) lodging a certificate signed by the statutory supervisor stating that--- (i) the operator has supplied to the supervisor a copy of the retirement village's financial accounts (being accounts that comply with section 15 of the Financial Reporting Act 1993); and (ii) the information contained in the application referred to in paragraph (a) is accurate; and (d) paying the prescribed fee. (3) The application referred to in subsection (2)(a) must be dated on a day within the month during which the return is required to be delivered to the Registrar, and the information contained in it must be accurate at that date. 14 Registration to be continuous Every retirement village that is registered remains registered unless--- (a) the Registrar suspends registration or cancels registration; or (b) the operator fails to renew the registration of the retirement village within the prescribed period. 15 Certification of registered documents An operator of a retirement village must, in the prescribed form and within the prescribed periods, lodge a certificate with the Registrar confirming that each registered document is correct and current and, in the opinion of the persons signing the certificate, not likely to mislead, deceive, or confuse any resident, intending resident, or the public. 16 Operator to notify change of circumstances and documentation (1) The operator of a registered retirement village must, in the prescribed form (if any), notify the Registrar of--- (a) any material change to any of the registered documents before that document or changed document is published or made available to any resident, any intending resident, or the public; and file:///s /BILLS/PDF/ txt (20 of 58) [19/12/ :20:35]

21 (b) any material change to the information contained in any registered document; and (c) any change of circumstances that makes any registered document likely to be misleading, deceptive, or confusing to any resident, any intending resident, or the public; and (d) any change--- (i) of any operator of the retirement village (whether as a result of the sale or other disposal of the retirement village or otherwise); or (ii) of the controlling interests in any operator of the retirement village (whether as a result of the sale of shares in the operator or otherwise); or village. (iii) to the name or address of any operator of the retirement (2) If notice is given to the Registrar under subsection (1), the Registrar may--- (a) amend the registered document accordingly or add the document to the register; or (b) require a new document to be lodged under section 10(2); or (c) suspend registration of the retirement village. (3) If the Registrar suspends registration under this section, section 17(2) to (5) applies. 17 Suspension of registration Suspension of registration (1) The Registrar may suspend the registration of any retirement village if he or she considers that--- (a) any registered document is likely to mislead, deceive, or confuse in a material way; or (b) the operator is failing to comply with this Act or any regulations made under this Act; or (c) any prescribed fee required to be paid by the operator of the retirement village is not paid. (2) The Registrar must give notice of the suspension to the operator of the retirement village, and that notice must specify--- (a) the reason for the suspension; and (b) the steps required to be undertaken by the operator to have the suspension lifted. (3) Once the operator of a retirement village has received notice of its file:///s /BILLS/PDF/ txt (21 of 58) [19/12/ :20:35]

22 suspension of registration, the operator, while the suspension is in force,--- (a) must take all reasonable steps to withdraw any advertisement or offer of occupancy relating to the retirement village: (b) must not enter into any occupation right agreement relating to the retirement village with any person. (4) An occupation right agreement entered into in contravention of subsection (3), section 24(1), or section 26 is voidable by the resident or intending resident at any time. (5) If a resident or intending resident exercises the right conferred by subsection (4), the resident or intending resident is entitled to receive--- (a) a refund, without deduction, of all payments made under the occupation right agreement or otherwise to the operator, whether or not services were provided for those payments: (b) interest at the prescribed rate: (c) actual and reasonable costs associated with the voiding of the agreement (for example, legal expenses and removal costs). Cancellation of registration 18 Cancellation of registration (1) The Registrar must cancel the registration of a retirement village if the Registrar receives a request in writing for cancellation from the operator of that retirement village. (2) Except as provided in section 22, cancellation of registration has the same effect as suspension of registration and the operator must take action under section 17 as if notice of suspension of registration had been given under section 17(2). (3) No operator may request cancellation of the registration of any retirement village that has any residents unless each of those residents has--- (a) received independent legal advice; and (b) consented in writing to the cancellation. 19 Further requirements as to registration and keeping registers Every operator of a retirement village and the Registrar must comply with the applicable provisions of Schedule 1 (which sets out requirements relating to the lodging of documents for registration and the keeping of the register by the Registrar). Memorials file:///s /BILLS/PDF/ txt (22 of 58) [19/12/ :20:35]