A Legal Analysis of the Similarities and Differences Between Retirement Villages and Strata Titles in WA

by | Mar 20, 2019 | Aged Care Blog

Can attractive and viable retirement communities can be created outside of the legislative framework governing traditional retirement villages?

This discussion comes about because (legal definitions aside for the moment) to many ageing persons and/or their family, at its most basic level a retirement community might be little more than:

  • a community of retired people;
  • accommodated within a complex that is:
    • appropriately-designed; and
    • managed in a way appropriate to the needs of its residents.

These ingredients can all be delivered in a range of settings outside of a true retirement village environment – such as in a strata complex.

On a legal analysis, one might, therefore, conclude that for a segment of the retired population in Western Australia, strata titled communities designed for persons over the age of 55 years can be a compelling alternative to retirement villages if developed and managed appropriately.

For the purpose of this article, the focus will be a comparison between:

  • a typical ‘lease for life’ retirement village where a resident pays:
    • an ingoing premium on entry; and
    • a deferred Management Fee or ‘DMF’ on exit; and
  • a strata complex for purchasers who are retired and over 55 years of age.

We will approach the comparison from several angles.

What is a ‘retirement village’?

The Retirement Villages Act 1992 (WA) (RV Act) defines a retirement village as a complex of residential premises and appurtenant land ‘occupied or intended for occupation under a retirement village scheme or used or intended to be used for or in connection with a retirement village scheme’.

What is a ‘retirement village’ scheme?

A retirement village scheme is a scheme for the occupation or purchase of residential premises, established for retired persons (or predominantly for retired persons), at least one of whom has paid a ‘premium’ for admission.

In WA, a regulatory framework is established by what will be referred to in this article as the ‘RV Legislation’; namely the RV Act, Retirement Villages Regulations 1992 (WA) (RV Regs), and a code of practice prescribed for retirement villages under the Fair Trading Act 2010 (WA) (RV Code).

For a developer or an operator of retirement communities, the RV Legislation creates a significant regulatory burden in terms of legislative compliance, obligations, and responsibilities.

What is a strata scheme?

A strata scheme under the Strata Titles Act 1985 (WA) (ST Act) refers to:

  • the division of a parcel of land into lots (with or without common property) under a strata plan;
  • the allocation of unit entitlements among those lots, and
  • the resultant rights and obligations as between the lot owners, occupiers and strata company.

The Community Titles Act 2018 and Strata Titles Amendment Act 2018 (both of which received Royal Assent on 19 November 2018, and will be referred to in this article simply as the “strata reforms”) will introduce positive reforms to the established strata titles regime, some of which will be mentioned later in this article.

Resident Tenure

Retirement villages – protection at a contract and scheme level

A retirement village resident on a ‘lease for life’ (which may be expressed as being literally for the remainder of the resident’s life, or for a term or terms sufficiently long to exceed the remainder of the resident’s life) does not purchase their unit; but they still enjoy security of tenure for the agreed term of their residence contract in several ways.

First, an administering body cannot unilaterally terminate a residence contract. Unless it terminates with the resident’s agreement, the administering body must apply to the State Administrative Tribunal (“SAT”) for an order to terminate a residence contract. Such an order may be granted in specific circumstances found in the RV Act (those circumstances being the transfer of a resident; medical grounds; breach of residence contract or rules; a resident causing serious damage or injury; or undue hardship to the administering body).

Secondly, retirement villages are protected at a whole of village level:

  • A retirement village scheme cannot be terminated without the approval of the Supreme Court while a person who has been admitted to the occupation of residential premises under the scheme remains in occupation of those premises: RV Act s 22(1).
  • If a retirement village is sold, the incoming owner is bound by any existing residence contracts: RV Act s 17.
  • Sections 15 and 16 of the RV Act require the owner of a retirement village to lodge a prescribed form of the memorial on the title. The memorial notifies the public at large that the land is (or is proposed to be) used for the purpose of a retirement village and that the provisions of the RV Act apply. The memorial also discloses that land within a retirement village may be subject to a statutory charge protecting any residents’ refund rights.

Strata schemes – tenure through ownership

Compare the above with the position under the ST Act:

  • The RV Legislation goes to obvious lengths to protect residents’ rights as lessees or licensees (as the case may be), bringing their interests closer to (but still not equivalent to) property ownership. In a strata scheme, the purchaser of a unit actually does own a real property asset; they are the registered proprietor of their unit and have the rights associated with property ownership.
  • Like a retirement village scheme, it is possible to terminate a strata scheme. This can occur by unanimous resolution of all owners. The strata reforms also introduce a new process, enabling 80 percent of the owners in a strata scheme to initiate termination. There is a safeguard protecting the remaining 20 percent in that unless it has unanimous support, a termination proposal must undergo a fairness and procedure review by the SAT. This aspect of the strata reforms was intended to specifically facilitate the termination (and renewal) of ageing strata schemes.

Protection of Ingoing Residents

Retirement villages – a consumer protection focus

The RV Legislation has a heavy consumer protection component, beginning when a prospective resident is considering a move into a retirement village.

Controls around advertising and promotion of retirement villages, and provisions as to contract requirements and a prospective resident’s right to information aim to give consumers certainty and transparency about the village they are entering into, allowing informed decisions to be made. For example:

  • The owner of land must obtain all necessary consents to develop a retirement village before any sales promotion is undertaken.
  • Prospective residents must be given a written residence contract complying with prescribed requirements. They must also be given various disclosure information – notably, the ‘Form 1’ Disclosure Statement.
  • After signing a residence contract, residents enjoy a 7 working day cooling off period, prior to occupation: RV Act s14.

Strata titles – a different set of buyer protections

The ST Act has its own protections for purchasers at Part V of the ST Act, dealing with notifiable information, notifiable variations, and deposits.

As a minimum, a seller must provide by way of disclosure:

  • A copy of the strata plan;
  • The standard and any non-standard by-laws;
  • A standard form explaining the Buying and Selling a Strata Titled Lot; and
  • A Disclosure Statement in the prescribed form. In the future, Buyers will receive improved disclosure information as a result of the strata reforms.

Ongoing Management and Administration

The role of a retirement village’s Administering Body

The administering body of a retirement village is ‘the person by whom, or on whose behalf, the retirement village is administered and includes a person (other than a resident) who is the owner of land within the retirement village’. Ordinarily, the administering body does not change unless there is a change in ownership of the village; although, it must be remembered that retirement villages can be sold, and administering bodies can and do change as a result.

The RV Legislation provides direction to the administering body on how a village must be operated, addressing important topics such as:

  • Budgets and management procedures
  • Resident consultation (RV Code clause 16)
  • Holding resident meetings (RV Code clause 26); and
  • The village dispute resolution process (discussed later in this article).

So, residents entrust the administering body with running a retirement village, and residents retain what is essentially a consultative role.

The administering body must discharge its duties in accordance with the requirements of the RV Legislation and is subjected to the oversight of the Commissioner for Consumer Protection. This consumer protection aspect is, admittedly, a feature of a retirement village that cannot be replicated like for like in a strata complex.

Strata companies, councils, and managers

Management of a strata scheme is the duty of the strata company, which is made up of the proprietors within the scheme. In practical terms, the functions of a strata company are performed by the council of the strata company, who in turn usually appoints a strata manager.

The strata reforms introduce regulatory requirements for strata managers. Amongst the new requirements, a strata management contract will need to cover details such as:

  • the duration of the contract;
  • what the strata manager will do for the strata company;
  • the strata manager’s obligation to give the strata company written reports about functions undertaken;
  • money payable to the strata manager and the bank account(s) to be used; and
  • how the contract may be terminated.

There is a potential longevity issue where a strata manager is appointed early in the life a strata scheme. This is because if a strata manager is appointed at a time when any proprietor holds 50% or more of the aggregate unit entitlement of the strata lots, then (under s 39A of the ST Act) there is an implied term in their agreement that the strata company may terminate after 5 years, though this may be extended by application to the SAT for a total period not exceeding 10 years.

An equivalent time limitation does not arise under the RV Legislation. Depending on one’s perspective, the finite length of a strata manager’s appointment may be seen either as a positive (as a means of quality assurance in the sense that the appointment is not permanent), or as a negative (in the sense that long term arrangements are not guaranteed).

Lifestyle Considerations

Age restrictions

A retirement village scheme is, by definition, established for retired persons.

Strata schemes, too, can be limited to occupation by retired persons, independently of the RV Act: A restriction under section 6 and 6A of the ST Act may limit the use of strata titled lots to occupation only (or predominantly) by retired persons. A ‘retired person’ has an equivalent meaning under both the RV Legislation and the ST Act.

Such a restriction may be complemented with suitable strata by-laws.

Rules and controls on behaviour

Under the RV Code, an administering body must establish a set of residence rules covering the rights and obligations of village residents. These can later be changed or revoked by the administering body, or by a special resolution of the residents (with the administering body’s agreement). The administering body, therefore, has control over the residence rules of a village.

In a strata scheme, by-laws apply. These are often a combination of the standard bylaws found in schedules to the ST Act, and additional by-laws made under the ST Act. Strata by-laws deal with matters such as management, control, use and enjoyment of lots and common property. They can be changed by a special resolution at a general meeting of the strata company.

What will happen as a resident ages?

Whether a retired person lives in a retirement village or strata complex, certain common considerations apply when considering the future capacity to age in place:

  • Home care can be provided in either a retirement village or a strata complex, and a home care provider can reach a ‘preferred provider’ arrangement with an administering body of a retirement village just as it can with a strata company or strata manager.
  • A retirement village can be co-located with (i.e. developed adjacent to) a residential care facility, just as a strata complex can be. Importantly, there is never a guaranteed place in residential aged care – even where a residential care facility is owned and operated by the same organisation as a neighbouring retirement village.

Dispute Resolution

Dispute resolution is inevitably necessary in communal living arrangements.

There are various ways for a retirement village resident to resolve disputes with other residents or an administering body. The RV Code dispute resolution provisions focus on conferral and mediation.

Under the dispute resolution mechanisms in the RV Act, the SAT can make orders in respect of various retirement village disputes. There is also the option of a complaint to the Commissioner if an administering body’s conduct is in question.

Likewise, the SAT also has jurisdiction over strata title disputes relating to powers, authorities, duties, and functions under the ST Act or strata by-laws. The strata reforms strengthen these dispute resolution powers, giving SAT the ability to resolve disputes between a strata manager and strata company. SAT will also be able to make larger monetary orders and assist with enforcement of non-monetary orders.

Fees and Charges

Fees and charges in a retirement village typically fall into 3 categories:

  • On entry, an in-going entry payment referred to in the RV Act as a ‘premium’ (which, in a “lease for life” scenario, is not actually a purchase price per se);
  • recurrent charges throughout a resident’s time at the village and for a limited time thereafter (up to 3 months for contracts entered into nowadays); and
  • on departure, an exit fee (often called a DMF) along with any other agreed charges such as refurbishment costs and marketing costs.

On the other hand, purchasers of strata titled units pay a true purchase price (in exchange, receiving title to their unit). They are subsequently charged contributions levied by the strata company.

On vacating, a strata lot owner would not expect to pay a DMF of the kind payable by a typical retirement village resident. If their unit remains vacant for an extended period, they will continue to be liable for any levies. They do not cease to become chargeable in the same way as recurrent charges in a retirement village.

What is best for a village owner and its residents requires an analysis of the lifetime cost, against the service levels, amenities and nature of accommodation provided.


Having regard to the key factors discussed in this article, it is feasible that two communities could be crafted to achieve a similar end product, even if one were a retirement village and the other a strata complex.

Whilst there will necessarily always be differences between a retirement village and a strata complex we would argue that it is possible to create attractive and viable retirement communities without the burden of the RV Legislation.

In some respects, a retirement village may be preferable to a strata complex and vice versa, depending on whose perspective is considered. The key is to understand the differences and to be clear about one’s target market:

  • It may be that for residents who are concerned with consumer protection, and seek beginning-to-end accountability (from construction pre-sales through to ongoing management into the future) a retirement village run by an administering body who is trusted, experienced and has a soundtrack record, might be best.
  • For residents who seek ownership of a property asset and are happy to have arms-length management arrangements (with contractually-appointed managers who may be replaced from time to time) an over 55’s strata complex may be desirable.
  • From an owner/operator perspective, an organisation who has a history and reputation embedded in retirement village operations may have a philosophical belief in the traditional retirement village model and all that goes with it.
  • A developer from outside the industry, however, might be more inclined to try over 55’s strata-titled developments, preferring to hand over ongoing management to a strata manager – ideally, one who has expertise working with communities of retired persons.

Retirement villages and over 55’s strata schemes are not the same, and nor are their respective legislative frameworks. Understanding the similarities and differences is key to creating attractive and viable retirement communities – whatever the chosen model.

David McMullen

David McMullen