Consumer NZ Backs Calls For Court Action Against Retirement Village Operators’ Unfair Contract Terms

Consumer NZ and the Retirement Village Residents Association are concerned retirement villages are ignoring warnings from the Commerce Commission about unfair terms in their contracts with residents. Both organisations are calling for the Commission to take further action.

Following complaints from Consumer NZ and the Retirement Village Residents Association (RVResidents), the Commerce Commission warned village operators some of their care claims and contract terms risked breaching the Fair Trading Act.

One term the Commission identified as potentially unfair allowed operators to charge residents for maintenance and repairs of chattels or fixtures within their units.

The Commission considered these terms likely to be unfair because the residents don’t have any ownership rights over their units, or the operator’s chattels, yet are expected to pay for maintenance and repairs.

Despite the Commission’s warning, most of Metlifecare occupation right agreements (ORAs) still allow the operator to charge its residents for maintenance and repairs.

After this was brought to RVResidents attention, it recently lodged a further complaint with the Commission, asking it to take court action. Consumer backs this call.

Jon Duffy, Consumer NZ chief executive, says living in a village under an ORA isn’t the same as owning a home because residents have no ownership rights, and in most cases, aren’t entitled to any capital gains when their units are sold.

“Even though residents don’t own the units, chattels or fixtures, they’re often responsible for the cost of maintenance, repairs and replacement of everything from heat pumps and blinds to light switches and power sockets.

“We think that’s completely unfair. Responsibility for repairing, replacing and maintaining operator-owned fixtures and chattels should fall on the retirement village.”

Residents don’t want to make a fuss

Di Sinclair, RVResidents national vice president and complaints coordinator, says the organisation receives ongoing complaints from Metlifecare residents about having to foot the bill for maintenance and repairs.

“In one case, an elderly woman was charged $562 for a draft strip to close up a gap between her garage door and some uneven concrete outside.”

Yet, according to Sinclair, under the Retirement Villages Code of Practice 2008, which sets out the obligations operators must meet, Metlifecare would be responsible for fixing the problem with the garage door, particularly as it was initially caused by the concrete beyond the woman’s villa.

“The operator must keep the building and equipment in good working order. A garage door, particularly one attached to a unit, is part of that obligation,” Sinclair says.

The resident fought the charge, and the operator backed down. It said it would pay half the repair cost and credited her account with $281. The resident reluctantly agreed to pay the reduced sum.

“Residents are afraid of repercussions if they ‘make a fuss’, and they often feel they don’t have the emotional or physical strength to get into conflict with village management.

“It's not fair that they have to rely on advocates to enforce their rights,” says Sinclair.

Consumer urges the Commission to hold retirement village operators to account

RVResidents is asking the Commission to seek a court declaration that these terms are unfair.

Consumer’s Jon Duffy agrees with Sinclair – residents shouldn’t have to get advocates involved to get a fair deal. ORA terms should be fair from the get-go, but often, they don’t meet the mark.

“Unfortunately, there isn’t much residents can do if they think their village is relying on an unfair contract term – only the Commerce Commission can take action.

"This needs to change to ensure residents, and others facing unfair terms, are protected. In the meantime, we want to see the Commission give teeth to its warnings and take action to protect residents,” says Duffy.

“We support RVResidents’ call to action and urge the Commission to hold operators to account.”

Note:

Read the full article on Consumer’s website: How Metlifecare is ignoring the Commerce Commission’s warnings

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