It is not uncommon for aged care operators to receive a call like this:

‍"Mum is being discharged from hospital in two days' time. She has been assessed as needing rest home level care and she's too frail to return to her home. I've seen advertisements for the care suites at your village, and they look lovely – just what Mum needs! Can she move in on Friday?"

Residents requiring care often need to move into care suites quickly and in many cases might not be able to wait for their occupation right agreement (ORA) to be signed and/or for the 15 working day cooling off period to have expired, which poses challenges for operators.  

What is a care suite?

A care suite is typically a room or apartment within a retirement village that is occupied by a resident receiving aged residential care under a licence to occupy (ORA).

Care suite residents enter into two agreements:

• an admission agreement - for the provision of aged residential care; and
• an ORA - which is governed by the Retirement Villages Act (RV Act).

Care suite residents benefit from the protections given to residents under the RV Act; including the cooling off period and the requirement to receive independent legal advice before signing an ORA.  

Cooling off period

Residents have 15 working days to change their mind and cancel their ORA after the date that they sign it.

If a resident cancels the ORA during this cooling off period, they are entitled to a refund of all moneys paid plus interest, without deduction. There is no ability to contract out of the cooling off period.

For that reason, most operators do not allow residents to move into an independent living unit until the cooling off period has expired. However, some operators may be willing to take a more flexible approach for care suite residents who need to move into care urgently.

Care suite early occupation options

Where early occupation is requested for a care suite, operators generally have three main options.

Option 1 – Allow early occupation before the ORA is signed

The advantage for the resident is that they can move into the care suite quickly – before seeing their lawyer to have the ORA explained to them, before signing the ORA and before the cooling-off period expires.  The resident would still enter into an admission agreement at the time they move in.  

However, the risk for the operator is that the resident then delays signing their ORA, or decides that they don’t want to enter into an ORA at all.  This can cause issues if there is an outgoing resident of the care suite who is waiting for a new resident to settle their ORA before the termination proceeds can be paid to the outgoing resident.

Option 2 – Allow early occupation after ORA is signed but before cooling off period has expired

There will be a slight delay in moving into the care suite while the resident sees their lawyer and signs the ORA, but this option has the advantage for the resident of being able to move into the care suite relatively quickly and before the 15 working day cooling off period has expired.  

There is still a risk for the operator that the resident will cancel their ORA after they have moved into the care suite, but the operator has the certainty that the resident has accepted the terms of the ORA.  

For options 1 and 2, operators would usually add special terms to the admission agreement to provide for a premium room charge to be payable for the period that the resident occupies the care suite if the resident did not proceed with the ORA. If the resident proceeds with the ORA, no premium room charge would be payable because the terms of the ORA would apply instead.

Option 3 - No early occupation - cooling off period must have expired before resident moves in  

While this option has the advantage of providing the operator with more certainty, it could mean that a resident who needs care urgently might choose another village that will allow them to move in earlier, and care beds will remain empty for longer.  

Deferred Entry Payment

Another practical issue will arise if a resident needs care quickly but is unable to pay the full ORA entry payment at the time that they need to move into the care suite. This is most likely because they are waiting for sale or relicensing of their existing home.

The two main options available to operators wanting to allow occupation in this situation would be:

1. Partial payment - Allow a resident to make a part payment of the entry payment before they move in, with the balance of the entry payment payable once their property sells. In this scenario, the ORA would settle and commence on the date that the resident moves in and makes the part payment.
2. Temporary occupation as a premium room - Allow the resident to move in and occupy the care suite as a premium room until the resident sells their property and is able to pay the entry payment. In this case, the ORA would not settle until the property was sold and the entry payment was paid.

There are risks to operators in both these approaches as residents' family members may be overly optimistic about sale times and operators may still have obligations to former residents. However, these arrangements can benefit everyone, allowing residents to access appropriate care sooner, freeing up public hospital beds, reducing the number of empty bed days in the care suites, and enabling a new ORA to be entered as soon as possible.

How can we help?

Allowing early occupation of care suites and/or deferred or partial entry payment arrangements can be a complex area for operators as there are number of issues to consider, and there is no one-size-fits-all approach.  

Our retirement villages and aged care specialists can assist with:

• reviewing your care suite ORAs and admission agreements.
• drafting special ORA terms for early occupation and/or deferred payment arrangements (including different options for the timing of commencing the deferred management fee/DMF and for charging premium room rates).
• providing practical guidance on resident settlements.

If you would like support navigating these issues or tailoring your documentation and processes, our team is here to help.