What is an ORA

What is an ORA?

An Occupation Right Agreement (ORA) is a legally binding contract between a prospective resident and a retirement village operator in New Zealand. This agreement grants the resident the right to occupy a specific unit—such as a villa, apartment, or studio—within the village. Unlike traditional property ownership, entering into an ORA does not confer ownership of the unit or the land; instead, it provides a license to occupy the premises.

Key Components of an ORA

• Capital Contribution: The initial payment made by the resident to secure the right to occupy the unit. This sum is typically substantial and forms the basis for calculating other fees, such as the Deferred Management Fee (DMF).
• Deferred Management Fee (DMF): A fee that accrues over time, often reaching up to 20-30% of the capital contribution. The DMF is deducted from the amount refunded to the resident or their estate upon termination of the agreement.
• Weekly Fees: Ongoing charges covering village outgoings, maintenance, and services. The structure and potential increases of these fees should be clearly outlined in the ORA.
• Maintenance Responsibilities: Clarification of which maintenance tasks are the responsibility of the resident versus those of the operator. This includes specifics about interior and exterior upkeep.
• Termination Conditions: Circumstances under which the ORA can be terminated by either party, along with the process for refunding the capital contribution, minus applicable fees.

Legal Protections and Requirements

The Retirement Villages Act 2003 mandates that all ORAs include certain disclosures to protect residents. Prospective residents must receive:

• Disclosure Statement: Details about the village's ownership, management, financial position, services, and facilities.
• Code of Residents’ Rights: An outline of the basic rights afforded to residents, ensuring they are treated with respect and have access to necessary information.
• Retirement Villages Code of Practice 2008: A document setting out the minimum standards for the operation of retirement villages, covering aspects like staffing, safety, and complaint procedures.

Prospective residents are required to obtain independent legal advice before signing an ORA to ensure they fully understand the terms and implications of the agreement. This legal counsel helps clarify any complex terms and confirms that the resident's rights are protected.

Accessing ORAs and Disclosure Statements

All ORAs and Disclosure Statements are registered with the New Zealand Companies Office and are accessible online. Prospective residents can review these documents to gain a comprehensive understanding of the terms associated with a specific village.

Making an Informed Decision

An Occupation Right Agreement is central to securing residence in a New Zealand retirement village. It is imperative for prospective residents to thoroughly review the ORA, understand all associated fees and responsibilities, and seek independent legal advice to ensure that their rights and interests are safeguarded.