This insight explains the purpose of a statutory charge under the – Retirement Villages Act 1999 (RV Act) and how it operates. Generally speaking statutory charges only relate to residents who do not hold a leasehold interest or a freehold interest in an accommodation unit (s114) – e.g. licences or a simple right to occupy.
Establishment of a charge
Immediately the Department of Housing and Public Work (DH&PW) registers a retirement village scheme, a statutory charge is created over the retirement village land (s116) except where the department decides it should not apply because the operator:
- is established for a religious, charitable or community purpose; and
- is of good standing in operating retirement villages; or
- because of other exceptional circumstances the scheme operator provides another security to secure the rights of a resident under a residence contract.
Where a statutory charge is created, it must be registered in the Land Titles Registry (s116(4), and appear as a registered notation on the land title for the retirement village land. The registered charge may be seen by any interested person searching the title for the village land.
What is a statutory charge?
A statutory charge is a legal mechanism whereby, under an Act, a legal interest in land is created at the time, and for the purposes, stated in the RV Act – usually to provide a mechanism to enforce an action or to provide a security. Statutory charges are not specific or unique to the establishment and operation of retirement villages. It is important to appreciate that it is not a ‘cost’ or a ‘fee’ imposed on a person by the RV Act.
As an interest in land is created, the interest may be registered on the land title over which the statutory charge was created. As such, all persons who have an interest in the land affected, or otherwise specified in the Act, are also afforded the protections, rights and remedies provided by the registering Act.
Purpose of statutory charge under the RV Act
Residents who just have a licence to reside in/over an accommodation unit (rather than holding a freehold interest or a registered leasehold interest in their accommodation unit) require security more than that provided merely by the licence itself. Therefore, the RV Act (s118) provides that the statutory charge secures each resident’s right to:
- live in their unit,
- use the village’s facilities, and
- get paid exit entitlements when they leave the village.
Generally speaking, a registered statutory charge created under the RV Act (s119) has priority over other registered securities, for example, a registered mortgage. In these cases, no matter when a mortgage was registered, the registered statutory charge has priority over the mortgage, which means an exit entitlement would be paid before any claims made by a mortgagee.
Enforcing a statutory charge
The RV Act (s120) provides that a resident who is denied a right mentioned above may, in certain circumstances, apply to the District Court for an order that the retirement village land be sold. Where relevant, other persons including other residents who have sufficient interest, may be joined as a party to the application. To provide further protection and security for residents who have the benefit of a statutory charge, the RV Act allows the charge to be extinguished or released in only very limited circumstances.
For more information visit – business.qld.gov.au