While protocols are not legally binding, there is an expectation that they will be applied.
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1. You must be clear about whether the residence contract permits reinstatement, refurbishment, neither or both; and about whether the outgoing or the incoming resident is liable for the resident’s share of the cost.
2. If refurbishment is permitted, it is good practice to promote awareness among residents and the residents’ committee of changing standards of refurbishment that apply in your village.
3. As soon as practicable after you receive advice of the resident’s intention to vacate or their death, it is good practice to consult with the resident or the resident’s legal representative (whether the resident’s attorney, executor or administrator) about measures to make the unit more marketable, such as reinstatement or refurbishment.
If the resident has died, tactfully explain to the resident’s family that delays will be reduced if probate is obtained, or an administrator is appointed, as soon as possible.
4. It is good practice to detail in writing to the resident or their legal representative:
- whether you propose reinstatement or refurbishment
- the contractual basis for the proposed works (and include a copy of any general refurbishment policy previously advised to residents)
- the expected completion time (which should normally be within 90 days of engagement of the contractor).
If the contract only provides for reinstatement, any refurbishment must be agreed with the resident or their legal representative.
5. If the resident or their legal representative believes they would be better off if no works were done, your options include:
- explaining the reasons why they would be better off
- explaining how the works will benefit the village
- considering how you could proceed with the works in a way that minimises any loss for the resident
- considering contributing to the cost.
6. It is good practice to discuss with the resident or their legal representative the process for obtaining quotes and a contractor, unless there is either:
- a general, competitive tender process in place that is known to residents
- agreement that the works are to be carried out by the contractor who normally carries out maintenance for the village.
7. It is good practice to:
- keep the resident informed of the progress of the works, including the possibility of delays and cost overruns
- deal with any significant delays or cost overruns as soon as they arise and discuss them with the resident or their legal representative
- consider alternatives when significant delays or cost overruns occur, including a time to discuss the pros and cons of allowing the resident or their representative to take over control of the works (including discussing health and safety requirements)
- provide a fully itemised account for the works (and where you are entitled to add on a percentage for supervision that is unreasonable, consider, instead, charging only on the basis of actual time spent on the job and your normal hourly rate).
- The need for, the standard of and the cost of the proposed works
- Whether the residence contract entitles refurbishment or reinstatement
- The process for obtaining quotes and a contractor
- Accounting for the cost.
‘Reinstatement’ refers to the repairs necessary to bring a unit to the condition it was in when the resident took occupation; ‘refurbishment’ refers to works that improve the unit beyond that level.
In most cases, you as the manager, and the resident, have a shared interest in getting the unit in the best possible condition for re-leasing or resale. This may speed up the re-lease or resale, maximise the ingoing contribution/sale price, and maximise the resident’s exit entitlement.
However, in some cases, the resident may prefer the unit to be re-leased/re-sold ‘as is’ or with minimal improvements because they believe that:
- the refurbishment will not speed up the re-leasing/resale
- the cost of the refurbishment will outweigh the benefits of a quicker re-leasing/resale
- any higher ingoing contribution/sale price obtained by the refurbishment will be offset by:
- the cost of the refurbishment
- the higher ongoing charges incurred because of the delay in putting the unit on the market
- the increased deferred management fee (where it is a percentage of the ingoing contribution/sale price).
Some residents may not understand that their residence contract entitles you to refurbish their unit, or they may expect that they only need to pay for reinstatement.
Where you want to use your own contractor, the resident may ask you to obtain alternative quotes or may believe that the work can be done quicker and cheaper by their own contractor.
Such concerns may be magnified where you:
- receive a percentage of the cost for supervision
- do not allow prospective residents to inspect the unit until the work is completed, or
- are using one contractor to reinstate/refurbish multiple units in the village.
Problems can also arise if there are delays in completing the work and/or if actual costs exceed the quote.
As manager, you will want a uniform and appropriate standard for units for re-leasing/resale, to:
- accelerate their re-leasing/resale (including to recoup the reinstatement/refurbishment costs you have been holding)
- maintain the required standard of the village
- ensure its ongoing marketability.
You may prefer to use the contractor of your choice because you know:
- they are qualified and insured
- they understand the health and safety laws you are responsible for
- the standard of work you will get
- they are contracted at head-office, multi-village level.
You may be reluctant to allow the resident to arrange the contractor because you fear delays arising from ensuring that your specifications are met and from the possibility of re-doing unsatisfactory work.
The issues involved in refurbishment or reinstatement can sometimes arise at a difficult or emotional time for the resident and their family. The amount of the ingoing contribution obtained and the speed with which the unit can be re-leased are critical to the resident’s ability to relocate or their family’s capacity to settle the estate.
This protocol supports better informing residents about these matters to help reduce disputes and, in some cases, to balance your interests with those of your residents, or their families.
The residence contract is the document that governs your powers to determine the works that may be carried out, the process for undertaking the work and who is liable for the cost. If the contract only provides for reinstatement, any refurbishment must be as agreed with the resident.
During the resident’s life, privacy considerations require you to deal only with the resident, legal representative or power of attorney. If there is a power of attorney, you should check what powers it gives the holder before you discuss anything with them.
The death of a resident automatically terminates any power of attorney. If the resident left a will, the executor becomes the resident’s legal representative. If the resident did not leave a will, the person appointed by the court as the administrator of the estate becomes the resident’s legal representative.
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