The amended RV Act

Western Australia’s amended Retirement Villages Act 1992 (WA) introduces a formal separation between capital maintenance and capital replacement, marking a significant shift in financial and governance obligations for operators.

Structural separation meets practical complexity

Operators must now:

• Prepare a five-year capital works plan.
• Establish a Capital Maintenance Fund (CMF) in a separate ADI account.
• Use recurrent charges solely for maintenance—defined as servicing, repair, and upkeep of capital items.

Capital replacement, when an item is no longer practical to maintain, must be funded from:

• Entry or exit payments specifically allocated for replacement, or
• The operator’s own resources.

Classification challenges remain: Despite statutory definitions, the boundary between maintenance and replacement is often blurred. Other jurisdictions (NSW, QLD) have seen tribunal disputes over resurfaced roads, air-conditioning units, and lift upgrades. WA operators should anticipate similar scrutiny. Clear documentation, budgeting discipline, and proactive resident communication are now essential.

No more blended reserves

Legacy practices such as:

• Mixed-purpose reserve funds; or
• Ad hoc budget transfers,

are no longer permitted.

Misuse of the CMF—even inadvertently—may attract financial penalties. The CMF must be used exclusively for qualifying maintenance expenses. Transfers to cover operational shortfalls or capital replacements are explicitly prohibited.

Risk reallocation: operators now carry the burden

Operators now bear the financial risk of deferred capital replacement. Recurrent charges cannot be used as a buffer. If the CMF is over- or underfunded:

• Residents (via special resolution); or
• The Commissioner,

may apply to the SAT for top-ups or refunds. This introduces new scrutiny over both over-collection and under-provisioning.

Need help preparing?

We are advising WA retirement village operators on how to prepare for these reforms. Our support includes:

• Reviewing fund structures, budgets, and residence contracts; 
• Identifying required changes ahead of commencement; and
• Providing compliant template documents once regulations are released.

 Contact Amber Crosthwaite to join the waitlist for documentation support.

Disclaimer

The information contained in this publication does not constitute legal advice and should not be relied upon as such. You should seek legal advice in relation to any particular matter you may have before relying or acting on this information. The Lavan team are here to assist.