Deferred Management Fees (DMFs)
Aslo known as Exit Fees
A Total Rip Off?
Purchasers of homes in a land-lease village are very likely to have included in their Site Agreements, a clause that requires them to forfeit a large percentage of their capital gains when they decide to sell and move out of the village.
Based on either the purchase or sale price of the home, the amount can be tens of thousands of dollars and is paid to the site owner even though the site owner has not contributed one cent to the upkeep or upgrade of the home.
MHOA has sent a submission to the Victorian State Government, requesting this abhorrent practice be ruled out, as is the case in other Australian states.
- This practice can lead to extreme financial hardship and leave the homeowner with insufficient funds to buy elsewhere or to enter an aged care facility.
- While the Residential Tenancies Act 197 Part 4A legislation states that all costs must be clearly identified in Site Agreements, there is no mention of DMFs in the legislation, leaving it open for the site owner to determine the amount that can be charged and the way in which it is calculated.
- If the DMF is based on the sale price of the home, the amount to be forfeited is completely unknown as it is impossible to know what the sale price of the home will be in the future, so it therefore cannot be disclosed in the Site Agreement.
MHOA is adamant that this unfair practice should be outlawed by the Government.
