Moving into residential aged care is one of the most significant — and complex — financial decisions older Australians face. The residence agreement governs accommodation costs that can exceed $500,000 as a lump sum (Refundable Accommodation Deposit or RAD), ongoing daily fees, care quality expectations, and exit conditions. These agreements are signed during an extremely stressful time, often when families are making urgent decisions after a hospital stay. Understanding the financial and legal terms before committing is essential to protecting the resident's rights and financial interests.
What is a Residence Agreement?
A residential aged care agreement is a contract between a resident (and often their family/representative) and an approved aged care provider. Under the Aged Care Act 1997 (and the forthcoming new Aged Care Act), providers must enter into a written agreement before or shortly after a resident moves in. The agreement covers accommodation payments (RAD, DAP, or a combination), basic daily fees, means-tested care fees, additional services, room type, care obligations, and exit/refund terms. The agreement must comply with the Aged Care Act and the User Rights Principles.
Red flags to watch for
Residents can choose to pay accommodation costs as a lump sum RAD, a daily payment (DAP), or a combination. Paying a large RAD ties up capital that could be earning income. The provider may prefer the lump sum, but you have the legal right to choose your payment method.
Beyond the base fees, providers often charge for items like premium meals, foxtel, hairdressing, or outings. If these aren't clearly listed with prices, costs can escalate without the resident's informed consent.
Under the Aged Care Act, RADs must be refunded within 14 days of the resident leaving or passing away. If the agreement doesn't reflect this, or if the provider has a history of delays, this is a serious concern.
Residents have the right to leave at any time. A provider cannot impose punitive notice periods or withhold RAD refunds because notice wasn't given. Any such clause likely conflicts with the Aged Care Act.
Since 1 July 2019, all aged care recipients must be given the Charter of Aged Care Rights. If the agreement doesn't reference the Charter, the provider may not be meeting their obligations under the Quality of Care Principles.
Your legal rights
The Aged Care Act 1997 (Cth) and its associated principles (User Rights Principles 2014, Quality of Care Principles 2014) set the legal framework. Residents have the right to: choose their accommodation payment method (RAD, DAP, or combination); receive a RAD refund within 14 days of departure (s. 52M); access the Charter of Aged Care Rights; make complaints to the Aged Care Quality and Safety Commission; and have their agreement comply with the legislated requirements. The Aged Care Quality and Safety Commission can investigate providers and impose sanctions. Residents can also access the National Aged Care Advocacy Program (OPAN) for free, independent support.
Questions to ask before you sign
- 1Can I see a complete breakdown of all fees — base daily fee, means-tested fee, RAD/DAP, and all additional service charges?
- 2What is the exact process and timeline for RAD refund upon departure?
- 3What happens to my RAD if the provider goes into administration?
- 4What care services are included, and what triggers a reassessment of my care needs?
- 5How do I lodge a complaint, and what is the provider's internal complaints process?
- 6Can I see the provider's most recent quality assessment report from the Commission?
Disclaimer: This guide is for educational purposes only and does not constitute legal advice. Contract law varies by jurisdiction and individual circumstances. Always consult a qualified legal professional before making decisions based on this information.