Importance of a properly signed resident agreement

The importance of having a properly signed resident agreement is often overlooked by aged care providers.

Ensuring a resident agreement is signed by the right person is more of a risk management than a compliance issue under the Aged Care Act. Under the Act, a provider must:

• enter into an accommodation agreement with a permanent resident; and
• offer to enter into a resident agreement with each resident.

Having a properly signed agreement is critical for ensuring the provider can enforce its contractual rights.

To take an obvious example, recovering unpaid fees or RADs can be a complex and ultimately futile process without a properly signed agreement.  While the provider has rights to charge fees and a RAD under the Act, a court considering awarding judgment will look for a signed agreement that supports this right.

Having a signed agreement is also critical to establish other contractual rights that sit outside those imposed by the Act. Some examples of rights that arise under the resident agreement, not the Act are:

• the right to charge interest on late resident fees or additional services fees;
• the right to charge additional services fees;
• the right to transfer an aged care business to a new provider; and
• the obligations for residents to comply with behavioural rules eg under the provider’s Rules of Occupancy.

Attempting to enforce such provisions without a contractual right to do so is challenging. However this type of conduct could also have consequences such as constituting misleading and deceptive conduct.

The most obvious mistake providers can make is not obtaining a signed agreement. However another common mistake is providers relying on “next-of-kin” to sign agreements. Next-of-kin do not have the authority to make these types of decisions.

The only representative with full legal authority to sign a resident agreement on behalf of a resident is a guardian with the power to make decisions about a person’s accommodation and the services they receive. However, a resident agreement should also be signed by a power of attorney with financial decision-making powers or an administrator or financial manager.

For providers, having the agreement signed by the guardian and a financial power of attorney/administrator is ideal.

However, as a bare minimum, the agreement should be signed by a person with the power to make decisions about finances to ensure the provider does not face an argument that the agreement is not enforceable if the fees/RAD are not paid.

In summary, we recommend that providers:

1. Have the resident agreements signed by the financial power of attorney/administrator at a minimum and preferably by the guardian also.
2. Keep a copy of evidence that the person has the right to sign. This may be a copy of the power of attorney/VCAT appointment.
3. Check the person has the power to make the relevant decisions. A power of attorney (medical) is not sufficient. The person needs authority to make financial decisions at minimum and preferably accommodation decisions also.
4. If an agreement has not been signed by the relevant person, a copy should be sent as soon as possible and evidence kept. This will give you grounds to argue that the person has impliedly accepted the agreement should the agreement be challenged at a later date.

If you have any issues with your resident agreements, please do not hesitate to contact Anita Courtney on (03) 8602 7211 or Victor Harcourt on (03) 9609 1693.