Aged Care Resident Agreement Australia: What to Check Before Signing
The resident agreement is the single most consequential document in the aged care admission process. It binds the resident (or their legal representative) to a fee structure, service terms, and contractual obligations that will govern every day of their stay. Yet most families sign it under time pressure — often on the same day the parent moves in — without reading beyond the first few pages.
Here's what the agreement actually contains, which clauses warrant careful review, and what you can negotiate before signing.
The Two Agreements You're Actually Signing
Under the Aged Care Act, residential aged care providers issue two separate agreements:
The Service Agreement governs the care and daily living services the provider will deliver, the fees the resident will pay (Basic Daily Fee, Hotelling Contribution, Non-Clinical Care Contribution), and the terms under which services can change. This agreement carries a statutory 14-day cooling-off period — the resident can withdraw within 14 days of signing without penalty.
The Accommodation Agreement governs the room: the agreed room price, the payment method (RAD, DAP, or combination), the terms of the 2% annual retention deduction (for post-November 2025 residents), and the refund process on departure. A 14-day cooling-off period applies to these provider agreements. Review the accommodation terms and refund process carefully before signing.
Some providers combine both into a single document. Whether combined or separate, both sets of terms are legally binding, and the obligations within each are distinct.
Clauses That Warrant Careful Review
Guarantor clauses. Many providers include a clause requiring a family member to personally guarantee the resident's obligations — meaning the guarantor becomes liable for any unpaid fees, outstanding DAP balances, or even damage to the room. There is no legal requirement under the Aged Care Act for a resident to provide a guarantor. While a provider can legally refuse admission if you decline to sign the guarantee, Seniors Rights Service recommends either striking out the clause entirely or inserting conditional language that limits the guarantee to specific, defined obligations (such as the Basic Daily Fee only).
If you signed a guarantee under emotional pressure during a crisis admission, the enforceability may be challengeable on unconscionability grounds — but this is a legal question that requires advice from an elder law solicitor.
Higher Everyday Living Fee (HELF). The HELF replaced legacy "extra service" and "additional service" fees. It covers premium services: larger rooms, superior dining, enhanced lifestyle activities, premium furnishings. Key rules:
- The HELF cannot be a condition of entry. A provider cannot refuse admission unless the resident agrees to pay for premium services.
- The HELF must be negotiated in writing after the resident has entered care, not before.
- A 28-day cooling-off period applies to the HELF agreement.
- HELF charges cannot be covered by government hardship assistance.
If the agreement presents the HELF as mandatory or bundles it into the baseline service fee, that's a regulatory breach.
RAD drawdown authorisation. For residents who pay a RAD, the agreement may include a clause permitting the provider to deduct ongoing daily fees (BDF, Hotelling Contribution, NCCC) directly from the RAD balance. This is legally permissible but only if authorised in writing by the resident or their representative. If drawdowns are active, the RAD balance decreases over time, which simultaneously increases the unpaid accommodation balance and causes the daily DAP component to rise. Make sure you understand the trajectory before authorising.
The 2% retention rule. For residents entering care on or after 1 November 2025, the provider is legally required to deduct a retention amount of 2% per annum (calculated daily on the reducing RAD balance) for up to five years. The deducted amount is non-refundable on exit. This means the RAD is no longer 100% refundable — over five years, the provider retains slightly less than 10% of the initial deposit. The provider cannot ask the resident to top up the balance or increase the DAP to compensate. Confirm the agreement reflects these terms accurately.
Room transfer and clinical reassessment terms. What happens if your parent's care needs escalate — for example, a shift from low-care to high-care, or a dementia diagnosis requiring a secure memory support unit? The agreement should specify the process for room transfers, whether a new accommodation agreement is required, and whether the room price changes.
Exit and refund terms. When the resident permanently leaves (whether by transfer to another facility, return home, or death), the RAD refund must be paid within 14 days in the circumstances set by the legislation. The agreement should state the applicable statutory timing clearly.
What You Can Actually Negotiate
The daily fees set by Services Australia (BDF, Hotelling Contribution, NCCC) are not negotiable — they are determined by the means assessment. But several elements of the agreement are:
The room price itself. Published RAD prices are not fixed. Providers often negotiate, particularly for rooms that have been vacant for extended periods, for residents willing to pay the full RAD upfront, or for families committing to the HELF. The negotiation is most productive when you can demonstrate awareness of comparable pricing at other facilities in the area.
The HELF scope and cost. Because the HELF is optional and negotiated after entry, you can choose which components to accept. If the provider bundles items you don't want, request an itemised breakdown and opt out of specific services.
Guarantor terms. As noted above, you can strike out or limit the guarantor clause. The provider may resist, but the Act does not require it.
Our Paying for Residential Aged Care guide includes a Provider Contract Audit checklist covering every clause discussed here, plus a set of negotiation talking points for the accommodation agreement meeting.
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