Assisted Living Resident Agreements: Key Points to Know Before You Sign

Like change of any kind, moving into a new community can be both exciting and overwhelming. Whether you are dealing with the emotion of leaving a community that you have lived in for a long time, or experiencing changes in your health, moving to a new community can be difficult but provide incredible benefits. One of the most daunting tasks in transiting to an assisted living community is the signing of the resident agreement. Similar to a rental agreement or lease on an apartment, the residency agreement governs cost, services, and termination options for your stay in the community. We recommend that you contact an elder law attorney who is knowledgeable with these types of communities and agreements if you want assistance in better understanding the agreement

What is a Resident Agreement?

The Resident Agreement will cover all the terms that you and the provider have agreed to, such as Costs, Services, Discharge Policies, Grievance Procedures and your Rights and Obligations as a Resident.

A resident agreement has many specific sections, but they can be grouped for the sake of discussion into several topics. They are:

• Accommodations and Term. Deals with the actual unit being rented and the duration of the residency agreement.
• Fees, Core Services and Meals. Sets the fee schedule and identifies both included services and those subject to extra cost. This topic also discusses the “what, when, where, how” of meal service.
• Residency Qualifications. Discusses the qualifications required to be admitted to the community and maintain residency.
• Maintenance and Use. Communicates the service levels regarding building and unit maintenance, and identifies how the rented unit is to be (and not be) used.
• Termination, Legal “Stuff” and Arbitration. Sets how the agreement can be terminated and includes a lot of standard legal language. One important item discussed in this section is arbitration.

A. Residency Qualifications

This section is designed to protect both you and the living community. Here are some things you should be aware of:

• Review the minimum requirements carefully and make sure you meet these requirements. It’s important to be honest with yourself, as you don’t want to be in a situation where you’ve violated the agreement within the first week.
• Does the contract state what happens in the event you cease to meet these requirements? For example, will you be forced to move out and how far in advance does the living community need to notify you before you are forced to leave? Is there an appeal process to dispute whether you meet the requirements? How does that process work?
• Some living communities may require the presentation of medical records or results from a recent medical exam. Make sure the contract ensures the results of the exam are kept confidential except as released by you.
• Some living communities may require a pre-admission assessment in which a nurse and/or community executive conducts an interview and/or medical exam. Make sure to understand in advance the purpose of this exam and what will be covered.
• Be sure you understand who is able to speak on your behalf if you are unable or do not want to be the one advocating for your rights. Can you name a son/daughter, another loved one or even an attorney to represent your interests?

B. Term of Residency Agreement

This section of the contract defines the terms of the agreement and what happens when the agreement ends or your stay is terminated. Several things may be defined: the resident’s rights to ownership (typically, there are none), the length of the agreement, and the “what to do” at termination and with personal property. Things to be aware of in this section include:

• The agreement should preferably be a month to month commitment. Be cautious of longer agreements, especially if you have no termination rights in the event you are no longer able to live there. For example, if you have a one-year lease and you have to leave after six months because of illness, will you have to pay the remaining six months even if you no longer occupy the unit?
• Is there an auto-renewal? In the event you agree to a term longer than monthly, ensure there is no auto-renewal clause. As you may imagine from its name, auto-renewal automatically renews the contract for a specified period of time, unless you notify in writing your desire not to renew. If the term is monthly, then auto-renewal typically doesn’t matter as much as you’ll only have 30 days exposure financially.
• How often can the living community management change or increase the fees? Usually, there is a notice requirement in the contract that must be followed prior to any rate increase. However, if your medical condition changes significantly and you need additional care, the provider may increase the charges without adhering to the notice period.
• Limit obligations at vacancy. Whether it is due to health or death, inquire about your obligations in the event you are no longer able to reside in the community. Some examples include: How long are you (or your family/estate) obligated to pay after you have left? How long do you have to remove your belongings?
• Reasonable notice for showings. Most agreements include a statement or clause that describes how and when the living community management can “show” your apartment to potential renters if you will not be continuing to rent the unit. Ensure you are provided reasonable notice before the living community shows your unit to a potential resident. 24-48 hours is reasonable in most situations. Try to avoid anything that doesn’t require reasonable notice to you, as this can be extremely stressful.

Tip: Remember, a “significant change” in your health status does NOT include day-to-day variations in health status, functioning or behavior, nor does it include short-term illness, such as a cold or the flu, unless these conditions continue to occur.

C. Termination or Leaving the Living Community

The termination section of the contract defines in what situations the contract may be terminated, what money is refunded after termination and what sections of the agreement continue after the end of the contract. Often the agreement defines termination rules in a variety of scenarios, including: termination by the resident, termination by the community and termination in the event of closure.

Some things to be aware of:

• What are the resident’s termination rights? What time-frame is required of you to give them notice of your decision to end the agreement? How much advance notice do they need to give you if they decide to end the agreement?
• Is there a shorter notice period in the case of death or health reasons, such as admission to a hospital or the requirement for extended skilled nursing care?
• Ensure that you can terminate, by giving reasonable notice of your decision to terminate the agreement and without reason.
• What are the living community’s termination rights? How much notice do they need to give you if they decide to terminate the agreement and potentially force you to leave?
• What is the appeal procedure if you feel you are being terminated or evicted unjustly?
• The living community may also terminate contracts in the event they lose their license or close. What happens in this case?
• What happens when the contract is terminated?

1. 1. 1. How long does your loved one have to remove your belongings?
      2. What should you expect in terms of refunds, e.g. security deposits, community fees or unused monthly fees?
      3. What is the timeframe for the living community to issue these refunds?

      D. Security Deposit or Community Fee/Deposit

      Often, the living community will require that a security deposit or “community fee” be paid in advance of your moving into the living community. It is important that you understand what the purpose of this fee because the living community will have different obligations to you or your estate depending on how this fee is legally classified.

      Security Deposits – A security deposit is usually defined as a dollar amount that is intended to cover damage to the premises (living unit) beyond normal wear and tear. A security deposit may also be used to cover rent if a tenant should fail to pay.

      • Landlords, or in this case the living community management, have specific rules that they need to follow if the deposit is legally classified as a security deposit. In Massachusetts, a security deposit remains the property of the tenant until a landlord is authorized to use it. Additionally, the landlord (living community) must:
      1. 1. 1. Keep the security deposit in a separate, interest-bearing bank account.
            2. The account must be clearly identified as continuing funds that do not belong to the landlord and are being held in trust (escrow) for the tenant.
            3. Within 30-days of depositing the security deposit, the landlord must inform the tenant in writing of the name and location of the bank where the deposit is being held as well as the amount of the deposit and the account number.
            • The law provides for penalties if the security deposit is not properly managed.

            Community Fee/Deposit – This is usually a one-time fee that is paid prior to moving into the living community. Sometimes this fee is paid to “reserve” your unit and typically, it is not applied to any other charges.

            • Is the Community Fee/Deposit refundable? Make sure you understand how this fee can be used, if at all, for your benefit.
              1. 1. 1. Can it be applied to additional services (such as nurse’s aides or home health aide services)?
                    2. Can it be used to pay for rent, if you otherwise don’t have enough money to cover your rent?
                    3. Will all or a portion of it be returned to you or your estate (after you died) and how does the repayment work? For instance, some living communities require that the unit be rented to a new tenant before any of the Community Fee is refunded. In other living communities, the Community Fee may be non-refundable.
                    4. Under what circumstances can the living community use your community fee/deposit?

            E. Other Legal “Stuff”

            Most contacts have several pages of standard legal language. Most of the time, these sections have no impact on the substance of your agreement. While much of this section is standard legal language, it does make sense to alert you to a few specific areas that may be included:

            • Costs and attorney’s fees. Be aware if the contract makes you responsible for costs and attorney’s fees related to action that may be taken to enforce the contract.
            • Insurance and liability. Most communities will require the resident to maintain their own insurance to cover personal property. You’ll likely be unable to change this, but you should get insurance if it is not provided.
            • Assigning or subletting. Most agreements will not allow you to sublet the unit to someone else.
            • Arbitration. Arbitration is a clause put into contracts so that disagreements are resolved by a third party and not in court. Arbitration can be conducted anywhere, and many companies would like to have arbitration close to their corporate offices. In the case of a residency agreement, you want to make sure the arbitration location is near your home. You don’t need to incur additional expenses should the need for arbitration arise.
            • Entire agreement. Make sure the residency agreement presented to you represents the entire agreement. You have a right to review all auxiliary materials referenced in the contract, including documents, handbooks or verbal representations.

            Residency Agreements can be complicated and it is important that you fully understand the benefits, entrance requirements and limitations of moving to a new community that provides you with assistances as you age. We would recommend that you work with an elder care attorney who understands these types of living communities and your needs as an aging adult. Your day-to-day options and contentment in Assisted Living are impacted by Residency Agreements as well. Read our article How A Residency Agreement Impacts Life in Assisted Living to learn more about living accommodations, visitors, decorating, and services in Assisted Living.