Max: Are folks expected to sign some kind of legal agreement/contract before they move into a retirement facility?
Althea: Yes. The type and details of the contract will vary depending on the type of facility. For example, it could be a month-to-month rental agreement or a continuing care residence agreement that you would sign with a buy-in community (a continuing care retirement community where you pay a large buy-in fee) or an actual equity purchase where you buy the unit like any other real estate purchase. These agreements are usually fairly lengthy and complicated.
Max: Is there a standard contract or does each facility customize theirs?
Althea: While the Dept of Social Services has oversight over the contracts, all facilities will have customized their own contracts. These contracts will cover a variety of items that you should be aware of prior to signing, such as: The services provided; Optional services the community will charge you for and how the fees for the services are calculated; What triggers a move into a higher level of care and who exactly determines when you need to make that move.
M: What's the difference between a typical month-to-month assisted living-type contract and one for a community which has a large upfront buy-in cost?
A: A month-to-month rental agreement may be less complicated than continuing care residence agreements that you will sign in communities with large buy-in fees or unit purchases. The continuing care residence agreements may have stipulations on what portion, if any, of the upfront buy-in you or your heirs may receive after you leave the community. These agreements may also have rules for when you or your heirs would receive that money, such as when the unit is sold or after a specified period of time. Month-to-month rental agreement may require that you give notice before leaving the community, such as a 30-day notice.
M: Are there items or provisions a senior should pay special attention to prior to signing?
A: Some of the things you should look at are: Historical fee increases over the past five years and how these fee increase are determined; For married couples, what happens if one person needs a higher level of care and the other person does not, or what if one person passes away and the other survives. Do one or both people need to relocate to a higher level or care? If someone is relocated, how are the fees determined in that situation? Other important provisions to consider are whether the unit subject to property taxes and tax increases and who will pay them. If you are purchasing a unit, who pays the property taxes and fees when the resident vacates? Often, the owner remains responsible for all or a portion of the monthly fees and property taxes until the unit is sold.
M: Is it necessary to hire an attorney to review the contract prior to signing?
A: While you are not required to hire an attorney to review your agreement, it is a good idea to do so to protect you as a consumer. Before signing any agreement, especially one for a major purchase or investment such as a move to a senior living community, you will want to know what the terms of your agreement are. Most people are not familiar with the terms or senior living agreements, so it is prudent to consult with someone who not only has the legal skills, but direct experience with senior living contracts.
Althea T. Kippes is an attorney, gerontologist, and real estate broker who assists her clients with the legal aspects of senior living, including identifying ideal retirement communities, understanding critical contract terms in senior living contracts, and avoiding costly mistakes. Althea will be one of the featured speakers at the free Senior Living Options educational seminar on February 22nd, Friday 1-2:30pm at the Mitchell Park Community Center in Palo Alto.