Understanding Residency Agreements, Part 6 – Termination and Other Legal Stuff

The purpose of the Understanding Residency Agreements series is to provide you with a working knowledge of the contract you’ll likely face should you choose assisted living for your loved one. The contract we’ll use as an example is from a major corporate assisted living company.  Many of these contracts can be found by searching Google, but I believe this agreement serves as a good example.

Part 6, the final part of the series, will discuss termination and other relevant legal sections.

XI. Termination

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.  Our sample 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.

Most communities will negotiate little on this section of the agreement, as it defines much of how their business is operated.  You should still be aware the rules in each scenario so that you can plan accordingly.  It never hurts to ask what can be changed negotiation, so give it a shot!

Some things to be aware of:

  • What are the resident’s termination rights?  What notice is required?  Thirty days is fair, but don’t let it be more than that, as you will lose your flexibility.  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, with notice, without reason.

So what are the community’s termination rights?

  • Ensure the community can only terminate for cause rather than for any reason.  Cause typically includes things like failure to pay rent, failure to meet residency requirements, intentional damage of the facility, being a danger to other residents, etc.
  • In the event you are under threat of termination, attempt to negotiate a period of time to remedy the situation.  Most contracts allow for thirty days to remedy contractual issues.
  • What is the appeal procedure if you feel you are being terminated or evicted unjustly.
  • The 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?

  • How long does your loved one have to remove his or her belongings?
  • What should you expect in terms of refunds, e.g. security deposits, community fees or unused monthly fees?  Depending on the amount of the community fee that was prepaid, you may be entitled to some type of refund.
  • Within how many days is  the facility required to issue these refunds?

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.  The details of these sections are also outside the scope of the Understand Residency Agreements series.  However, it does make sense to alert you to a few “gotchas” below:

  • Costs and attorney’s fees. If there is a provision that resident shall bear all costs and fees (including attorney’s fees) to enforce the agreement, try to remove that language.  Attorney’s fees can become quite costly and these fees should be part of the facility’s cost of doing business.
  • Insurance and liability. First, 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.  Second, the community will likely try and disclaim all liability.  You want to try and negotiate this such that the community is at least responsible where the community or its staff has acted intentionally, recklessly or with gross negligence.
  • Assigning or subletting. Most agreements will not allow you to sublet the unit to someone else.  However, in the event the community does this, you may still be responsible financial.  In other words, make sure you protect yourself in the event of subletting so you are not on the hook for damages, rent and other expenses.  Read this section carefully.
  • 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.  That way, 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.

That concludes the Understanding Residency Agreements series.  As mentioned during the first part of the series, you should also have an attorney review any agreement you sign, especially one that has such large financial and emotional implications.  Our hope is that this series will empower you to be a more educated negotiator and have a more fruitful discussion with your attorney.

Relevant Articles:

  • http://www.regencypk.com Nestor Eligio

    As a person working in the field most agreement that I’ve seen are very reader friendly and understandable to the client. Most company add on certain condition like a resident handbook that ties into the resident agreement. Which can be used to terminate and agreement if the resident or family violate the conditions in the resident handbook. It is important for families making a decision into assisted living to ask for a copy of the resident agreement & resident handbook prior to singing the contract. I always give it! no problem.

  • http://www.basicamericancomfort.com/2008/12/02/understanding-assisted-living-residency-agreements/ Understanding Assisted Living Residency Agreements | Basic American Comfort

    [...] Click here for full article and link to part 1 thru 5 of this informative series: [...]