Assisted Living Contracts: What to Read Before You Sign

The Document Most Families Don't Read Carefully Enough

Assisted living contracts — also called residency agreements — are legal documents, and they are typically long, dense, and full of language that rewards careful reading. Most families receive them a few days before a planned move-in date, when the emotional and logistical pressure to just sign and get the transition underway is high.

Taking the time to read and understand the contract before signing is one of the most important practical steps a family can take. Here's what to focus on.

What's Included in the Base Rate — and What Isn't

The most consequential section of any assisted living contract is the one that defines what the monthly base rate actually includes, and what is billed separately as an add-on.

Base rates typically cover housing, utilities, three meals daily, housekeeping, laundry, and access to scheduled activities and transportation. What is often billed separately: medication management, incontinence supplies, escort to meals, additional personal care assistance beyond a base number of hours, and one-on-one engagement for residents with memory impairment.

The gap between the quoted base rate and what a resident actually ends up paying each month can be significant. Ask the community for a sample monthly statement from a current resident with similar care needs — or at minimum, ask them to walk through every service that would apply to your loved one's specific situation and confirm which are included and which are add-ons.

The Rate Increase Clause

Almost every assisted living contract includes language permitting the community to increase monthly fees with advance notice — typically 30 to 60 days. Understand what that clause actually says: Is there a cap on annual increases? Is notice required in writing? Is the rate increase community-wide or can it be applied to individual residents based on reassessed care needs?

Rate increases in senior living are normal and expected — but understanding the terms in advance prevents them from being a surprise.

Care Level Reassessment

Most assisted living communities reassess residents' care needs periodically, and when those needs increase, the monthly rate typically increases to reflect the additional care provided. The contract should describe how reassessments work, who conducts them, how frequently they occur, and what the process is for families to be notified and, if needed, to dispute the outcome.

The Move-Out Clause

This is one of the most important sections to understand, and one families rarely focus on during the excitement of placement. Under what circumstances can the community require a resident to move out? The most common grounds include: the community is unable to meet the resident's care needs, the resident poses a safety risk to themselves or others, or the resident fails to pay.

Understanding the notice period required, what the community's obligations are during that notice period, and what the refund policy is for any pre-paid amounts gives families important protection if circumstances change.

Refund and Deposit Policies

Many communities require a community fee or deposit at move-in. The contract should specify clearly whether this is refundable, under what conditions, and on what timeline. Similarly, if a resident passes away or needs to move to a higher level of care within weeks of move-in, what is the refund policy for the current month's rent? These policies vary significantly between communities.

Arbitration Clauses

Some assisted living contracts include a binding arbitration clause, which requires that any disputes between the family and the community be resolved through arbitration rather than litigation. Whether to accept such a clause is a decision worth making with full awareness — it limits legal recourse. Some states have restrictions on arbitration clauses in senior living contracts; it's worth knowing your state's rules.

Getting a Second Set of Eyes

For a placement that will cost thousands of dollars per month, having a family member with legal or financial background review the contract — or consulting a local elder law attorney — is time and money well spent. An elder law attorney can identify clauses that are unusual or problematic for your state, and can advise on negotiating specific terms before signing.

YourPath advisors can help families know which questions to ask and what to look for as they review community contracts, and can flag anything that warrants closer attention.