Contacted about lease for assisted living facility HELP! Oregon

[John Clarken]

Hello! Long time listener, forum browser, and small time investor (4 properties). I was recently contacted by a provider of a 24 hr assisted living care facility. He has offered significantly higher rent than market rate but I'm concerned as it seems almost too good to be true. Being as my real estate journey is starting to take off I really do not want to endanger everything my family and I have worked for. Any advice or items to watch out for would be greatly appreciated. Main items of concern:

Lease set up: Business to owner, specific items to include - boiler plate or company that can generate for a fee

Liability issues and insurance

ADA requirements: the owner had stated only required depending on what tenants live in the facility- carbon/smoke alarms - no ramps, etc (seems fishy as in construction rules on ADA are stringent)

As the owner do I need any short of license?

Again any help is greatly appreciated!

[Justice Jacobs]

Hello John, 

Great question and congratulations on your progress thus far with investing. Just to give you a bit of my background, I am the owner-operator of RAL's in GA. I pair investors with opportunities in residential assisted living space. It would be a great opportunity to explore, and I think you are fortunate to have a property suitable for that particular operator. With regard to liability protection, it would be a good idea to consult a lawyer. However, you can also do some due diligence by doing the following:

1) Is the provider licensed via the state regulatory body (i.e. Georgia has the Georgia Dept. Of Community Health, DCA)

    You can contact me if you would like assistance finding this information for your state.

2) They should have commercial liability insurance, but double check with a lawyer to see how/where you could be held liable. Depending on the arrangement (lease, lease-purchase, profit sharing, etc.), you should have zero liability for the mishaps of the operator, since the license they have to legally operate the business would be expected to assume liability.

3) My current understanding is that the ADA requirements would only be mandatory if it was a commercial facility dedicated to a particular use (i.e. I have seen a retrofitted single family home with a zoning change, which did require ADA compliant modifications; the same was not true for a large single family home with traditional zoning being operated similarly). I would need to get in the rules and regulations for the ADA criteria to verify. They are generally correct in stating that the type of resident they accept would dictate requirements needed. If they do not have the ability to accept residents in wheelchairs, it would be unwise to accept them.

Finally, at least in the state of GA, you would not need a license as the owner of the home, but that could vary on your state and local rules and regulations. I could not imagine why you would need to have a license since that would not be the case if they were operating a different type of business out of the home? Once again, I can try to assist in the state you are operating in.  

DISCLAIMER: This is not legal advice. Please consult a lawyer in your state of operation.