Life Estates & Assisted Living Residential Relocation

1. Life Estates & Assisted LivingResidential Relocation Dianna Nausley WSDOT, Real Estate Services Relocation Assistance, Program Support, and Local Agency Program Manager June 11, 2012

2. What relocation rights does an occupant have if they do not have fee interest in the property? Hum……………???? June 11, 2012

3. Type of Displacement 90 Day or Less Occupant Life Estate Occupant Someone who occupies real property where their interest in the real property is for the remainder of their life and is reserved in a conveyance document. • Someone who occupies the real property at least 90 days prior to the initiation of negotiations • Someone who occupies the real property prior to its acquisition, but who does not meet the length of occupancy requirements June 11, 2012

4. Differences in Entitlements 90 Day or Less Occupant Life Estate Occupant Considered an owner Replacement Housing Payment Price Differential Payment Incidental Expenses Rent Supplement • Considered a tenant • Replacement Housing Payment • Rent Supplement • Down Payment Assistance June 11, 2012

5. Life Estate Options • Purchase a replacement dwelling • WSDOT policy allows an owner occupant to purchase a life estate in a retirement home or contracts for extended residence in a limited care or full care facility that provides medical and residential services to persons unable to live independently and provide their own care • Rent a replacement dwelling June 11, 2012

6. How does the acquiring agency handle the following life estate situation: I have a life estate, I no longer own the property but I do occupy the property? My son who owns the property also occupies it. Who gets the RHP? June 11, 2012

7. June 11, 2012

8. Who is entitled to what? Life Estate – Owner Occupant Son - Owner Occupant Replacement Housing Payment (RHP) Price Differential Payment Incidental Expenses Partial ownership Must spend entire proportionate share of acquisition payment plus full amount of calculated price differential • Replacement Housing Payment (RHP) • Price Differential Payment • Incidental Expenses • Partial ownership • Must spend entire proportionate share of acquisition payment plus full amount of calculated price differential June 11, 2012

9. Example • Acquisition = $200,000 • Price Differential (PD) Computation = $20,000 • Share 50/50 occupant status • Each entitled to $10,000 of the price differential • Each must spend $120,000 on a replacement dwelling to receive maximum PD • ½ of acquisition payment which is $100,000 plus • Full amount of PD $20,000 June 11, 2012

10. Assisted Living • Treated as if the displaced owner is purchasing a “life estate” considering it is their intent to live out the rest of their life in a retirement or extended care facility. • A retirement home or extended residence in a limited care or full care facility that provides medical and residential services to persons unable to live independently and provide their own care • Must sign an agreement with the facility for the replacement living situation June 11, 2012

11. Why use it? • Eliminates the requirement of an elderly displaced person to purchase a single family replacement dwelling when they may not have the ability to take care of the home and will have to turn around and sell it to move into an assisted living situation • Less stress for the elderly person & supporting family June 11, 2012

12. Can anyone use it? • Intended for use by elderly displaced persons June 11, 2012

13. Disbursement Policy • Payment based on signed resident agreement and copy of monthly charges w/supporting documentation • Direct payment to displaced owner • Payment to care facility on behalf of displaced owner and warrant made payable to both parties • Initial payment made when signed documents are obtained • Final payment paid in the 6th month June 11, 2012

14. Computation • Base figure = monthly charge for the facility minus amounts attributable for food • Initial payment = Multiply base figure x 6 months. Add the amount of any non-refundable entrance fee to the calculated initial payment • Final payment = Price differential – initial payment • Will not be made if displaced person dies prior to final payment June 11, 2012

15. Example • RHP calculation is $24,000 • Extended care facility monthly fee is $2,000, which includes $500 a month for food • One time fee non-refundable entrance fee is $200 The displaced owner signs a resident agreement and supplies you with the above information. The displaced owner is entitled to the full RHP in the amount of $24,000. Compute the initial and final payments. June 11, 2012

16. Answer • Base figure • $2,000 monthly fee - $500 for food = $1,500 • Initial payment • $1,500 base figure x 6 months = $9,000 + $200 entrance fee = $9,200 • Final payment in 6 months • $24,000 RHP - $9,200 initial = $14,800 • Verify living status of displaced person before sending final payment June 11, 2012

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