Life Estates & Assisted LivingResidential Relocation

Dianna NausleyWSDOT, Real Estate ServicesRelocation Assistance, Program Support, and Local Agency Program Manager

June 11, 2012

What relocation rights does an occupant have if they do not have

fee interest in the property?

Hum……………????

June 11, 2012

Type of Displacement

90 Day or Less Occupant

• 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

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.

June 11, 2012

Differences in Entitlements

90 Day or Less Occupant

• Considered a tenant• Replacement Housing

Payment– Rent Supplement– Down Payment Assistance

Life Estate Occupant

• Considered an owner• Replacement Housing

Payment– Price Differential Payment– Incidental Expenses– Rent Supplement

June 11, 2012

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

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

June 11, 2012

Who is entitled to what?Life Estate – 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

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

June 11, 2012

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

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

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

Can anyone use it?

• Intended for use by elderly displaced persons

June 11, 2012

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

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

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

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

June 11, 2012