The Paletz Law Blog

Baby Boom Meets Senior Housing Boom

June 20th, 2018 | By: Mircea Iosif, Esq.

It’s no secret the average age of Americans is increasing[1] and many baby boomers may be in the market for housing that accommodates their needs while still allowing for independence. Recognizing this trend, enterprising property owners have been looking for ways to cater to this growing market. Senior housing providers are actually permitted an exemption to certain fair housing laws, which allows them to rent specifically to older individuals and thus limit other types of tenancies including those of families with minor children.[2] Some senior properties must be occupied solely by individuals 62 years of age or older, while others have a lower age threshold of 55 years.

For a housing provider to fall under the 55+ exemption, it must meet the “80/20” ratio: 80% of the occupied units must be occupied by at least one person 55 years of age or older, while the other 20% can be occupied by those under the age threshold. Additionally, the housing provider must have the intent to operate as a senior housing facility. Intent includes the way the community is described to prospective residents, lease provisions, rules and regulations, restrictions in the land deed, actual practices of the housing provider, and common area postings where the housing is advertised as senior housing.

Finally, the housing provider must maintain the 80/20 ratio to keep the exempt status. Age verification of tenants must be updated once every two years and can be done by survey. Even if a tenant does not comply with these procedures, the community can assume they are 55+ if there is evidence to support the assumption. Having clear and routine procedures in place to determine occupancy of each individual unit is helpful and should be part of the normal leasing process.

Converting an existing property to senior housing is possible, but landlords and property managers should be aware that doing so can be difficult and take several years. This was not always the case as federal law at one time provided a specific transition period for a property to qualify as senior housing, but that ended in 2000. Therefore, those wishing to convert must pay close attention to fair housing laws to avoid liability. Additionally, property managers should review the land deed itself to determine if it addresses any restrictions on its use.

Whether a tenant is living in a traditional rental property or senior property, another factor to consider is that at some point, the resident may no longer be able to care for themself. In such a case, they are able, upon giving requisite notice, to terminate the lease before the end of the term. [3] To be proactive, landlords should always have next of kin or emergency contact information in the tenant’s file.

The Bottom Line: The demand for senior housing is booming. However, to meet this demand, property owners need to follow federal regulations in order to avoid noncompliance and fair housing liability issues. Even slight deviations from procedure and regulations can cause providers to lose their exempt status.

[1] https://www.census.gov/newsroom/press-releases/2018/cb18-41-population-projections.html

[2] See 42 U.S.C §3601 a/k/a Housing for Older Persons Act of 1995; https://www.congress.gov/104/plaws/publ76/PLAW-104publ76.pdf

[3] http://legislature.mi.gov/doc.aspx?mcl-554-601a

 

The information contained in this article is only meant to be a basic overview and should not be construed as legal advice. Readers should not act upon this information without the advice of an attorney. The contents are intended for general information purposes only and may not be quoted or referred to in any other publication or otherwise be disseminated without the prior written consent of Paletz Law.

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