A landlord of residential property is restricted on what fees can be charged to a lessee, but are these restrictions the same for assisted living facilities (ALFs)?  ALF/resident relations differ from traditional landlord/tenant relations. (For the purposes of this blog, ALF residents will be referred to as residents and landlord lessees as tenants.) While the two relationships share many similarities, ALF residents are provided with additional healthcare monitoring and services that a landlord would not be expected to provide.

The Massachusetts Supreme Judicial Court was recently presented with the opportunity to distinguish between the permissible charges landlords and ALFs may charge their tenants/residents. Landlord-tenant law falls under the restrictions of Massachusetts Security Deposit Statute, where ALFs are bound by the state’s ALF statutes – both laws being very similar in nature. (ALFs are called assisted living residences (ALRs) in Massachusetts.  For purposes of this writing, the more common ALF will be used.) Courts in the state were split on the issue of the extent that the security deposit statute might apply to ALF residents; and, if so, whether ALF statutes permitted additional charges beyond those listed in the security deposit statute.

Due-on-sale clauses are a common element of most mortgages and other loans. The provision is a protection for lenders specifying that if property rights of an encumbered asset are transferred, the lender has the right to demand immediate payment for any amounts due from the debtor. A transfer could be any change in the debtor’s rights to the property – like selling a home or quitclaiming a deed. Logically, upon the sale of a home, a lender would want to recover the balance of the loan owed by the debtor-seller. The original note may say that the debtor has 100 more months to pay, but with the due-on-sale clause, payment is due right away due to the transfer. Fortunately though, not all transfers are treated as “transfers” that trigger the clause.

When there is a dispute as to whether the due-on-sale clause has been activated, challengers look to two different authorities for guidance: the Garn-St. Germain Act and the Office of the Comptroller of the Currency (OCC). Debtors look to the former; lenders look to the latter. Frustratingly, the two provisions do not align entirely.

The Uniform Law Commission (ULC) has been around for more than a century.  The non-profit has commissioners from each state that promulgate uniform laws for states to ruminate and adopt. The goal of the UTC is to promote the uniformity of laws across the U.S.  A model act is one that doesn’t necessarily need to be adopted in its entirety; the purpose of the act can be achieved even if only parts of the act are adopted.  A uniform act is one that tries to establish the same directive on a particular topic across the various jurisdictions.  Even if the goal of a uniform act is adoption in its entirety, many states still add their own changes and nuances upon adoption.