Very possibly, I just don’t know the right people and I don’t follow the right electronic discussion groups, blogs and other fora. But my impression is that Minnesota lawyers aren’t giving enough attention to – or haven’t purposefully developed ways to share vital intelligence, practice aids and case histories about – antecedents to contract formation in a very significant demographic shift. It has to do with (no surprise) the Baby Boomers.
What I’ll suggest below is unsupported speculation. It’s how I see a segment of the Minneapolis-St. Paul housing market developing over the next decade or so. The scenario may apply to much smaller cities too. (Anecdotally, this shift is happening all over the country, but that’s not my concern here.) In our state’s largest urban area, at least, I’d venture to say that it’s almost inevitable, based on three propositions.
The search for senior housing will only get more challenging.
First, most people now in their late 60s to early 80s (give or take) who live in single-family homes will be looking for new living situations. So will people in this age group who live in townhomes or other multi-household communities where they feel help will be hard to come by as they grow older. Some in this cohort will choose to stay put, but most will not. Some seeking to move will do so in a panic because of rapid, unexpected declines in health. Some will have more foresight and will start the search before there’s a crisis. And some will move in with children or other family members, but I’ll posit that most will wind up in unfamiliar surroundings without old friends or family nearby.
Second, so many people will be looking for down-sized, lower-maintenance situations that demand will far exceed supply. Some will consider traditional apartments open to all ages, whether rentals, cooperatives or condominiums. Others will be looking at housing-with-services establishments or continuum-of-care communities, many of which will become subject to licensure and regulation as assisted living facilities under the new Minnesota Statutes Chapter 144I. All senior-focused establishments in this grey zone, between housing for anybody and nursing homes, will be studying the enactment (H.F. 90) that created this Chapter and the forthcoming regulations and other guidance, to design their responses during the period before all of its provisions apply.
Third, this demand-supply imbalance will create a bargaining power imbalance. There will be long waiting lists for nearly every decent opportunity. Sellers and lessors of units in all types of multi-household residential properties will be offering either take-it-or-leave-it deals at the low end or extremely expensive feature-overloaded “cruise ship” communities at the high end, and very little in between. Even if a middle market does emerge, many people are going to “settle”, leaping before they look. They’ll resign themselves to living in situations they’ll say could have been worse, expecting to stay until that inevitable next move, which almost all hope will be to the Great Beyond rather than to the nursing home.
An example.
A mid-seventies couple who are old clients of mine recently moved into an apartment in a continuum-of-care community in the west suburbs. They had been wait-listed for one of the independent-living units there for almost five years. When they finally reached the top of the list for a unit of the size they wanted, they had one week to decide before their right of first refusal expired. They signed a purchase agreement immediately. I hope it’s their last move, and that they’re happy about the choice for the rest of their days. But assuming that – five years ago – these clients had fully researched and analyzed all the rights, obligations, warranties and disclaimers attendant to becoming owners there (hopefully with someone’s help, though not mine, I wasn’t even aware they were looking), did they confirm that nothing had changed?
After the move, changes in the environment may not be pleasant surprises.
Now picture what will happen in any one of the new senior communities that seem to be opening almost daily once all units are fully occupied. The residents will not exactly be captives, but as they age they may lose the wherewithal, emotionally and physically, to undertake the search for new housing again. It’s hard enough uprooting oneself from a home of perhaps half a century. In marketing parlance, they’ll face high switching costs.
What does this mean for operators of these establishments? Some may see an opportunity to progressively reduce services in both quantity and quality wherever the contracts with residents have holes or ambiguities. To be fair, even those genuinely committed to giving residents good value will be in a bind. There will almost certainly be more demand for many types of non-medical assistance, attendant care and household services than there will be service providers. As a result, whether the operators have subcontracted such services or use in-house staff, they’ll face steep, unrelenting cost increases.
An ounce of prevention.
I believe that not enough attention is being paid to assisting people who are making the transition to senior communities by analyzing the offerings before the fact. The focus of most elder law specialists seems to be on damage control and seeking redress for residents already living in situations that have become problematic. Again, I’d like to think that I’m misinformed or just not paying attention, but I can’t recall any discussions on listservs, or CLE programs, devoted to the common elements in these personal disasters that could have been foreseen and avoided.
Assisting a client who wants both 1) the right balance of services and cost in a new living situation, and 2) reasonable assurance that as time passes changes in that balance will be subject to specific constraints, needn’t be a one-off engagement. One critical aspect of the lawyer’s role in this effort (which may require multi-disciplinary collaboration, with accountants, personal medical care planners, et.al.) is thorough analysis of the contracts involved, before the client puts pen to paper. A client may be investigating both rental residences and those that require a purchase. He or she might be in declining health, with a predictably increasing need for more medical and non-medical assistance and living space adaptations. To competently ask “what can go wrong and how do we structure the contract to avoid it” the lawyer might appreciate access to a dedicated well of knowledge.
Two not insignificant concerns about developing a separate practice area here spring to mind immediately: 1) whether clients will be willing to pay enough for this kind of analysis and planning to make it profitable for the firm; and 2) whether there are now, and will continue to be, meaningful differences in the contract provisions across comparable communities, particularly if a few large multi-state operators are building most of the new ones. They’re intertwined concerns. I can hear a client saying, “If all the deals are the same, why should I pay you to tell me about problems I might or might not have later on?”
At very least, we can expect that there will be a difference between the service packages in high-end and low-end establishments. Beyond that, I believe we don’t know how much bargaining power or meaningful choice a given client may have now or in the next few years, because advocacy and planning for this purpose isn’t a recurring engagement for most attorneys in elder law, estate planning and wealth preservation, or other disciplines that might encounter it.
I think we do know, however, that for most of the new residents in these senior establishments there will be children and other younger family members hoping that all goes well, because, if not, they may be burdened with more frequent and emotionally demanding advocacy than they care for.
A modest first step.
MSBA’s Practicelaw Development community has begun construction of a new toolbox to address contract and planning issues raised by this migration into senior housing. The quality of information and practice aids organized there will depend on contributions of those who might want to use it, for issue-spotting if for no other purpose. Beginning with a collection of “horror stories”, and, one would hope, some success stories, seems appropriate. Where courts have addressed complaints against housing providers or service subcontractors, the cases might be included. Hopefully, enough material will accumulate so that it can be curated in ways that inform development of checklists, e.g., for reviewing contracts for all the various housing options (other than nursing homes), to identify the particular must-have and must-to-avoid aspects of each. Checklists for selling a home prior to making this transition would also be relevant. Study groups and CLE presentations might be an outgrowth as well.
Conclusion
These are just a few thoughts about what could become a multi-faceted resource for MSBA members. A few moments reflection on the need, on the power imbalance involved in this particular housing search, and on the likelihood that clients won’t be able to realistically anticipate their own frailties in the coming years, hopefully will suggest others. Members’ creativity and generosity in contributing to this knowledge base will determine its utility for those helping clients make this transition.