Residential Assisted Living Due Diligence Checklist for Buyers
Buying a residential care home means taking responsibility for people who rely on the home for their daily care, often in a setting that feels like family. Before closing, a buyer needs to confirm that the license, finances, caregivers and house are what they appear to be. Residential assisted living due diligence is where those questions are answered with records, inspections and conversations rather than impressions.
This checklist is for buyers of existing, licensed residential care homes, which may be called residential assisted living homes, adult family homes, personal care homes or board and care homes depending on the state. Larger communities, in-home care and skilled nursing are outside its scope. This is not legal, regulatory, privacy or employment advice; work with qualified professionals on the matters that apply to your transaction.
A Note on Sensitive Information
Resident records and caregiver personnel files contain sensitive information subject to applicable privacy and employment requirements. Work with counsel on what can be reviewed before closing and in what form.
1. Financial Records
- Tax returns and financial statements for several years, including year-to-date
- Bank statements
- Resident census history and rate sheets
- Revenue by resident payment source, where applicable, using appropriately protected information
- Payroll records and owner compensation
- Existing debt and liens
Compare tax returns, financial statements and deposits to confirm reported results. Our guide to residential assisted living valuation explains how these records support price.
2. Licensing and Inspection History
- The current license, who holds it and the licensed capacity
- Inspection reports, findings and corrections
- Complaints and any enforcement actions
- Administrator, training or certification requirements that apply
- What happens to the license in a change of ownership
Requirements vary by state. See our guide to residential care home licensing.
3. Residents and Agreements
- Resident agreements, rates and notice provisions
- Length of stay and move-out history
- Any program participation and its requirements, where applicable
- Family feedback and complaint history
4. Caregivers
- Caregiver schedules, including overnight coverage
- Tenure, pay structures and training
- Live-in arrangements, if any, and how they are structured
- How caregivers are classified, which should be reviewed by qualified professionals
- Whether key caregivers intend to stay after the sale
See our guide to residential care home staffing.
5. The House
- Title, survey and appraisal if the property is included, or the lease if it is rented
- Zoning and permitted use for a care home at the location
- Accessibility features, fire and life-safety systems
- Roof, HVAC, plumbing and general condition
- Any required safety inspections
Our article on residential assisted living real estate covers zoning and property considerations.
6. Insurance and Incidents
- Liability, property and workers’ compensation coverage
- Claims history and incident reports
- Emergency and evacuation procedures
7. Items Your Lender Will Request
Lenders typically request many of the same records, plus the purchase agreement and your personal financial information. See our guide to residential assisted living loan requirements.
Using What You Find
Diligence findings may confirm the deal, change the price, add conditions or lead you to walk away. Issues can be addressed through price adjustments, holdbacks, repairs before closing or other terms, subject to negotiation and lender requirements.
US Professional Funding works with buyers acquiring existing residential assisted living homes. Learn more about our residential assisted living acquisition financing.
