Crafting the Perfect Lease for Your Assisted Living Facility

assisted living facility agreement assisted living landlord assisted living lease agreement assisted living operator lease ral lease template residential assisted living business start an assisted living business Feb 17, 2025

If you're planning to rent or lease an assisted living facility, you need the right lease agreement in place. A good lease makes sure everyone is on the same page—from how much rent is due to who fixes the leaky faucet!

This guide will break it all down in a simple, easy-to-understand way so you can create a lease that protects both the property owner and the operator while keeping your business running smoothly.

Check out the video, too:

What Is a Lease Agreement?

A lease agreement is a legal contract between:

๐Ÿ  The Landlord – Owns the property and rents it out.
๐Ÿ‘จ‍๐Ÿ’ผ The Operator – Runs the assisted living business inside the property.

This lease covers more than just rent—it also includes insurance, maintenance rules, and state compliance requirements. Think of it as a rulebook for how the property and business should work together.


Why Do You Need a Lease Agreement?

A lease is more than just paperwork—it helps keep everything clear and protects both parties from misunderstandings.

โœ… Legal Protection – Makes sure both sides follow state rules.
โœ… Financial Stability – Ensures rent is paid on time (which is extra important if the landlord has an SBA loan!).
โœ… Clear Responsibilities – Decides who fixes what and who pays for repairs.

Even if you own both the property and the business, a lease between your two entities adds legal protection and makes tax reporting easier.


Who Creates the Lease Agreement?

๐Ÿ”น Usually, the landlord drafts the lease, and the operator reviews it.
๐Ÿ”น Sometimes, the operator creates the lease if they have special requests.
๐Ÿ”น An attorney should always review it to make sure it's legally sound.


Key Parts of an Assisted Living Lease Agreement

Here are some important things to include in your lease:

๐Ÿ“Œ Insurance Requirements – Who pays for property insurance, liability insurance, and workers' compensation?
๐Ÿ“Œ State Compliance – The lease must follow state laws and assisted living regulations.
๐Ÿ“Œ Rent & Rate Adjustments – If the landlord’s loan has an adjustable rate, how will the rent be affected?
๐Ÿ“Œ Maintenance Responsibilities – Who takes care of repairs and property upkeep?
๐Ÿ“Œ Operational Rules – Includes staffing requirements and resident care standards.
๐Ÿ“Œ Signatures & Notary – Some states require leases to be notarized—double-check yours!


Tips for Operators Reviewing a Lease

Before signing, make sure you:

๐Ÿ“– Read Every Word – Don’t skim! Every clause matters.
โš–๏ธ Consult an Attorney – A legal expert can make sure you’re protected.
๐Ÿ“ Negotiate Terms – If something doesn’t work for your business, ask for changes!

๐Ÿ’ก Bonus Tip: Grab our Free Sample Lease Agreement to help you get started!


Steps to Create a Lease Agreement

1๏ธโƒฃ Define the Relationship – Outline what both parties expect.
2๏ธโƒฃ Draft the Agreement – Use a sample lease as a guide.
3๏ธโƒฃ Consult Professionals – Have a lawyer review everything.
4๏ธโƒฃ Review and Sign – Both parties should agree before signing.
5๏ธโƒฃ Keep a Copy – Store it safely for future reference.


Final Thoughts

A strong lease is the foundation of a great partnership between a landlord and an assisted living operator. It ensures everything runs smoothly and protects everyone involved.

If you’re just getting started, download our FREE sample lease agreement to see what yours should include. And always check with a lawyer to ensure your lease follows state rules!

๐Ÿ’ก Need more help? Reach out to us for expert guidance on leasing your assisted living facility!

Next steps?

Ready to take the next step in your assisted living journey? Download our Business Plan Checklist to ensure you have all the elements needed for a successful business plan. This tool will help you outline your business strategy, identify key goals, and prepare for a profitable venture. Additionally, consider exploring the Assisted Living Investing Mastermind program. This comprehensive 12-month program is designed to guide you step-by-step toward owning and operating your own assisted living facility. With the added benefit of personalized coaching support, the program ensures you have the resources and guidance needed to succeed in this rewarding industry.

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