The article makes it sound like someone bought the place and jacked up the monthly maintenance fee by $5000 just because “fuck you.”
Well, given that they bought in under the lump-sum + maintenance model and have somehow been "upgraded" to the rental model, that's exactly what happened. It would be like buying a home and then the old owner coming back and saying, "you know what, I could get more money renting this place - you have to pay rent now." These people likely sold their house and used that money to buy into the community - essentially paying for the right to use the building until they die. It's common in CCRC facilities (continuing care retirement community). You essentially pay for the plant and then pay maintenance, and they guarantee that they will have a spot for you in their care facility as you need more assistance (Independent living -> Assisted Living -> Nursing and/or Memory Care - Hospice). It's much like a reverse mortgage in that you "buy" your "home" and get to live in it until you die, at which point the deed is turned over with your heirs getting nothing. Except that in this case you don't get a monthly payment; instead you pay a fee for the facility services which is free of a rent cost. As you move up in care, the fee gets larger to cover the additional services (additional meals, personal assistance, and ultimately nursing care), but it's just for utilities and services - your payment covers the physical buildings. As you move up, people behind you buy in and that money is used for (CEO bonuses) maintenance and updates to the buildings. Many of these are "non-profits" so the extra money technically isn't for profit, but there are lots of corporate mouths to feed in CCRCs and they find ways to distribute the money.
Well, given that they bought in under the lump-sum + maintenance model and have somehow been “upgraded” to the rental model, that’s exactly what happened.
It doesn't sound like it:
The townhome residents were part of an agreement that allowed for this restructuring. Those who chose not to transition to the monthly rental structure did so in accordance with the terms of their contracts. We accommodated all residents. All were afforded the opportunity to stay in their townhome under their existing contracts until those contracts expired. Those who chose to leave did so through a negotiated buyout process, as permitted by their contracts.
The people here never owned their homes. They purchased long-term agreements, and as those agreements expired, the owners moved to a different process.
The "negotiated buyout" is from people ending their leases early.
Okay - you lease a car that includes gasoline and all maintenance. The agreement is that you get to drive it until you die. You pay $80,000 up front for the car and $100/mo for the maintenance, which can increase per the lease. You go along for 4-5 years, and each year your maintenance increases, maybe to $130/mo today, because of the cost of gas and parts needed. You can leave at any time, but if you ever leave or die, you don't get to keep the car - it still technically belongs to the leaseholder. You forfeit the $80k.
Well, the company sold and the new owners can't find enough people with $80k lying around to buy in, so they decided they'll just change the model to include the cost o the car - and charge $650/mo for the service. You get a letter that at your next annual increase, the monthly fee is going to from $130 to $650 because they've changed what constitutes "maintenance" as part of their terms and conditions. You can either stay with the package and pay $650/mo or you can leave and have no money to go find a new car. Oh, and you have no job and are on a fixed income because you're 75 years old.
CCRC buy-ins/contracts are for life. I used to design the buildings for them, I still do design work on existing facilities. I've also gone over a contract with my own parents. You essentially pay full price for a residential "unit" and as you require more care you are moved, without additional cost, into a higher care location. The owners than re-"sell" your previous unit to the next resident. When you die, there is no equity that your heirs will receive - in that way it's like a lease. The contract is for life with an annual escalation for maintenance and service.
You are missing my entire point in order to be pedantic. I know it's not a mortgage. What part of, "they're both just contracts with a lot of money attached" did you fail to understand?
The part where you didn't notice one of those contracts has an expiration date at signing?
It's just a silly ass comparison man. I genuinely do not believe you've read the article. You're just lashing out at perceived injustice, from your half-understood perspective.
These people likely sold their house and used that money to buy into the community - essentially paying for the right to use the building until they die.
Company says:
All were afforded the opportunity to stay in their townhome under their existing contracts until those contracts expired.
From the article it sound like there was no maintenance escalation clause limitation - they bought in for, say, $750,000 with a payment of $1000/month in fees, per their contract. Each year the contract maintenance increases (since costs increase) and it had gone up to ~$1300…then, all of a sudden, the owner decided that they weren't getting enough people with $750k to drop up front and added a $6.5k/month option with little or no buy in. When these residents rolled to their annual renewal, instead of the normal 3-6% increase, they were "upgraded" to the new rental-based prices - $6.5k.mo. Their contract is still valid, and they can still stay there, but based on the lawyers these people have gone to about the increase, it's all 100% legal because there is no limit in the contract on how much the fee can increase.
Thank you for taking the time to try to explain this.
When these residents rolled to their annual renewal, instead of the normal 3-6% increase, they were “upgraded” to the new rental-based prices - $6.5k.mo.
I did not think it was set up for annual renewal like that.
Well, given that they bought in under the lump-sum + maintenance model and have somehow been "upgraded" to the rental model, that's exactly what happened. It would be like buying a home and then the old owner coming back and saying, "you know what, I could get more money renting this place - you have to pay rent now." These people likely sold their house and used that money to buy into the community - essentially paying for the right to use the building until they die. It's common in CCRC facilities (continuing care retirement community). You essentially pay for the plant and then pay maintenance, and they guarantee that they will have a spot for you in their care facility as you need more assistance (Independent living -> Assisted Living -> Nursing and/or Memory Care - Hospice). It's much like a reverse mortgage in that you "buy" your "home" and get to live in it until you die, at which point the deed is turned over with your heirs getting nothing. Except that in this case you don't get a monthly payment; instead you pay a fee for the facility services which is free of a rent cost. As you move up in care, the fee gets larger to cover the additional services (additional meals, personal assistance, and ultimately nursing care), but it's just for utilities and services - your payment covers the physical buildings. As you move up, people behind you buy in and that money is used for (CEO bonuses) maintenance and updates to the buildings. Many of these are "non-profits" so the extra money technically isn't for profit, but there are lots of corporate mouths to feed in CCRCs and they find ways to distribute the money.
It doesn't sound like it:
Uhh… that's EXACTLY what it sounds like? Or are you one of those morons that cannot read between the lines of corpo speak?
"negotiated buyout process" my ass.
The people here never owned their homes. They purchased long-term agreements, and as those agreements expired, the owners moved to a different process.
The "negotiated buyout" is from people ending their leases early.
Okay - you lease a car that includes gasoline and all maintenance. The agreement is that you get to drive it until you die. You pay $80,000 up front for the car and $100/mo for the maintenance, which can increase per the lease. You go along for 4-5 years, and each year your maintenance increases, maybe to $130/mo today, because of the cost of gas and parts needed. You can leave at any time, but if you ever leave or die, you don't get to keep the car - it still technically belongs to the leaseholder. You forfeit the $80k.
Well, the company sold and the new owners can't find enough people with $80k lying around to buy in, so they decided they'll just change the model to include the cost o the car - and charge $650/mo for the service. You get a letter that at your next annual increase, the monthly fee is going to from $130 to $650 because they've changed what constitutes "maintenance" as part of their terms and conditions. You can either stay with the package and pay $650/mo or you can leave and have no money to go find a new car. Oh, and you have no job and are on a fixed income because you're 75 years old.
This was not their rental agreement.
A more apt comparison would be that I'm leasing a car, and after my lease expires, the next lease has higher rates.
This is the opposite of the situation the property owners are in.
It would save you a lot of pointless stress if you read the articles you respond to.
CCRC buy-ins/contracts are for life. I used to design the buildings for them, I still do design work on existing facilities. I've also gone over a contract with my own parents. You essentially pay full price for a residential "unit" and as you require more care you are moved, without additional cost, into a higher care location. The owners than re-"sell" your previous unit to the next resident. When you die, there is no equity that your heirs will receive - in that way it's like a lease. The contract is for life with an annual escalation for maintenance and service.
These contracts aren't for life, per the article.
So… you're just going to pretend like a mortgage and their contract aren't just contracts with large sums of money attached?
Your inability to see this as a problem is hilarious and quite pathetic. Your humanity has been replaced with business speak.
They did not sign a mortgage, because they never one the home. I'd strongly recommend reading the article.
You are missing my entire point in order to be pedantic. I know it's not a mortgage. What part of, "they're both just contracts with a lot of money attached" did you fail to understand?
The part where you didn't notice one of those contracts has an expiration date at signing?
It's just a silly ass comparison man. I genuinely do not believe you've read the article. You're just lashing out at perceived injustice, from your half-understood perspective.
Just because it was legal does not make it just. The fact you cannot understand that is frankly pathetic.
You said:
Company says:
What am I missing?
From the article it sound like there was no maintenance escalation clause limitation - they bought in for, say, $750,000 with a payment of $1000/month in fees, per their contract. Each year the contract maintenance increases (since costs increase) and it had gone up to ~$1300…then, all of a sudden, the owner decided that they weren't getting enough people with $750k to drop up front and added a $6.5k/month option with little or no buy in. When these residents rolled to their annual renewal, instead of the normal 3-6% increase, they were "upgraded" to the new rental-based prices - $6.5k.mo. Their contract is still valid, and they can still stay there, but based on the lawyers these people have gone to about the increase, it's all 100% legal because there is no limit in the contract on how much the fee can increase.
Thank you for taking the time to try to explain this.
I did not think it was set up for annual renewal like that.