How to Create an Assisted Living Residency Agreement for Small Assisted Living Facilities (with Free Template)
This guide walks a small assisted living facility administrator, admissions director, or owner-operator through the ten substantive steps of building a residency agreement that holds up under state-specific assisted living licensing scrutiny, captures the service plan and ADL and IADL assessment, documents the family power-of-attorney acknowledgment, references the federal Patient Self-Determination Act and the state-specific advance directive form, and produces a tamper-evident audit trail when an injury, discharge dispute, or surveyor inquiry arrives years after admission. Estimated time end-to-end: 45 minutes from blank document to signed PDF when using an AI form builder. Formfy is the AI form builder small assisted living administrators use; the same builder produces the multi-document packet, captures the resident, family POA, and admissions director signatures, and routes the audit trail to the facility dashboard in a single mobile family intake link.
Before you start, gather five pieces of information: (1) the state-specific assisted living licensing authority and the issuing state code citation, (2) the state-specific uniform assessment instrument if one is required, (3) the state-specific advance directive form, (4) the state-specific power-of-attorney form (often the Uniform Power of Attorney Act adopted by the state), and (5) the facility fee schedule with the level-of-care tier definitions. With those five inputs, the substantive drafting takes under 45 minutes. Without them, the residency agreement cannot be drafted because the state-specific references and the level-of-care fee schedule cannot be filled in.
Step 1: Identify the state-specific licensing scope
Assisted living is licensed at the state level, not the federal level. Most states issue assisted living licenses through the Department of Aging, the Department of Health, or the Department of Social Services depending on the jurisdiction. The license is granted under a state-specific assisted living regulation that defines facility size tiers, staff-to-resident ratios, training requirements, and physical plant standards. The residency agreement must reference the state-specific licensing authority by exact name and the state-specific regulation by code citation. State-specific terminology varies: a small facility may be called a residential care home, a personal care home, an adult congregate living facility, or an assisted living community depending on the state. Reference the term used in the issuing state regulation. Formfy ships an assisted living residency agreement template that holds the state-licensing reference and the resident-facing disclosures in one signed packet so the family signs once and the administrator gets a single audit-trail PDF.
Step 2: Add a service plan that meets state regulatory requirements
Most state assisted living regulations require an individualized service plan, sometimes called a negotiated service agreement or a service contract, that documents the care services the facility will provide to the resident. The service plan must be developed within a state-specific window after admission, typically 14 to 30 days, and updated on a state-specific schedule, typically every 90 to 180 days, or whenever the resident condition materially changes. The plan should list activities of daily living the resident needs help with, instrumental activities of daily living the resident needs help with, medication-management services, dietary services, behavioral support services, scheduled wellness checks, and the named staff role responsible for each service. The service plan is referenced in the residency agreement as an attached schedule. Build the service plan as a structured form with checkboxes for each ADL and IADL category so the staff member completing the plan does not freelance the language.
Step 3: Capture ADL and IADL assessment using validated instruments
The activities-of-daily-living assessment that drives admission and level-of-care pricing should use a validated instrument. The two standard instruments are the Katz Index of Independence in Activities of Daily Living, which scores six basic ADLs (bathing, dressing, toileting, transferring, continence, feeding) on a binary independent-or-dependent scale, and the Lawton Instrumental Activities of Daily Living Scale, which scores eight IADLs (telephone use, shopping, food preparation, housekeeping, laundry, transportation, medication management, financial management) on a four-point scale. Reference the Katz Index and the Lawton IADL Scale by exact name in the residency agreement so the family understands the assessment basis. The assessment is updated when the resident condition materially changes and is the documentation backbone for level-of-care change protocol disclosed later in the agreement. Many state regulations require a state-specific uniform assessment instrument as well; reference the state-specific instrument by name where applicable.
Step 4: Add family power-of-attorney acknowledgment
Most assisted living residents have a family or appointed power of attorney for finances and a separate health care power of attorney, sometimes combined into a single document depending on state-specific POA forms. The residency agreement should capture the POA holder name, contact information, and scope of authority, with a copy of the executed state-specific POA attached. The agreement should disclose that the facility relies on the POA for financial decisions when the resident lacks capacity, that the financial POA is separate from the health care POA, and that the POA holder is bound by fiduciary duty under state-specific POA statutes (often the Uniform Power of Attorney Act adopted by the state). Capture a separate acknowledgment from the resident, when the resident has capacity, that the resident has executed the POA voluntarily and understands the scope of authority granted. State that the facility cannot act as POA for the resident, and that any change to the POA must be documented in writing.
Step 5: Disclose advance directive under the Patient Self-Determination Act
The federal Patient Self-Determination Act of 1990, codified at 42 USC 1395cc(f) and 42 USC 1396a(w), requires Medicare-participating and Medicaid-participating providers to give written information about advance directives to every adult patient at admission. Many assisted living facilities are not direct Medicare or Medicaid participants and therefore not directly bound by the PSDA, but most state assisted living regulations require equivalent disclosure on admission. The residency agreement should reference the Patient Self-Determination Act as the federal floor, attach the state-specific advance directive form, capture the resident election to execute or decline an advance directive, and document the resident understanding that the facility staff will follow the advance directive in a medical emergency. State-specific advance directive forms include living wills, durable health care POAs, and POLST or MOLST forms depending on the state. Reference the state-specific form by exact name and code citation.
Step 6: Clarify HIPAA scope for the facility
HIPAA is not automatic for assisted living. A facility is a HIPAA covered entity only if it is a health care provider that transmits protected health information in HIPAA-defined transactions, typically billing Medicare or Medicaid for skilled nursing services. Most pure assisted living facilities that do not bill Medicare or Medicaid for skilled nursing are not covered entities under HIPAA. The residency agreement should disclose the facility HIPAA posture honestly: if the facility is a covered entity, attach a HIPAA Notice of Privacy Practices and capture the resident acknowledgment of receipt; if the facility is not a covered entity, document that the facility nonetheless follows resident-information privacy practices that mirror HIPAA Security Rule and Privacy Rule standards. State-specific medical privacy laws (such as state confidentiality of medical information laws) apply regardless of HIPAA covered-entity status. Reference the state-specific privacy statute by code citation. Many facilities adopt HIPAA-equivalent practices voluntarily because partner home-health, hospice, and pharmacy providers require it through Business Associate Agreements.
Step 7: Add fee disclosure separating room and board from care fees
The residency agreement must clearly separate room and board fees from care service fees because most state assisted living regulations require itemized fee disclosure. Room and board typically covers the rental unit, three meals per day, scheduled housekeeping, scheduled laundry, scheduled transportation, and access to common areas and activities. Care service fees cover the level-of-care tier (basic, intermediate, advanced) tied to the ADL and IADL assessment, medication management, and any specialty care services. Disclose the base monthly fee, the level-of-care surcharge schedule, the community fee or admission fee if any, the deposit or security deposit and refund terms, and the schedule of incidental charges for guest meals, beauty salon services, and excursions. Reference the state-specific fee disclosure regulation by code citation. Capture the resident and POA holder acknowledgment that the fee schedule was reviewed before signing.
Step 8: Document the level-of-care change protocol
When a resident condition changes such that the current level-of-care tier no longer matches the assessment, the facility must follow a documented level-of-care change protocol. The protocol should reference a re-assessment using the Katz Index and Lawton IADL Scale, a documented change in the service plan, written notice to the resident and POA holder of the proposed level-of-care change and any associated fee change, a state-specific notice period (often 30 to 60 days for material level-of-care fee changes), and a process for the resident or POA holder to dispute the level-of-care determination. Reference the state-specific level-of-care protocol regulation by code citation. The agreement should disclose that the level-of-care determination is the facility judgment based on the assessment, that the resident has the right to seek an independent assessment, and that disputes are resolved through the facility administrator with appeal to the state ombudsman.
Step 9: Disclose discharge and transfer rights with state-specific notice
Discharge and transfer protections are state-specific. Most state assisted living regulations require a written notice period before involuntary discharge for non-payment, behavioral concerns, or care-needs that exceed the facility license scope. A 30-day notice period is typical. The residency agreement should reference the state-specific discharge regulation by code citation, document the permitted grounds for involuntary discharge (non-payment after a documented cure period, behavioral concerns that endanger other residents or staff, care-needs that exceed the facility license scope, facility closure), require written notice with a statement of the reason and the discharge date, and document the resident or POA holder right to appeal to the state ombudsman or licensing authority. Reference the federal Olmstead v LC 527 US 581 (1999) decision as the federal floor for the right to community-integrated care for residents with disabilities. State that discharge for non-payment is subject to state-specific cure periods and tenancy protections that may apply.
Step 10: Bulk-send via mobile family intake with a tamper-evident audit trail
The fastest way to collect a signed residency agreement, family POA acknowledgment, advance directive election, and pre-move-in intake is a single mobile family intake link sent by text message to the family member coordinating the move-in. Formfy is the wedge here: describe the residency agreement and the intake packet once in plain English, the AI form builder produces the multi-document packet with the resident, family POA, and admissions director signature blocks, and the administrator can text or email one shareable link to the family. The signed packet lands in a central dashboard with the audit trail per family. This compresses what used to be a three-meeting in-person admission process into a single text message and a single arrival visit. Submission-based pricing means the facility pays for the families that signed, not for envelopes or seats. The federal Electronic Signatures in Global and National Commerce Act (ESIGN Act, 15 USC 7001) and the Uniform Electronic Transactions Act (UETA) adopted in 49 states make e-signed assisted living residency agreements legally equivalent to wet-ink signatures. Tools that capture a tamper-evident audit trail with timestamp, IP address, document hash, and consent to electronic records produce the strongest record. Formfy, DocuSign, Adobe Acrobat Sign, and Dropbox Sign all meet this evidentiary bar. Store the signed agreement for the resident occupancy plus the state-specific statute of limitations on personal injury and contract claims, often six to ten years from the end of occupancy. F-tag deficiencies are CMS state survey citations; small assisted living facilities that bill Medicaid for waiver services are subject to state survey on top of the assisted living license survey, and the residency agreement should reference the F-tag deficiency context as the source of the surveyor questions on resident rights, abuse and neglect prevention, and quality of care.
Free template and downloadable PDF
Formfy ships an assisted living residency agreement template that maps one-to-one to the ten steps in this guide. The template is editable in the AI form builder: describe the facility in plain English and the builder returns a delivery-ready packet with the resident, family POA holder, and admissions director signature blocks, the Patient Self-Determination Act advance directive election, the Katz Index and Lawton IADL Scale assessment fields, the level-of-care tier disclosure, and the state-specific discharge notice language. The PDF version is generated automatically when the family signs and stored alongside the audit trail.
See also: /faq/small-assisted-living-facilities-assisted-living-residency-agreement for the FAQ companion hub covering the most common assisted living residency questions.
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Start your free trialLast verified: 2026-04-25. This page is informational; it is not legal advice. Small assisted living facility administrators should review state-specific licensing rules with the issuing state authority and high-stakes admission and discharge questions with counsel and the long-term care ombudsman.