Retirement Community Residents Have Contractual Rights

Interesting case from the Michigan Court of Appeals brought to our attention by attorney Jeanne Hannah (author of “Taking Charge: Good Medical Care for the Elderly and How to Get It”) about contracts in retirement communities. First the lesson then the case. The moral is retirement communities are bound by their, lengthy multi-page, contracts.

The case involves Henry Ford Village in Dearborn, a continuing care retirement community. Prior to the year 2000 HFV promised that residents would get their full deposit back after they moved out or died when their unit was re-occupied.

As I understand the facts, a problem developed for HFV. The market changed – competing facilities opened in other parts of the metro area – and the units were not as valuable. People did not want to move across town to Dearborn. HFV could not get new residents to put down as large a deposit as before. HFV changed its policy. Representatives of the units could get the full deposit if they were willing to wait for a new resident to pay that much or they could take the lesser amount that HFV could now get for the units. Some former residents took the lesser amount.

A former resident representative sued in court contending that HFV had to pay back the full deposit regardless of whether it got a lesser deposit from a new resident. Attorneys for HFV opposed the suit.  The Court decision allowed the case to proceed as “class action consisting of all residents of HFV who did not receive a full refund of their entrance deposits on their individual units as advertised and promised by defendants.”

The case name is Erma Rogers Revocable Trust v. Erickson Retirement Communities et al, case no. 332495 published December 12, 2017. I also wish to note that the attorney representing the proposed class of residents is former state representative David Honigman an attorney who specializes in class action suits.

The case must yet go to trial and the plaintiff-residents must prove their case. But the moral is a retirement community cannot back out of its contractual duties, even if it has good reason. Residents do have contract rights that they can take to court.