Washington Adult Family Home Change of Ownership

Start with the provider and control test

WAC 388-76-10105 defines control through the power to direct management, operations or policies, including through ownership, voting, agreement or contract. A change in the provider or its control can constitute CHOW. The rule lists organizational changes and transfers of operations among the events to evaluate. (Source: WAC 388-76-10105)

Prepare an ownership and responsibility chart before and after the proposed transaction. Include related entities and management arrangements. A stock purchase, internal restructuring or operating agreement should not be assumed outside the rule merely because the property's owner remains unchanged.

Read the listed events and exceptions in context

The rule includes specified changes in organizational form, mergers, dissolution and certain cumulative share transfers. It also identifies events that do not by themselves constitute an ownership change. Those limited examples are not a blanket exemption for every personnel or ownership adjustment.

Give counsel and DSHS the complete facts rather than choosing a label intended to avoid review. The relevant question is who will actually control the provider and operation. A transaction should reflect that supported determination in its approval schedule and closing conditions.

Obtain the required operating authority before handoff

The CHOW rule requires both a new application and a new license. It states that the new owner must obtain the license before transfer and must not begin operation until it is granted, unless exceptional provisional authority has actually been requested and granted under the cited statute. (Source: WAC 388-76-10105(2), (6))

Do not treat a submitted application, accepted purchase offer or management agreement as equivalent to permission to operate. If an interim arrangement is proposed, obtain a case-specific legal and agency assessment and identify the actual authority supporting it.

Use the sixty-calendar-day ownership notice

WAC 388-76-10106 requires the current owner to provide written notice to the department and residents or applicable representatives sixty calendar days before the proposed change. Its required contents include ownership identities, the home's information, notice date, residents' choice about staying or moving and relevant policy or operational changes. (Source: WAC 388-76-10106)

Prepare the notice with appropriate advisers and keep evidence of delivery. Confidential marketing should be planned around required disclosure rather than promising that no resident or family will learn about the transaction before closing.

Keep ownership and relocation notices separate

The location/address rule, WAC 388-76-10110, requires a new application and license for the new location and at least thirty days' written notice to residents or representatives before that change. It is a different event from ownership change. A transaction involving both needs analysis of both workstreams. (Source: WAC 388-76-10110)

Build a separate notice entry for each applicable event. Identify the responsible sender, recipients, required contents, proposed effective date and delivery evidence. If the transaction also relocates residents, ask the agency and counsel how both requirements apply to the proposed sequence.

Check qualifications for seven/eight-resident homes

WAC 388-76-10032 requires an applicant for CHOW of a seven/eight-resident home to be a currently licensed AFH provider with at least twenty-four months of that licensing history. It also addresses a six-or-more-resident license for the preceding twelve months and specified inspection/enforcement conditions. Read the entire rule with the buyer's evidence. (Source: WAC 388-76-10032)

Do not assume that buying the real estate or retaining the seller's staff qualifies the purchaser. Determine the capacity the buyer can lawfully operate before valuing all historical revenue as repeatable. No automatic alternative capacity is prescribed by this guide if the buyer does not qualify.

Examine license limits, exemptions and enforcement

DSHS advises prospective buyers to check the home's history and current status, including limits, outstanding enforcement and exemptions. Review the available locator information and obtain the seller's current records and correspondence. A public listing may not answer every current question. (Source: DSHS buying-an-AFH guidance)

Ask qualified reviewers which findings affect residents served, staffing, property or ongoing operation. The CHOW rule requires the incoming owner to correct deficiencies existing at the ownership change. Identify the work and cost before relying on a clean historical financial statement.

Do not assume specialty revenue follows the sale

DSHS identifies Meaningful Day Activities, Expanded Community Services and Specialized Behavior Support as examples of specialty contracts that do not transfer on CHOW. The new operator needs the necessary qualifications and an executed specialty contract before providing those specialty services; the guidance also conditions corresponding payment on that contract. (Source: DSHS)

Review the target's actual specialty services and payments separately from its general operating license. Establish the incoming owner's pathway and show any unconfirmed continuation as a dependency. Do not represent a contract application as guaranteed approval or treat all historical specialty receipts as unrestricted future revenue.

Reconcile resident funds and ongoing obligations

The CHOW rule requires funds in resident accounts to remain in an equivalent account. If those funds move, the new owner must promptly provide the specified written information about the new depository. It also requires a copy of the ownership notice to the department. (Source: WAC 388-76-10105(6))

Prepare a supported closing reconciliation and assign custody and communication responsibilities. Distinguish resident-owned funds, deposits, advance payments and ordinary business cash according to the actual records and obligations. A bank balance does not establish that every dollar can fund acquisition costs.

Coordinate property, staffing and financing

The operating approval should be evaluated alongside property rights, condition, permitted use and the intended staffing model. If the seller provides substantial direct support or management, budget the buyer's actual replacement plan. The owner-replacement explanation provides the financial distinction.

Discuss the complete purchase, improvement and working-capital needs with appropriate lenders and advisers. Neither the sixty-day notice nor the seller's existing license establishes a loan commitment, approved property use or sufficient cash for the first months of operation.

Build a dependency-based closing schedule

List the application, notices, qualifications, inspections, required contracts, property conditions and financing steps. Record who supplies the evidence and what confirms completion. Update the schedule when material facts or agency instructions change.

The letter-of-intent guide helps organize the commercial discussion, but legal terms need transaction-specific advice. Do not count backward from a desired date and assume the department will complete its work in the remaining time.

Confirm readiness for the first operating week

Before handing over operations, verify required authority, qualified coverage, essential supplies, payroll, records access, resident funds and emergency responsibility. Staff and residents should know the appropriate contacts and any changes that must be communicated.

Use the residential-home diligence checklist to connect these licensing issues with earnings, property and continuity. This guide addresses a scoped Washington AFH ownership framework; it does not complete the state's tax, brokerage, market, Medicaid-program or every facility-specific requirement.