What is due diligence when buying an assisted living facility?

Due diligence is the buyer's verification process before closing — confirming the license and change-of-ownership path, the financials, census and payer mix, staffing and licensure, the physical plant, and any legal or contract issues match what the seller represented.

What documents should you request when buying an assisted living facility?

Request the current license, the state survey and citation history, 2–3 years of profit-and-loss statements, 36 months of census by care level, all resident agreements, the employee roster with licensure, vendor contracts, insurance loss runs, and a property condition report.

What are the biggest red flags when buying an assisted living facility?

Open state-survey deficiencies, owner dependency (the license or relationships tied to the seller), change-of-ownership delays, Medicaid concentration above roughly 30%, pending litigation, and worker misclassification are the most common deal-killers.

How long does due diligence take on an assisted living facility?

Usually a few weeks to a couple of months, driven mostly by document turnaround and the change-of-ownership (CHOW) license transfer, which should begin as early as the purchase agreement allows.

Assisted Living Due Diligence Checklist for Buyers (2026)

Due diligence is the part of buying an assisted living facility where you confirm the business is what the seller says it is — and where a good deal proves itself or falls apart. Use the checklist below, category by category, before you remove your contingencies.

Want a specialist to run this with you? Get matched with an assisted living expert for your market.

Key takeaways

Verify the license and the change-of-ownership (CHOW) path first — it's the longest pole in the tent.
Trust documented numbers, not the seller's summary — insist on 2–3 years of P&L and the survey history.
Census and payer mix set the value — confirm occupancy and the private-pay vs. Medicaid split.
Owner dependency and open citations are the classic deal-killers — find them early.

Licensing and regulatory

Current license status and expiration
The state's change-of-ownership (CHOW) requirements and timeline
Full survey, inspection, and citation history — including any open plans of correction
OIG exclusion screening for the entity and key staff
Zoning and licensed resident-capacity limits (critical if you plan to add beds)

Financials

Two to three years of profit-and-loss statements
A sell-side or buyer Quality of Earnings review of those numbers
Verified operating expenses and honest, documented add-backs
The current rate roll and any scheduled rate increases
All vendor and service contracts (food, pharmacy, medical, maintenance, software)

Census and payer mix

Occupancy trend over the last 36 months, by care level
Private-pay vs. Medicaid (and other payer) mix — heavy Medicaid concentration is a risk
Every current resident agreement and any move-out notices
Waitlist and referral-source strength

Staffing

Employee roster with licensure and certification status
A qualified, licensed administrator or Executive Director — ideally not you
Caregiver-to-resident ratios and staff turnover
Wage rates, open positions, and whether key staff will stay post-sale
Worker classification (W-2 vs. 1099) — misclassification is a common liability

Physical plant

Independent property condition assessment
Deferred maintenance and capital-expense needs
Life-safety systems and fire-marshal status
ADA and accessibility compliance

Legal and contracts

Real property title, liens, and any leases
Pending or past litigation (including wrongful-death or injury claims)
Insurance loss runs and current coverage
Whether you're buying assets or the business entity — it changes which liabilities transfer to you

The deal-killers to catch early

Some findings should change your price, your terms, or your decision to proceed at all: open survey deficiencies, owner dependency (the license or key relationships tied to the seller personally), CHOW delays, Medicaid concentration above roughly 30%, pending litigation, and worker misclassification. Fixing or pricing these before closing beats discovering them after.

How long does due diligence take?

For most care-home purchases, diligence runs a few weeks to a couple of months, gated mostly by document turnaround and the CHOW license transfer. Start the CHOW application as early as your agreement allows, and lean on your team — a specialized assisted living agent, a healthcare attorney, and an accountant — to keep it moving. For the full buying process, see how to buy an assisted living facility; to understand how these findings affect price, see assisted living facility valuation.

This guide is for informational purposes only and is not financial, legal, or tax advice. Licensing rules and required disclosures vary by state — confirm with the relevant authorities and licensed professionals.

Assisted Living Due Diligence Checklist for Buyers