In its community integration rule (42 CFR 441.301(c)(4)(5) and 441.710(a)(1)(2)), CMS requires that landlords of provider-owned and provider-controlled homes have a lease or comparable residency agreement with individuals living in those homes. In response to this, DODD, with a workgroup of stakeholders, developed a rule regarding settings in which home and community-based services (HCBS) may be delivered, Ohio Administrative Code 5123-9-02. This rule was updated in December 2022 and has specific requirements for a lease or residency agreement in these settings.

Ohio law only allows provider owned settings in limited circumstances.  Under R.C. 5123.165, “no person or government entity may provide supported living to an individual with a developmental disability if the person or government entity also provides the individual a residence.”  This is subject to limited exceptions. 

Related Terms

Landlord

The landlord is the ‘owner, lessor, or agent of the owner contracted by the owner to manage the premises or to receive rent or room costs in accordance with a lease or a residency agreement meeting the requirements’ set forth in rule.

Lease

A lease is a ‘written rental agreement meeting the requirements for rental agreements set forth in Chapter 5321. Of the Revised Code.’

Limited Exceptions that Allow Provider Owned Settings

There are only two exceptions where providers can only own a home where they provide services: A licensed residential facility or a residence where Shared Living is provided by the homeowner. Both settings require a Residency Agreement. 

Residency Agreements

A residency agreement is required in all licensed residential facilities and all shared living settings where the caregiver is not related to the person served.  The individual and the landlord must both sign the residency agreement to show that they agree with the terms of the agreement.

DODD has published a new Residency Agreement template that may be used in licensed residential facilities and/or Shared Living homes. It is optional to use this template, but Shared Living providers and Licensed Residential Facilities do need to ensure they have a residency agreement that does not have terms contrary to the template and includes the language outlined in Ohio Admin. Code 5123-9-02 (F)(2).
When an individual has a guardian of the person, sometimes landlords ask the guardian to sign the agreement. Guardians of the person do not have the legal authority to sign such an agreement. However, a guardian, such as APSI, may be willing to sign an addendum. You can find a sample “Guardian Addendum to Residency Agreement for Residential Facility” among the available templates.

Provider Controlled Settings

A provider controlled residential setting is a home where the landlord is one of the following:

for independent providers:

The landlord is a corporation, limited liability company, or other entity owned partly or entirely by the independent provider; or

The landlord is an immediate family member of the independent provider (spouse, parent or stepparent, child or stepchild, sibling or step sibling, grandparent or grandchild, cousin, aunt, uncle, nephew, or niece).

for an agency provider:

The landlord is an immediate family member (spouse, parent or stepparent, child or stepchild, sibling or step sibling, grandparent or grandchild, cousin, aunt, uncle, nephew, or niece) of an owner or management employee of the provider; or

The landlord employs a person who is also an owner or management employee of the provider; or

A board member of the provider is also a board member of the landlord’s company; or

The landlord is owned partly or entirely by an owner or management employee of the provider, or an immediate family member of the provider, or

The landlord is an owner or management employee of the provider.

Agencies Cannot be Owners of Provider-Controlled Residential Settings

An agency cannot own a residence that qualifies as a provider-controlled residential setting. The definition of “Provider-controlled residential setting” given in Ohio Admin. Code 5123-9-02(A)(14) does not include any language that would permit this, as an agency cannot own itself, nor can an agency hire itself as a “management employee.” 

Subleasing

The restriction on home and community-based service providers not being able to be both provider and landlord for people they serve includes subleasing. A provider cannot lease a residence from a landlord and through subleasing, or any other arrangement, allow a person served by the provider to live in the home.

Guidance was given in August 2022 that if providers were involved in a subleasing situation, the situation needed to end by August 31, 2023.

Leases

A lease is required in a provider-controlled residential setting. The individual and the landlord must both sign the lease to show that they agree with the terms of the agreement. The lease must include:

  • A statement that the residence is a provider-controlled residential setting and explain the relationship between the landlord and the provider of home and community-based services.
  • A statement that the individual may choose any provider to deliver home and community-based services.

DODD has provided a Lease Addendum template that can be used in addition to a legally binding lease to address these required statements. It is optional to use this template, but providers with provider-controlled settings do need to ensure they have a lease in place that does not have terms contradictory to the template and includes the language outlined in Ohio Admin. Code 5123-9-02 (F)(2).

Setting the Rent

The rule speaks to rent being reasonable and comparable to community standards and that it be set based on the residence and not upon an individual’s ability to pay.

The intent of this section of the rule is to ensure that individuals who pay rent where they live are doing so in a manner in line with their community’s standards and that when individuals share the rent for a setting, everyone is expected to pay an equal amount of rent, regardless of personal resources.

The landlord should set the rent for the setting based on parameters used to set rent amounts for the public. Some resources for setting rent amounts to ensure they are comparable to other homes in the neighborhood are:

  1. HUD’s Fair Market Rents https://www.huduser.gov/portal/datasets/fmr.html#2023
  2. Check rental listings in your local newspaper and on Craigslist. See what other landlords are charging for homes and apartments that match your property(s) in terms of size and features.
  3. Consider geographic factors such as proximity to shopping malls, golf courses, highways, parks, and schools. Renters might pay more for properties when they are in attractive settings.
  4. Network with others who own and rent property and discuss with them the rental market and how much properties are renting for given current economic conditions.

Once a rent amount that is reasonable and comparable to similar homes in the neighborhood has been determined, then the individual and their team (guardian, SSA, advocate, etc.) should work together to determine if the individual can afford the rent based on their current income or if the individual will need some type of rental assistance to afford the rent. In addition to current income, some resources for assisting an individual with meeting their rent responsibility might include:

  1. Gift/Help from family or friends.
    1. Providers should not pay part or entire rent/utilities/food costs/etc.
  2. State or Federal Rental Assistance programs such as HUD, Section 8, Metropolitan Housing, USDA Housing Assistance etc.
  3. Room & Board Subsidy (Licensed Residential Facilities Only)
  4. Local Funds from County Board or Housing Corporation

Ohio Landlord-Tenant Requirements

Tenants and Landlords are also bound by requirements outside of DODD. 

Questions?

Questions about provider owned and provider-controlled settings may be directed to HousingSupport@starkdd.org.