Buying the business does not simply transfer the existing AFH license
DSHS’s current guidance for buying an AFH through Change of Ownership (CHOW) says the buyer must submit an AFH license application and meet qualification and licensing requirements. Treat the transaction as both a business acquisition and a new licensing process.
Check the home’s current license status, limits and enforcement history
DSHS specifically tells prospective CHOW buyers to check the history and current status of the home. A licensed AFH may have limits on resident types, structural limits, limits on who can provide care, exemptions to particular WAC requirements or outstanding enforcement.
DSHS recommends checking the AFH Locator for limits and enforcement issued within the previous three years and asking the current owner about ongoing limits, exemptions and enforcement.
Specialty contracts may not transfer to the new owner
DSHS states that specialty contracts such as Meaningful Day Activities, Expanded Community Services and Specialized Behavior Support are not transferable through CHOW. The new owner must meet qualifications and have the appropriate fully executed specialty contract before providing those specialty services and receiving payment for them.
If Medicaid residents or Medicaid revenue are part of your business plan, verify the contracting steps for the new ownership structure instead of assuming the seller’s contract automatically continues.
DSHS — Applying for an AFH Medicaid Contract ↗Review the business separately from the real estate
Beyond DSHS licensing, a buyer should understand exactly what is being purchased: the real estate, an operating entity, furnishings, business name, resident agreements, deposits, receivables, staff obligations and other assets or liabilities. Use qualified legal, accounting and real-estate professionals for the transaction documents.
- Confirm whether the home is owned, leased or separately transferred.
- Inventory furniture, equipment and safety systems.
- Review insurance and payroll obligations.
- Understand resident agreements and transition communication.
- Build a cash-flow plan for the period before all contracts and referrals are in place.
Organize licensing and closing milestones together
- Verify the AFH license, enforcement history, limits and exemptions.
- Confirm your personal/provider qualifications.
- Review the property approval and any alterations since inspection.
- Submit the required AFH license application and supporting documents.
- Confirm Medicaid and specialty-contract requirements.
- Coordinate resident, staff and operational transition planning.
- Do not assume the seller’s timelines are your licensing timelines.
A CHOW can be faster to operationalize than building a home from scratch, but only when the regulatory and business-transfer pieces are handled carefully.
Frequently asked questions
Does an AFH license transfer when I buy the business?
DSHS says a buyer using the CHOW process must submit an AFH license application and meet current qualification and licensing requirements. Do not treat the seller’s license as an automatically transferable asset.
What should I check before buying an existing AFH?
DSHS specifically recommends checking current license status, limits, enforcement history, exemptions and other restrictions. Business, property, resident and contract due diligence are also important.
Do specialty contracts transfer in an AFH CHOW?
No. DSHS says specialty contracts such as Meaningful Day Activities, ECS and SBS are not transferable through a change of ownership. The new owner must qualify and execute the appropriate contract.
Can I keep Medicaid residents after buying an AFH?
Resident transitions and payment arrangements require careful coordination. Verify licensing, Medicaid-contract and case-management requirements with DSHS before closing or promising continuity of payment.