There seem to be a few misconceptions re deferred payment agreements. It's not up to the care home whether or not they will accept a deferred payment agreement: this is down to the LA and they must offer such an agreement if the property isn't one that is disregarded, and if there is actual value in the home, and the persons other savings are less that £23,250. Of course, such a deferred payment agreement may not be adequate to pay for care home bills. If you do decide to use the deferred payment agreement, in the event the person in care dies you have 90 days to repay the loan. Interest and setting up fees are likely to payable on such an agreement
The 12 week property disregard only applies where the person entering care has less than the current upper limit of other savings, or when their savings drop to that upper level.
To answer your points in order:
It is unclear to me at what point a house must be sold.
Is it soon after an aged person enters care
or is it after the person dies ?
This is really determined by the person in care's circumstances. If they have adequate income/savings from other sources, then the home does not have to be sold. If by renting the house out this would provide adequate funds, ditto. The thing to remember though, is that in order to sell the home/rent it out/obtain a deferred payment agreement someone will have to be legally able to act for the person in care - this is normally done via a Lasting Power of Attorney, but if one has not been set up, someone will have to apply to become a Deputy.
If it is soon after the person enters care., then if ,for example, the money raised is enough for three years care but the person dies after a couple of months what happens to the balance of the money ??
The balance of the money forms part of the person in care's estate and would be distributed according to their will, if they have one, or via intestate provisions if they don't.
If it is after the person dies , which could potentially be anything up to 30 years after the person enters a care home, what is the status of the house in the meantime?
Can it be lived in ?
Can it be rented out ?
Can it be renovated ?
etc
This goes back to the whole: it's your call thing (or rather the person who holds the LPA/deputyship). If you have a deferred payment agreement, it makes sense that the property should be lived in, either by a family member or by a tenant, as you need to maintain the property and keep it insured etc and this is much easier when someone is living in it. As to renovations: you would need to keep careful records. Some people use their own funds for this, with the understanding that they will be repaid at the time the property is sold, others use some of the person in care's funds. It can be problematic though and generally I would say that if the property needs substantial renovations you might be better off simply selling it as is.
This page talks about deferred payment agreements and other matters related to paying for care
https://www.gov.uk/government/publi...hats-changing/care-and-support-whats-changing
Also read this
https://www.alzheimers.org.uk/site/scripts/documents_info.php?documentID=2710
Edit : nitram got there first