Sandwell Council has sparked fury among the community in Tipton over plans for Walker Grange care home, which could see the site shut down and put on the market for £500,000.
Councillors and West Bromwich West MP Shaun Bailey have urged bosses to rethink the move, while a petition to save the Central Avenue site has more than 1,000 signatures.
Now the authority's influential scrutiny committee have agreed to look into the scheme before making a formal recommendation over whether it should proceed.
Councillor Luke Giles, chair of the authority's Budget and Corporate Scrutiny Management Board, said it was "in the best interests of residents" that the board looked into the plans.
He said: "It is our job to look at issues like this which have caused some concern in the community, and to hold the executive to account.
"The board has overwhelmingly supported this decision to examine the issues surrounding Walker Grange. We will be looking at all information available before making our recommendation."
The future of the care home is currently out to consultation after Sandwell Council argued it was dated, with facilities "proving unsuitable to meet the care and support" of residents.
The site, which opened in the early 1990s, is made up of 39 one-bed apartments and currently has 22 tenants.
Earlier this month the issue was raised in the House of Commons, with Mr Bailey telling MPs that his constituents were getting "turfed out of their care home" even though the council had underspent on adult social care by £2m.
Sandwell Council said that no decision had been made about Walker Grange and that the safety and wellbeing of residents there was "an absolute priority".
The council has said any modernisation of the buildings would require the temporary closure of the care home, creating additional financial pressures for the authority.
This would also mean people having to move into temporary care homes and potential job losses, the council said.