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Presenting an Equity or Type E Agreement

Friday, August 25, 2017

In the past, prospects have either owned or rented real estate so an Equity agreement with its proprietary rights seems more familiar to a mature adult. Having some ownership in a property after an outlay of significant capital may be more comfortable to many consumers.

Equity CCRC Agreement


With an Equity agreement, the prospective resident has the opportunity for home ownership; the resident owns their independent living dwelling within the campus of a Life Plan Community or CCRC. Obviously with home ownership, an Equity agreement requires a significant outlay of cash at the onset in order to purchase the dwelling. As with other agreements, the Equity Life Plan Community provides a variety of services and amenities in addition to multiple levels of care to accommodate any future needs. Monthly fee structure and what is covered in the area of services and amenities may differ from one agreement to another; but frequently an Equity agreement bundles services and provides healthcare discounts similar to a Modified agreement.


Since most Americans were raised to seek and honor home ownership, the fact that Equity agreements actually promote ownership has a dramatic appeal to prospects. Haven’t we been raised with the thought that owning your own home is part of the American dream? Even though the initial investment in entering an Equity agreement may be significant, a prospect feels like they are receiving something more concrete and solid than with the other types of Life Plan agreements. When equity is involved, a resident may finance their home through mortgages or utilize home equity loans. In fact, the home can be bequeathed to children or set up in a family trust. An Equity agreement allows for the joys of home ownership while removing the headaches of home ownership since management undertakes facility maintenance of the home.


Emphasizing the financial advantages of an Equity agreement is one of the strongest incentives toward encouraging a prospect to choose an Equity agreement. Some prospects are in a financial situation that assuming a mortgage on the independent living home is an attractive proposition. Also, the ability to “pass down” the home to children is attractive to those whose progeny are permanently located in the area. Stressing home ownership versus a buy-in creating some form of “virtual” ownership offered by Type A, B, and C agreements creates a convincing argument. Some Equity models require a prospect to turn the property over to management for resale, accompanied by a fee for marketing and selling the home. This procedure can be equated to the model of agreements with refund structures of 80 and 90 percent, making that requirement more palatable.


The Equity model allows a resident to continue to enjoy the joys of home ownership, yet removes the worries over home maintenance and the insecurities of future healthcare. Recognition of the importance of home ownership in the psyche of the American adult can be the basis of the presentation of an Equity plan.

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