CCRC Type D And E Contracts

Continuing care retirement communities (CCRCs) have three basic contracts and two outliers. In the three standard contracts, there is some risk shift to the CCRC. Here we look at the two outliers: rental contracts and equity contracts. In Type D and E contracts, there is limited or no risk shift to the CCRC. The home or condo where the resident will stay has a different character than in the Contract Types A, B, and C.

CCRC Rental Contracts

Rental CCRC contracts, sometimes known as Type D contracts, are not purchase contracts or long-term leasehold (i.e., right to occupy for long term). The senior is essentially renting the residence on a monthly basis and paying for this right usually month-to-month. There is no buy-in, but there might be a nominal community fee. Contracts can be month-to-month or longer. These costs can be much higher than in the other contracts because of the lack of buy-in.

Access to additional health services or residences is usually not guaranteed. This means your ability to access the on-campus health facility is no greater than a non-community member. Occasionally, the rental contract may offer the renter priority access over non-community residents.

Costs of CCRC Type D Contracts

Monthly costs for Type D contracts (rental units) can be virtually anything. But rents are higher than what one would pay in a buy-in community. Access costs to health facilities if you can get in are charged at the then-current costs. In other words, what someone from outside the facility would pay.

Make Sure To Get Answers To CCRC Rental Contract Questions

Type E Contracts – Equity And Co-op

Equity and co-op contracts, sometimes called Type E contracts, are situations where the residence is owned by the senior. Usually, these types of CCRC get started when a group of homeowners or condo owners get together to create a co-op.

Obviously, there’s no buy-in because the seniors own their own homes. However, there is often a monthly fee that’s used to support the community (maintenance, clubhouse, common property, etc.). The co-op, now a CCRC, may build, purchase or contract with other levels of care facilities and health services. For example, the CCRC may purchase priory occupancy rights at a nearby nursing home or long-term residential care facility. If the CCRC has made these types of agreements, the costs may be reflected in the monthly fees. Otherwise, the health services would be paid for at the then-current rates and priority placement may be unavailable.

One area of challenge is what to do with the property when the homeowner dies? Does the property go to the heirs? Or does the community own the property and sell it to another qualifying senior with the proceeds going to the heirs?

Costs of Equity And Co-Op Contracts

Costs for Type E contracts are tied to community fees. The community fees are for maintenance, common areas and shared amenities. Occasionally a co-op might have contracted with nearby health and alternative residential properties. If so, some of these costs can also be included in the monthly fees.

Make Sure To Get Answers To These Questions

Review The Other Contract Options

Before moving on, make sure you’ve also reviewed Contract A,  Contract B, and Contract C. They are very different and have a substantial impact on short and long-term costs.