Glossary

Entrance Fee (CCRC)

Also known as: founder's fee, initial entrance fee

A large upfront payment made by an incoming CCRC resident, in addition to ongoing monthly service fees, in exchange for the right to occupy a unit and access the community's continuum of care, with refundability terms varying by contract type.

Entrance fees are typically structured on a declining-balance or fully refundable basis: a declining-balance (amortizing) fee is earned by the community over a set period (often several years) and is non-refundable thereafter, while a fully or partially refundable fee obligates the community to repay some or all of the fee to the resident's estate upon move-out or death, usually upon resale of the unit to a new resident. From a financing perspective, entrance fees function partly as resident-provided development capital and partly as prepaid future care, which is why CCRC entrance-fee liabilities and refund obligations must be actuarially modeled and are a central covenant and disclosure item in CCRC bond financings, distinguishing this financing mechanism sharply from any other seniors housing product.