Jump to a section
Key takeaways
- Identify the promise supported by the entrance payment.
- Separate initial and recurring scheduled payments.
- Review refund terms, restrictions and accounting independently.
Begin with the care agreement
An entrance payment can support a long-term service promise. Read the signed contract and its related contracts, including the services, duration, conditions and party that owes the service. The same community may have several contract forms. The promises can differ.
California CDSS distinguishes entrance fees from monthly charges for current housing and services. Its guidance also explains that the promise of care, rather than payment method alone, defines a continuing-care contract in that framework. These are scoped California examples. (Sources: resident guidance; contract FAQ)
A fictional first-year payment schedule
Assume a fictional agreement requires the entrance payment once and twelve unchanged monthly charges. All payments occur as scheduled, with no refund, discount, additional service, financing cost or other adjustment during the year.
| Fictional scheduled payment | Calculation | First-year amount |
|---|---|---|
| Entrance payment | Once | $240,000 |
| Monthly service charges | 12 times $4,000 | $48,000 |
| Total scheduled payments | $240,000 plus $48,000 | $288,000 |
The $288,000 is a first-year payment total under the assumptions. Only $48,000 comes from the stated twelve monthly charges. Neither figure supplies the correct revenue-recognition entry or the cost of a lifetime of care. Future charges and services can follow different terms.
Separate refunds and deposits
The refundable-entrance-fee definition addresses the returnable amount, triggering conditions and payment timing. This page identifies the underlying entrance payment. A refundable deposit may serve a different reservation or security purpose; the names do not make the agreements interchangeable.
Build a schedule by contract type rather than applying one refund percentage to the entire community. Keep the payment history, amendments and open requests connected to the correct agreement through approved access.
Review the promise alongside the cash
Use the CCRC diligence guide to connect entrance receipts with future care, refunds and building costs. Ask the accountant to distinguish cash received, liabilities and book income.
The working-capital guide addresses a separate operating-funding need. Do not count the same receipt as freely available acquisition cash while also relying on it to meet promises to residents.
Frequently asked questions
Is an entrance fee the purchase price of the apartment?
Not automatically. The contract may establish occupancy and care rights or another arrangement. Read the actual interest granted, including any ownership or membership provisions. A large initial payment alone does not establish title to real estate.
Is the full payment recurring annual revenue?
No. The payment schedule, book income and recurring income are different measures. Accountants should assess the income entries and amounts owed. Do not repeat a one-time entrance payment in every forecast year merely because cash arrived.
Are all entrance fees refundable?
No universal answer applies. Contracts and law determine refund rights, calculations and conditions. Review each contract type and amendment. A returnable share also has a timing and funding question, covered in the separate refundable-entrance-fee definition.
Can the purchaser spend all entrance-fee cash at closing?
Do not assume it is cash free to fund the purchase. Check the service promises and refunds. Review escrow and reserve rules, debt documents and sale terms. Match the cash to what is owed before relying on it for payroll, debt or acquisition payments.
Sources
Sources are dated to distinguish current guidance from earlier publications. They support the identified facts; the transaction questions and examples are educational analysis.
- California CDSS: continuing-care residents and families (2026). Retrieved September 5, 2026.
- California CDSS: continuing-care contracts and financial oversight (2026). Retrieved September 5, 2026.