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                                                                  EXHIBIT 10.103



REGULATORY AGREEMENT                                U.S. DEPARTMENT OF HOUSING
NURSING HOMES                                       AND URBAN DEVELOPMENT
                                                    Office of Housing
                                                    Federal Housing Commissioner


<TABLE>
<S>                                      <C>                   <C>
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Project Number                                                 Mortgagee
121-22031-PM-ALF/REF                                           Red Capital Mortgage, Inc.,
                                                               an Ohio corporation
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Amount of Mortgage Note                                        Date
$2,985,800.00                                                  February 1, 2001
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Mortgage Recorded (State)                County                         Date
California                               Alameda                        February 1, 2001
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Book                                                           Page
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</TABLE>


         This Agreement entered into as of the 1st day of February, 2001 between
RETIREMENT INNS II, LLC, a Delaware limited liability company whose address is
245 Fischer Avenue, Suite D-1, Costa Mesa, California 92626 (jointly and
severally, hereinafter referred to as Lessee) and the undersigned FEDERAL
HOUSING COMMISSIONER, (hereinafter called Commissioner).

         In consideration of the consent of the Commissioner to the leasing of
the aforesaid project by ARV FREMONT, L.P., a California limited partnership,
Mortgagor, and in order to comply with the requirements of the National Housing
Act and the Regulations adopted by the Commissioner pursuant thereto, Lessees
agree for themselves, their successors, heirs and assigns, that in connection
with the mortgaged property and the project operated thereon and so long as the
Contract of Mortgage Insurance continues in effect, and during such further
period of time as the Commissioner shall be the owner, holder or reinsurer of
the mortgage, or during any time the Commissioner is obligated to insure a
mortgage on the mortgaged property:

         (1)      The lease shall be subject and subordinate to the mortgage
                  securing the note or other obligation endorsed for insurance
                  by the commissioner;

         (2)      Lessee shall make payments under lease when due;

         (3)      Payments by the lessee to the lessor shall be sufficient to
                  pay all mortgage payments including payments to reserves for
                  taxes, insurance, etc., payments to the Reserve for
                  Replacements, and to take care of necessary maintenance. If at
                  the end of any calendar year, or any fiscal year if the
                  project operates on the basis of a fiscal



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                  year, payments under the lease have not been sufficient to
                  take care of the above items, the lessor and lessee upon
                  request in writing from the Commissioner shall renegotiate the
                  amounts due under the lease so that such amounts shall be
                  sufficient to take care of such items; the Commissioner shall
                  be furnished by the lessee, within thirty days after being
                  called upon to do so, with a financial report in form
                  satisfactory to the Commissioner covering the operations of
                  the mortgaged property and of the project;

         (4)      The lessee shall not sublease the project or any part thereof
                  without the consent of the Commissioner;

         (5)      The lessee shall at all times maintain in full force and
                  effect a license from the State or other licensing authority
                  to operate the project as a nursing home, but the owner shall
                  not be required to maintain such a license;

         (6)      Lessee shall maintain in good repair and condition any parts
                  of the project for the maintenance of which lessee is
                  responsible under the terms of the lease;

         (7)      Lessee shall not remodel, reconstruct, add to, or demolish any
                  part of the mortgaged property or subtract from any real or
                  personal property of the project;

         (8)      Lessee shall not use the project for any purpose except the
                  operation of a nursing home;

         (9)      If a default is declared by the Commissioner under the
                  provisions of Paragraph 10 of the Regulatory Agreement entered
                  into by the lessor-mortgagor and the Commissioner on the 1st
                  day of February, 2001, a copy of notice of default having been
                  given to the lessee, the lessee will thereafter make all
                  future payments under the lease to the Commissioner;

         (10)     The lease may be cancelled upon thirty days written notice by
                  the Commissioner given to the lessor and the lessee for a
                  violation of any of the above provisions unless the violation
                  is corrected to the satisfaction of the Commissioner within
                  said thirty day period.

         (11)     The Commissioner must approve any change in or transfer of
                  ownership of the lessee entity, and any change in or transfer
                  of the management operation, or control of the project.



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         (12)     The lessee shall not reduce or expand, allow to be reduced or
                  expanded, or cause the expansion or reduction of the bed
                  capacity of the project without the consent of the
                  Commissioner. Any change in the bed capacity shall violate
                  this Regulatory Agreement.

         (13)     The lessee shall not enter into any management contract
                  involving the project, unless such shall contain a provision
                  that, in the event of default under the Regulatory Agreement
                  as recited in paragraph 9 (above) of this Agreement, the
                  management agreement shall be subject to termination without
                  penalty upon written request of the Commissioner. Upon such
                  request the lessee shall immediately arrange to terminate the
                  contract within a period of not more than thirty (30) days and
                  shall make arrangements satisfactory to the Commissioner for
                  continuing proper management of the project.

         (14)     The mortgaged property, equipment, buildings, plans, offices,
                  apparatus, devices, books, contracts, records, documents, and
                  other papers relating thereto shall at all times be maintained
                  in reasonable condition for proper audit and subject to
                  examination and inspection at any reasonable time by the
                  Commissioner or his duly authorized agents. Lessee shall keep
                  copies of all written contracts or other instruments which
                  affect the mortgaged property, all or any of which may be
                  subject to inspection and examination by the Commissioner or
                  his/her duly authorized agents.

         (15)     There shall be full compliance with the provisions of (1) any
                  State or local laws prohibiting discrimination in housing on
                  the basis of race, color, creed, or national origin; and (2)
                  with the Regulations of the Federal Housing Administration
                  providing for non-discrimination and equal opportunity in
                  housing. It is understood and agreed that failure or refusal
                  to comply with any such provisions shall be a proper basis for
                  the Commissioner to take any corrective action he may deem
                  necessary including, but not limited to, the refusal to
                  consent to a further renewal of the lease between the
                  mortgagor-lessor and the lessee, the rejection of applications
                  for FHA mortgage insurance and the refusal to enter into
                  future contracts of any kind with which the lessee is
                  identified; and further, if the lessee is a corporation or any
                  other type of business association or organization which may
                  fail or refuse to comply with the aforementioned provisions,
                  the Commissioner shall have a similar right of corrective
                  action (1) with respect to any individuals who are officers,
                  directors, trustees, managers, partners, associates or
                  principal stockholders of the lessee; and (2) with respect to
                  any other type of business association, or organization with
                  which the officers, directors, trustees, managers, partners,
                  associates or principal stockholders of the lessee may be
                  identified.



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         IN WITNESS WHEREOF, the parties hereto have set their hands and seals
on the date first hereinabove written.


                                 RETIREMENT INNS II, LLC

                                 By: AMERICAN RETIREMENT VILLAS
                                       PROPERTIES II
                                     Its sole member

                                     By: ARV Assisted Living, Inc.
                                         Its General Partner

                                         By:
                                            ---------------------------
                                            Douglas Armstrong
                                            Vice President

                                 February 1, 2001




                                 SECRETARY OF HOUSING AND URBAN
                                 DEVELOPMENT ACTING BY AND
                                 THROUGH THE FEDERAL HOUSING
                                 COMMISSIONER



                                 By:
                                    ----------------------------------
                                    Authorized Agent


                                 February 1, 2001



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