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Exhibit 10.7
                               LEASEHOLD MORTGAGE

         THIS LEASEHOLD MORTGAGE (the "Mortgage") is made effective as of
January 1, 2002 (the "Effective Date") by BALANCED CARE TENANT (HCN), INC., a
corporation organized under the laws of the State of Delaware ("Tenant"), having
its chief executive office at 1215 Manor Drive, Mechanicsburg, Pennsylvania
17055, in favor of HEALTH CARE REIT, INC., a corporation organized under the
laws of the State of Delaware ("Lender"), having its principal office at One
SeaGate, Suite 1500, P. O. Box 1475, Toledo, Ohio 43603-1475.

         A.       Tenant is the owner of a leasehold interest in the Real
                  Property (defined below).

         B.       Lender has extended a loan as further described in Article 2
                  hereof. Lender has requested that Tenant enter into this
                  Mortgage to grant a lien on Tenant's leasehold interest in the
                  Property (defined below).

         C.       A Memorandum of Lease dated of even date herewith has been
                  recorded simultaneously with this Mortgage in the appropriate
                  recording office.

         Tenant has executed and delivered this Mortgage and by these presents
does mortgage, warrant, grant, transfer and convey to Lender and to its
successors and assigns, forever all of Tenant's right, title, and interest to
and under the following property which Tenant now owns or may hereafter acquire:

         1. The leasehold estate of Tenant in the real property described on
Exhibits A-1 through A-5 attached hereto and made a part hereof ("Real
Property") which is subject to the Master Lease Agreement dated as of January 1,
2002 by and between Pennsylvania BCC Properties, Inc., a corporation organized
under the laws of the State of Pennsylvania and HCN BCC Holdings, Inc., a
corporation organized under the laws of the State of Delaware (collectively,
"Landlord") and Tenant, and as amended from time to time (the "Lease") for the
operation of the facility located on the Real Property ("Improvements"),
together with all options to purchase or lease said Real Property or any portion
of or interest in that Real Property, all modifications, extensions and renewals
of the Lease and all rights to renew, cancel, modify or terminate the Lease or
extend the term of the Lease and all options, privileges and rights
<PAGE>
granted Tenant under the Lease. The Real Property and Improvements are
collectively referred to as the "Property".

         TO HAVE AND TO HOLD the same with all of the rights, privileges and
appurtenances thereto belonging unto Lender, its successors and assigns forever
in accordance with the terms and conditions set forth herein.

                              ARTICLE 1: WARRANTIES

Tenant covenants with Lender and its successors and assigns that the Lease is in
all respect valid and in full force and effect, that Tenant is not in default
under any of the terms and provisions thereof, that Tenant has no knowledge of,
nor has received any notice from the Landlord of any default under the Lease, or
that any controversy exists involving any claim of default under the Lease.

                               ARTICLE 2: PURPOSES

2.1 Secured Obligations. This Mortgage secures performance of the following
obligations (the "Secured Obligations"):

2.1.1 Payment of Credit Extended. The payment of the indebtedness of Balanced
Care Corporation, a corporation organized under the laws of the State of
Delaware ("Borrower") to Lender in the original principal amount of
$1,500,000.00, plus interest on the unpaid balance thereof, which indebtedness
is evidenced by a note made by Borrower in favor of Lender ("Note") with a
maturity date of the earlier of [i] the Option Closing Date (as defined in the
Note), or [ii] December 21, 2006 and any extensions, modifications,
substitutions or renewals of the indebtedness or the Note.

2.1.2 Obligations Under Loan Documents. The performance of (i) all obligations
of Borrower under the Note, (ii) all obligations of the Tenant under this
Mortgage, and (iii) any extensions, modifications or renewals of any document
set forth in the foregoing subsections (i) and (ii), and any documents executed
in substitution therefor (collectively, the "Loan Documents").

2.1.3 Advances to Protect Property. The payment of unpaid balances of all
advances made by Lender for the payment of taxes, assessments, insurance
premiums, or costs incurred for the protection of the Property if paid by Lender
in accordance with the terms of the Lease.

2.2      [Intentionally Deleted]


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2.3 Interpretation. This Mortgage form is and shall be construed accordingly to
reflect the fact that the credit giving rise to the Secured Obligations would
not have been extended by Lender but for the security provided by this Mortgage.
Where the sense requires it, the singular may be read as the plural or the
reverse and any gender may be read as any other gender.

                              ARTICLE 3: COVENANTS

3.1 Obligations. Tenant shall pay and perform all Secured Obligations of Tenant
when due and required.

3.2      Lease.

3.2.1 Tenant agrees to keep and perform all obligations of the tenant under the
Lease. Tenant agrees not to commit or permit any breach of the Lease. If Tenant
shall default at the performance of any obligations of the Lease beyond
applicable cure periods, if any, Lender may, at its option and after written
notice to and receipt of consent from Landlord, with or without notice to Tenant
unless otherwise required, take any action necessary or desirable to cure the
default. Tenant authorizes Lender to enter upon the Real Property for that
purpose.

3.2.2 Tenant agrees to give written notice to Lender of any default under the
Lease within Tenant's knowledge, or the receipt by Tenant of any notice of
default from Landlord and to furnish to Lender all information that Lender may
request concerning the performance by Tenant of obligations of the tenant under
the Lease.

3.2.3 Lender does not assume, nor shall it be deemed to have assumed or
otherwise be responsible for, performance of any of the obligations of Tenant as
Lessee under the Lease.

3.2.4 Tenant agrees that as long as this Mortgage is in effect, there shall be
no merger of the Lease with the fee estate of the Real Property, by reason of
the fact that the Lease may be held directly or indirectly by or for the account
of any person who shall hold the fee interest in all or part of the Real
Property or any interest of the Landlord under the Lease. In the event Tenant
acquires the fee title or any other interest in the Real Property covered by the
Lease, unless Tenant furnishes to Lender evidence reasonably satisfactory to
Lender that the leasehold estate and the fee estate have not merged and the
Lease retains priority over any encumbrances on the fee interest or other
interest in the Real Property (or that there are no such encumbrances), this
Mortgage will attach to and cover and be a


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lien upon the fee title or such other interest so acquired and the fee title or
other interest shall, without further assignment, mortgage or conveyance, become
subject to the lien of this Mortgage.

3.2.5 Except as otherwise set forth in the Lease, so long as this Mortgage is in
effect, Tenant agrees that no surrender or termination of the Lease, in whole or
in part, shall be valid or effective.

3.2.6 Tenant agrees that if the Lease is terminated prior to the expiration of
its term by reason of Tenant's default, and if, pursuant to any provision of the
Lease, or otherwise, Lender or its designee shall acquire, from Landlord, a new
lease of the fee interest of the Property or any part of the Property, Tenant
shall have no right, title or interest in the new lease.

3.2.7 Tenant agrees that if any action or proceeding shall be instituted to
evict Tenant or to recover possession of the Property or for any other purpose
affecting the Lease or this Mortgage, Tenant will immediately deliver to Lender
true copies of the complaint, summons, and all other pleadings and papers
received by Tenant.

3.3 Insurance. Tenant shall furnish to Lender copies of all insurance policies,
certificates and other evidence of insurance required under the Lease on or
before the dates provided in the Lease and with those policies, certificates or
other evidence of insurance are required to be furnished to the Landlord under
the Lease.

3.4      Funds for Impositions and Insurance.

3.4.1 After an Event of Default and with the written consent of Landlord,
provided Landlord does not require such payments under the Lease, at the request
of Lender, Tenant shall pay to Lender a sum (called "Funds") equal to
one-twelfth of the yearly payments for Impositions (as defined in the Lease) and
insurance on the Property, as may be reasonably estimated by Lender. The Funds
paid to Lender shall be used to make the specified payments and as additional
security for the Secured Obligations.

3.4.2 The Funds shall be deposited by Lender with an institution the deposits or
accounts of which are insured or guaranteed by federal or state agency, and
shall not be deemed to be funds held in trust, and may be held with the general
funds of such depository. The funds shall be placed in an interest-bearing
account. All interest thereon shall be considered "Funds".


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3.4.3 If the amount of the Funds held by Lender together with future monthly
installments of Funds payable prior to the due dates of the Impositions and the
insurance on the Property shall not be sufficient to make payments as they fall
due, Tenant shall pay to Lender the amount necessary to pay the deficiency
within 10 days after the date from which Lender gives notice requesting payment
thereof.

3.4.4 Upon performance in full of the Secured Obligations, Lender shall promptly
refund to Tenant any Funds held by Lender.

3.4.5 If the Property is sold or acquired by Lender, Lender shall apply any
Funds then held by Lender as a credit against the Secured Obligations.

3.4.6 Lender has the right to make payments for which it is holding Funds.

3.5 Application of Payments. All payments and proceeds of sale received by
Lender under this Mortgage shall be credited as set forth in the Note.

3.6 Charges and Liens. Except to the extent Tenant makes payments therefor under
Section 3.4 and except for items being contested in good faith, in compliance
with the requirements of the Lease, Tenant shall promptly pay before delinquent
taxes, assessments, levies, and any other charges which have or may become a
lien on any of the Property.

3.7 Preservation of Property. Subject to the terms of the Lease, Tenant shall
keep the Property in good repair, and shall neither commit waste nor permit
impairment or deterioration of the Property.

3.8 Protection of Security. If Tenant fails to perform Tenant's agreements under
this Mortgage or if any action or proceeding is commenced which materially
affects Lender's interest in the Property, including, without limit, any
proceeding concerning eminent domain, insolvency of Tenant, any decedent, or
enforcement of any ordinance, legislation, or regulation, then Lender is
authorized to make such appearances, disburse such sums, and take such action
that Lender reasonably determines is necessary or desirable to protect the
Property and Lender's interest therein, including, without limit, the
disbursement of sums for payment of reasonable attorneys' fees, taxes,
assessments, insurance premiums, costs incurred for the protection of the
Property, and the entry upon the Property to make repairs.


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3.9 Inspection. After reasonable notice to Tenant, Lender or any person
authorized by Lender may enter upon and inspect any of the Property at all
reasonable times.

3.10 Eminent Domain. If the Property or any part thereof becomes the subject of
any proceeding ("Condemnation") for the taking of property or any conveyance in
lieu thereof, the provisions set forth in the Lease regarding Condemnation shall
prevail in the event that there are any proceeds paid to Tenant as a result of a
Condemnation.

3.10.1 Payment Pending Restoration. Tenant's obligation to make payment on
Secured Obligations shall not abate pending any repair or restoration of the
Property due to the Condemnation.

3.11 Other Mortgages and Liens.

3.11.1 Prior Mortgages. If any of the Property is subject or becomes subject to
a lien prior to the lien of this Mortgage, the following provisions shall apply:

         [i] Tenant shall pay when due all amounts required to be paid under any
obligation secured by a prior lien and shall otherwise perform all of the
obligations of Tenant hereunder.

         [ii] Tenant shall not request, accept, or permit payment to Tenant of
any loan amount or disbursement the repayment of which is secured by any prior
mortgage without prior express written consent from Lender.

         [iii] Tenant shall be in compliance with Sections 3.3 and 3.4 if
Tenant pays the Impositions and maintains the insurance coverage required under
any prior mortgage to which Lender has expressly consented.

         [iv] A default in any prior mortgage shall be a default under this
Mortgage.

         [v] Lender may cure any defaults of Tenant under any prior Mortgage or
pay, in whole or in part, any prior lien. To the extent of such payments, Lender
shall be subrogated to the rights and lien of the prior lien; however, any prior
lien rights to which Lender may become subrogated shall not merge with the lien
of this Mortgage.

3.11.2 No Merger of Liens. Lender may at any time during the term of this
Mortgage hold more than one lien against the Property or any part thereof. All
such liens held by Lender shall remain separate and distinct from each other and
each


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shall retain its individual priority and shall not merge with any other lien
held by Lender, unless and until Lender executes and records an instrument
expressly merging any such liens. If a default in this Mortgage occurs, Lender
may foreclose upon any lien against the Property held by it in such order and at
such times as Lender may elect. If Lender acquires title to the Property other
than through foreclosure of this Mortgage, the lien of this Mortgage shall
continue and shall not merge with Lender's title to the Property.

3.11.3 No Consent. Nothing in this Section 3.11 shall be construed to mean that
Lender consents to any lien prior to the lien of this Mortgage.

3.12 Advances and Default Rate. Any payment made by Lender that Lender has the
right to make under any term of this Mortgage (except for payments from Funds
for which Funds have been deposited by Tenant) and expenses incurred and
payments made by Lender in taking action authorized by this Mortgage shall be
indebtedness of Tenant secured by this Mortgage, shall be payable upon demand,
shall bear interest at the Default Rate (as defined in the Note) from the date
of disbursement, and shall be deemed advances under subsection 2.1.3.

3.13 Damage, Destruction and Rebuilding. In the event of a Casualty (as defined
in the Lease), Tenant shall comply with the terms of the Lease.

3.13.1 No Abatement; Expenses. Tenant's obligation to make payments on Secured
Obligations shall not abate pending the repairs or rebuilding of the Property.
Tenant shall pay the costs, expenses and fees of any architect or engineer
employed by Lender to review any plans and specifications and to supervise and
approve the repairs or rebuilding of the Property.

                 ARTICLE 4: TRANSFER OF THE PROPERTY; ASSUMPTION

4.1 Tenant's Successors. This Mortgage shall be binding upon Tenant's successors
and assigns and shall be binding upon and inure to the benefit of Lender and its
successors and assigns; however, Tenant may neither assign Tenant's rights under
this Mortgage nor delegate Tenant's duties under this Mortgage without the
express written consent of Lender.

4.2 No Transfer. Except for transfers made in connection with Permitted Liens
(as defined in the Lease) or subleases or assignments otherwise permitted in the
Lease, including, but not limited to, those permitted Subleases (as defined in
the Lease) set forth in Section 18.1 of the Lease, Tenant shall not sell, lease,


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grant a lien on or security interest in, or otherwise transfer or encumber all
or any part of the Property or any legal or equitable interests therein without
the prior written consent of Lender.

4.3 No Release of Tenant. No sale, transfer, or encumbrance of the Property or
of Tenant's rights under this Mortgage and no delegation of Secured Obligations
under this Mortgage or any other Secured Obligations shall release Tenant from
liability for any Secured Obligations unless: [i] Lender and such transferee or
delegee agree in writing that such transferee or delegee is satisfactory to
Lender and that such transferee or delegee shall perform the Secured Obligations
and pay such interest thereon as Lender may request, and [ii] Lender delivers to
Tenant a written release.

                              ARTICLE 5: [RESERVED]

                 ARTICLE 6: DEFAULT, ACCELERATION, AND REMEDIES

6.1 Event of Default. The occurrence of any Event of Default under a Loan
Document or the Lease shall constitute an Event of Default under this Mortgage.

6.2 Rights and Remedies Upon Default. Whenever any Event of Default occurs,
subject to the prior rights of Landlord and with Landlord's prior written
consent, Lender may take any one or more of the following remedial steps
concurrently or successively in addition to any other remedies under the Loan
Documents, at law or in equity, to the extent permitted by applicable law.

6.2.1 Lender may enter and take possession of the Property without terminating
this Mortgage, and complete construction of the Improvements (or any part
thereof) and perform the obligations of Tenant under the Loan Documents.

6.2.2 The Property may be sold by private sale without judicial process or
appraisal (the same being hereby waived) upon 10 days' notice to Tenant and, by
such sale, foreclose Tenant's equity of redemption in the Property completely
and as effectively as through an action to foreclose, the same being hereby
waived.

6.2.3 Lender may foreclose this Mortgage or accept delivery of a deed in lieu of
foreclosure. In any foreclosure or sale, the Property may be sold in one or more
parcels, lots, or groups (including mixtures of personal and real property, or
separately, any provision of law to the contrary


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notwithstanding) and, to the extent permitted by law, Lender shall be under no
obligation either to marshal any assets of the Tenant or to marshal any portions
of the Property.

6.2.4 Lender may sue Tenant directly to collect any monies then due and may take
any action at law or equity (including bringing an action for a mandatory
injunction, restraining order or specific performance) to enforce performance of
the Secured Obligations.

6.2.5 For any security in which no interest arises under real estate law, Lender
may exercise its rights as a secured party under Article 9 of the Uniform
Commercial Code. Tenant agrees that a commercially reasonable manner of
disposition of the Property subject to security interests under Article 9 shall
include, without limitation and at the option of Lender, the sale of the
Property in whole or in part, concurrently with the foreclosure sale of the
Property in accordance with the provisions of this Mortgage.

6.2.6 Lender may, and is hereby authorized by Tenant, at any time or from time
to time, to the fullest extent permitted by law, without advance notice to
Tenant (any such notice being expressly waived by Tenant) to set off and apply
any and all sums held by Lender, any indebtedness of Lender to Tenant, any and
all claims by Tenant against Lender, against any obligations of Tenant under the
Loan Documents, whether or not such obligations or claims of Tenant are matured
and whether or not Lender has exercised any other remedies hereunder.

6.2.7 In any action or proceeding to foreclose this Mortgage, or upon actual or
threatened waste to any part of the Property, Lender may apply, without notice
to Tenant, for the appointment of a receiver ("Receiver") of the Property.
Unless prohibited by law, such appointment may be made either before or after
sale, without notice, without regard to the solvency or insolvency of Tenant at
the time of application for such Receiver and without regard to the then value
of the Property, and Lender may be appointed as Receiver. The Receiver shall
have the power to collect the rents, issues and profits of the Property during
the pendency of the foreclosure and, in case of a sale and deficiency during the
full statutory period of redemption, whether there be redemption or not, as well
as during any future times, if any, when Tenant, except for the intervention of
such Receiver, would be entitled to collect such rents, issues and profits, and
all other powers which may be necessary or are usual in such cases for the
protection, possession, control, management and operation of the Property


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during the whole of said proceeding. All sums of money received by the Receiver
from such rents and income, after deducting therefrom the reasonable charges and
expenses paid or incurred in connection with the collection and disbursement
thereof, shall be applied to the payment of the Secured Obligations or applied
to remedy any default hereunder as Lender may direct. Tenant, if requested to do
so, will consent to the appointment of any such Receiver as aforesaid.

6.2.8 Lender may take any other action which Lender is entitled to take under
any law, equity, or the Loan Documents.

6.2.9 Lender may, at its option, but without any obligation so to do, and
without waiving or releasing Tenant from any of the agreements and covenants in
the Loan Documents, pay any sum or perform any act or take such action as Lender
may deem necessary or desirable in order to protect the lien of this Mortgage,
the Property or otherwise in the sole discretion of Lender. Tenant hereby grants
to Lender, and agrees that Lender shall have, after the occurrence of one or
more Events of Default, the absolute and immediate right to enter in and upon
the Property or any part thereof to such extent and as often as Lender, in its
sole discretion, deems necessary or desirable for such purpose. Lender may pay
and expend such sums of money as it may, in its sole discretion, deem necessary
for the purposes stated herein. Tenant hereby agrees to pay to Lender, on
demand, all such sums so paid or expended by Lender, together with interest
thereon from the date of each such payment or expenditure at the default rate
specified in the Note.

6.3 Sale of Property. Subject to the prior rights of Landlord and with
Landlord's prior written consent, the following provisions apply to any sale of
the Property pursuant to this Article 6 or pursuant to any judicial proceeding.

6.3.1 Receipt Sufficient Discharge for Purchaser. The receipt of the court
officer or other person conducting any such sale for the purchase money paid at
any such sale shall be sufficient discharge thereof to any purchaser of the
Property, or any part thereof, sold as aforesaid. No such purchaser or his
representatives, grantees or assigns, after paying such purchase money and
receiving such receipt, shall be bound to see to the application of such
purchase money upon or for purpose of this Mortgage, or shall be answerable in
any matter whatsoever for any loss, misapplication or non-application of any
such purchase money or any part thereof, nor shall any such purchaser be bound
to inquire as to the necessity or expediency of any such sale.


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6.3.2 Lender's Purchase of Property. Lender or any holder of the Note may bid
for and purchase the Property being sold, and upon compliance with the terms of
sale. Lender or any holder of the Note may hold, retain, possess and dispose of
such Property in its own absolute right without further accountability.

6.3.3 Application of Proceeds of Sale. Unless Lender elects otherwise, the
purchase money or proceeds of any such sale shall be applied first, to all
charges, expenses and fees payable by Tenant and Borrower under the Loan
Documents, including all attorney's fees, Receiver's fees and other costs and
expenses incurred by Lender, with interest thereon at the default rate specified
in the Note; second, to all unpaid interest accrued on any of the Secured
Obligations; third, to the principal amount outstanding of the Secured
Obligations; and the balance, if any, to Tenant.

6.3.4 No Defense; Waiver. Failure to join or to provide notice to subtenants of
Tenant in the Property as defendants in any foreclosure action or suit shall not
[i] constitute a defense for Tenant to such foreclosure; [ii] preclude Lender
from obtaining a deficiency judgment against Borrower or otherwise reduce or
diminish the amount of any such judgment in any manner whatsoever; or [iii] give
rise to any claims by Tenant, or any person claiming through or under Tenant,
against Lender. Upon the request of Lender and to the extent not prohibited by
applicable law, Tenant shall execute and file with the clerk of the court a
legally sufficient waiver of any statutory waiting period with respect to the
execution of a judgment obtained by Lender in connection with any foreclosure
proceedings. The obligations of Tenant to so execute and file such waiver shall
survive the termination of this Mortgage.

                            ARTICLE 7: MISCELLANEOUS

7.1 Advances by Lender. At any time and from time to time during the term of
this Mortgage, Lender may incur and/or pay and/or advance costs or expenses [i]
incurred or advanced by Lender which Lender is authorized or has the right (but
not necessarily the obligation) to incur or may incur under any term of any Loan
Document or any law; [ii] of whatever nature incurred or advanced by Lender in
exercising any right or remedy provided by any term of any Loan Document or in
taking any action which Lender is authorized to take by any term of any Loan
Document; [iii] required to be paid by Tenant by any term of any Loan Document,
but which Tenant fails to pay upon demand; or [iv] any and all costs and
expenses from which Tenant is required to hold Lender harmless by any term of
any Loan


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Document, but from which Tenant fails to hold Lender harmless. Any reasonable
costs, expenses, or advances incurred or paid by Lender shall become part of the
indebtedness evidenced by the Loan Documents and, upon demand, shall be paid to
Lender together with interest thereon at the default rate specified in the Note
from the date of disbursement by Lender. Payment of such costs, expenses, or
advances shall be secured by this Mortgage.

7.2 Attorney's Fees and Expenses. Tenant shall pay all reasonable costs and
expenses incurred by Lender in enforcing or preserving Lender's rights under
this Mortgage, and all other Loan Documents, and in all matters of collection,
whether or not an Event of Default has actually occurred or has been declared
and thereafter cured, including, but not limited to, [i] the reasonable fees,
expenses, and costs of any litigation, receivership, administrative, bankruptcy,
insolvency or other similar proceeding; [ii] reasonable attorney and paralegal
fees and disbursements; [iii] the reasonable expenses of Lender and its
employees, agents, attorneys, and witnesses in preparing for litigation,
administrative, bankruptcy, insolvency or other proceedings and for lodging,
travel and attendance at meetings, hearings, depositions, and trials in
connection therewith; [iv] court costs; and [v] consulting and witness fees and
expenses incurred by Lender in connection with any such proceedings. All such
costs, charges and fees as incurred shall be deemed to be secured by this
Mortgage and collectible out of the proceeds of this Mortgage in any manner
permitted by law or by this Mortgage.

7.3 Construction of Rights and Remedies and Waiver of Notice and Consent.

7.3.1 The provisions of this Section 7.3 shall apply to all rights and remedies
provided by this Mortgage or any Loan Document or by law or equity provided
Lender obtains Landlord's prior written consent.

7.3.2 WAIVER OF NOTICES AND CONSENT TO REMEDIES. Unless otherwise expressly
provided herein, any right or remedy may be pursued without notice to or further
consent of Tenant, both of which Tenant waives.

7.3.3 Each right or remedy under the Loan Documents is distinct from but
cumulative to each other right or remedy and may be exercised independently of,
concurrently with, or successively to any other rights and remedies.


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7.3.4 No extension of time for or modification of amortization of the loan shall
release the liability or bar the availability of any right or remedy against
Tenant or any successor in interest, and Lender shall not be required to
commence proceedings against Tenant or any successor or to extend time for
payment or otherwise to modify amortization of the loan secured by this Mortgage
by reason of any demand by Tenant or any successor.

7.3.5 Lender has the right to proceed at its election against all security or
against any item or items of such security from time to time, and no action
against any item or items of security shall bar subsequent actions against any
item or items of security.

7.3.6 No forbearance in exercising any right or remedy shall operate as a waiver
thereof; no forbearance in exercising any right or remedy on any one or more
occasion shall operate as a waiver thereof on any further occasion; and no
single or partial exercise of any right or remedy shall preclude any other
exercise thereof or the exercise of any other right or remedy.

7.3.7 Failure by Lender to insist upon the strict performance of any of the
covenants and agreements herein set forth or to exercise any rights or remedies
upon default by Tenant hereunder shall not be considered or taken as a waiver or
relinquishment for the future of the right to insist upon and to enforce by
mandamus or other appropriate legal or equitable remedy strict compliance by
Tenant with all of the covenants and conditions hereof, or of the rights to
exercise any such rights or remedies, if such default by Tenant is continued or
repeated, or of the right to recover possession of the Property by reason
thereof. To the extent permitted by law, any two or more of such rights or
remedies may be exercised at the same time.

7.3.8 If any covenant or agreement contained in any Loan Document is breached by
Tenant and thereafter waived by Lender, such waiver shall be limited to the
particular breach so waived and shall not be deemed to waive any other breach
thereunder. No waiver shall be binding unless it is in writing and signed by
Lender. No course of dealing between Lender and Tenant, nor any delay or
omission on the part of Lender in exercising any rights under any of the Loan
Documents, shall operate as a waiver.

7.3.9 The lien of this Mortgage shall not be affected by reason of [i] the
failure of Lender to comply with any request of Tenant (or of any other person
so obligated) to take action to foreclose this Mortgage or otherwise enforce any
of the


                                      -13-
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provisions of this Mortgage or of any of the Secured Obligations, or [ii] the
release, regardless of consideration, of the obligations of any person liable
for payment or performance of the Note, or any part thereof, or [iii] any
agreement or stipulation extending the time of payment or modifying the terms of
the Note, and, in the event of such agreement or stipulation, Tenant and all
such other persons shall continue to be liable under such documents, as amended
by such agreement or stipulation unless expressly released and discharged in
writing by Lender.

7.3.10 Tenant, for itself and its successors and assigns, hereby irrevocably
waives and releases, to the extent permitted by law, and whether now or
hereafter in force, [i] the benefit of any and all valuation and appraisement
laws, [ii] any right of redemption after the date of any sale of the Property
upon foreclosure, whether statutory or otherwise, in respect of the Property,
[iii] any applicable homestead or dower laws, and [iv] all exemption laws
whatsoever and all moratoriums, extensions or stay laws or rules, or orders of
court in the nature of any one or more of them.

7.3.11 Nothing contained in any of the Loan Documents shall constitute any
consent or request by Lender, express or implied, for the performance of any
labor or services or the furnishing of any materials or other property in
respect of the Property or any part thereof, or be construed to permit the
making of any claim against Lender in respect of labor or services or the
furnishing of any materials or other property or any claim that any lien based
on the performance of such labor or services or the furnishing of any such
materials or other property is prior to the lien of this Mortgage.

7.4 Notices. All notices, demands, requests, and consents (hereinafter
"Notices") given pursuant to the terms of this Mortgage shall be in writing,
shall be addressed to the addresses set forth in the introductory paragraph of
this Mortgage, to Borrower at the address set forth in the Note and to Landlord
at the address set forth in the Lease, and shall be served by [i] personal
delivery; [ii] United States mail, postage prepaid; or [iii] nationally
recognized overnight courier. All Notices shall be deemed to be given upon the
earlier of actual receipt or three days after mailing or one business day after
deposit with the overnight courier. Any Notices meeting the requirements of this
Section shall be effective, regardless of whether or not actually received.
Lender and Tenant may change their notice address at any time by giving the
other party written notice of such change.


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<PAGE>
7.5 Amendment. This Mortgage may be amended only by a writing signed by Lender
and Tenant and consented to by Landlord. All references to this Mortgage,
whether in this Mortgage or in any other document or instrument, shall be deemed
to incorporate all amendments, modifications and renewals of this Mortgage made
after the Effective Date.

                            ARTICLE 8: INTERPRETATION

8.1 Captions. The captions and headings contained in this Mortgage are for
convenient reference only and are not to be used to interpret or define the
provisions hereof.

8.2 Severability. If any provision of this Mortgage or the application thereof
to any party or circumstance shall, to any extent, be adjudged to be invalid or
unenforceable, the remainder of this Mortgage and the application of any such
provision to other parties or circumstances shall not be affected thereby, and
each provision of this Mortgage shall be valid and enforceable to the fullest
extent permitted by law.

8.3 Governing Law. This Mortgage and the rights and obligations of the parties
hereunder shall be governed by and construed and interpreted in accordance with
the laws of the State of Ohio, except that the creation and perfection of liens
and security interests in the Property, and the procedures for foreclosure and
execution of the liens and security interests shall be governed by, construed
and interpreted in accordance with the laws of the state where the Real Property
at issue is located, in each case without regard to the conflict of law rules of
such state.

8.4 Survival. All agreements, representations, and warranties contained in this
Mortgage shall survive the execution and delivery of this Mortgage, and shall be
deemed to be effective continuously throughout the term of this Mortgage.

8.5 Conflict in Provisions. In the event of any conflict in the provisions of
this Mortgage and the Lease, the terms and provisions of the Lease shall govern.

                             ARTICLE 9: CONSTRUCTION

9.1 No Liability for Lender. Tenant hereby acknowledges and agrees that the
undertaking of Lender under this Mortgage is limited as follows:

         (a) Lender is not and will not be in any way the agent for or trustee
of Tenant. Lender does not intend to act in any way


                                      -15-
<PAGE>
for or on behalf of Tenant in disbursing the proceeds. Lender's purpose in
making the requirements set forth herein is to protect the validity and priority
of this Mortgage and the value of its security.

         (b) This Mortgage is not to be construed by Tenant or anyone furnishing
labor, materials, or any other work or product for improving the Property as an
agreement by Lender to assure that anyone will be paid for furnishing such
labor, materials, or any other work or product. Tenant is and shall be solely
responsible for such payments.

         (c) Lender is not responsible for construction of any improvements to
the Property. Notwithstanding Lender's inspection of the Property and the
improvements, Lender assumes no responsibility for the quality of construction
or workmanship, or for the architectural or structural soundness of any
improvements to the Property, or for the adherence to or approval of any plans
and specifications for any improvements to the Property.

         NOW, THEREFORE, if Borrower shall pay the Secured Obligations in full
and Tenant shall fully comply with this Mortgage, then this Mortgage and the
estate hereby granted shall cease, and Lender shall thereupon release this
Mortgage at the cost and expense of Borrower (all claims for statutory
penalties, in case of Lender's failure to release, being hereby waived);
otherwise, this Mortgage shall remain in full force and effect.

               [THE REMAINDER OF THIS PAGE IS INTENTIONALLY BLANK]


                                      -16-
<PAGE>
         IN WITNESS WHEREOF, this Mortgage has been duly executed as of (but not
necessarily on) the Effective Date.

Signed and acknowledged in the            BALANCED CARE TENANT (HCN),
presence of:                              INC.

Signature /s/Theresa M. Haddad            By:/s/Robin L. Barber
                                                Robin L. Barber
Print Name Theresa M. Haddad                    Vice President and

                                                Secretary

Signature /s/Robert J. Sutton             Tax I.D. No.: 25-1883367

Print Name Robert J. Sutton

STATE OF PENNSYLVANIA      )
                           )      SS:
COUNTY OF CUMBERLAND       )

         On this the 29th day of January, 2002, before me, the undersigned
officer, a Notary Public, personally appeared Robin L. Barber, the Vice
President and Secretary of Balanced Care Tenant (HCN), Inc., known to me (or
satisfactorily proven) to be the person who executed the foregoing Leasehold
Mortgage, and acknowledged that she executed the foregoing instrument for the
purposes therein contained.

         IN WITNESS WHEREOF, I have hereunto set my hand and official seal.

                                          /s/Jaynelle D. Covert
                                          Notary Public

My Commission Expires: 6/21/04                           [SEAL]


THIS INSTRUMENT PREPARED BY
AFTER RECORDING RETURN TO:

Eileen M. Best, Esq.
Shumaker, Loop & Kendrick, LLP
1000 Jackson Street
Toledo, Ohio  43624-1573


                                      S-1
<PAGE>
                            CERTIFICATE OF RESIDENCE

         The undersigned certifies that the principal office and address of
Lender is One SeaGate, Suite 1500, P. O. Box 1475, Toledo, Ohio 43603-1475.

                                                   HEALTH CARE REIT, INC.


                                                   By:/s/Erin C. Ibele

                                                   Title: Vice President and
                                                          Corporate Secretary


                                      S-2