<PAGE>
 
                                                                   EXHIBIT 10.41
 
                            BOND PURCHASE AGREEMENT

                          Dated as of March 31, 1997

                                by and between


                             GLN Capital Co., LLC
                                  (as Buyer)

                                      and

                         G&L Realty Partnership, L.P.
                                  (as Seller)


<PAGE>
 
                               TABLE OF CONTENTS

                                                                            Page
                                                                            ----

ARTICLE I  CERTAIN DEFINITIONS...............................................  1
     Section 1.1 Definitions.................................................  1

ARTICLE II  PURCHASE OF BONDS................................................  7
     Section 2.1 Agreement to Sell and Purchase Bonds........................  7
     Section 2.2 Payment of Purchase Price...................................  7
     Section 2.3 Assumption of GMAC Debt.....................................  7
     Section 2.4 Transfer of Bonds...........................................  7
     Section 2.5 Bond Information Schedule...................................  7
     Section 2.6 April 1, 1997 Interest Payment..............................  7

ARTICLE III  CONDITIONS PRECEDENT............................................  7
     Section 3.1 Condition Precedent to Buyer's Obligations..................  7
     Section 3.2 Condition Precedent to Seller's Obligations.................  8

ARTICLE IV  REPRESENTATIONS AND WARRANTIES...................................  9
     Section 4.1 Representations and Warranties of Seller....................  9

ARTICLE V  MISCELLANEOUS....................................................  17
     Section 5.1 Survival...................................................  17
     Section 5.2 Governing Law..............................................  17
     Section 5.3 Modification, Waiver in Writing............................  17
     Section 5.4 Notices....................................................  17
     Section 5.5 Trial By Jury..............................................  18
     Section 5.6 Headings...................................................  18
     Section 5.7 Severability...............................................  18
     Section 5.8 Exhibits Incorporated......................................  18
     Section 5.9 Counterparts...............................................  18
     Section 5.10 Entire Agreement..........................................  18
     Section 5.11 Further Assurances........................................  18
     Section 5.12 Indemnification..........................................   18




                                       i


<PAGE>
 
                            BOND PURCHASE AGREEMENT

     THIS BOND PURCHASE AGREEMENT, made as of March 31, 1997, is by and between 
GLN Capital Co., LLC, a Delaware limited liability company, having an address at
439 North Bedford, Beverly Hills, California 90210, Attention: Mark Hamermesh, 
Telefax Number (310) 859-9032 ("Buyer"), and G&L Realty Partnership, L.P., a 
                                -----
Delaware limited partnership with an address of c/o G&L Realty Corp., 439 North 
Bedford, Beverly Hills, California, Attention: Daniel Gottlieb, Chief Executive 
Officer, Telefax Number: (310) 859-9032; ("Seller").
                                           ------

                                   RECITALS

     WHEREAS, Seller is the owner (i) of those certain Massachusetts Industrial 
Finance Authority Health Care Revenue Bonds (Hampden Nursing Homes, Inc. 
Project) Series 1989A (the "1989A Bonds"), and (ii) of those certain 
                            -----------
Massachusetts Industrial Finance Agency Health Care Revenue Bonds (Hampden 
Nursing Homes, Inc. Project) Series 1989B (the "1989B Bonds", and together with 
                                                -----------
the 1989A Bonds, the "Bonds"); and
                      -----

     WHEREAS, Seller is desirous of selling the Bonds, and Buyer is desirous of 
purchasing the Bonds on the terms and conditions set forth herein;

     NOW, THEREFORE, in consideration of premises and the covenants, agreements,
representations and warranties set forth in this Agreement, and for other good 
and valuable consideration, the receipt and adequacy of which is acknowledged 
hereby, the parties hereby covenant, agree, represent and warrant as follows:

                                   ARTICLE I

                              CERTAIN DEFINITIONS
                              -------------------

     Section 1.1 Definitions. For all purposes of this Agreement:
                 -----------

     (a) the capitalized terms defined in this Article I have the meanings 
                                               ---------
assigned to them in this Article I, and include the plural as well as the 
singular;

     (b) the words "herein", "hereof", and "hereunder" and other words of 
similar import refer to this Agreement as a whole and not to any particular 
Article, Section, or other subdivision; and

     (c) the following terms have the following meanings:


<PAGE>
 
     "Accounts" means, collectively, the Bond Fund Series A Principal Account, 
      --------
the Bond Fund Series B Principal Account, the Bond Fund Series A Interest 
Account, the Bond Fund Series B Interest Account, the Debt Service Reserve Fund 
Series A Account, the Debt Service Reserve Fund Series B Account, the Project 
Fund General Account, the Project Fund Option Exercise Account, the Renovations 
Fund, the Arbitrage Rebate Fund and the Escrow Account.

     "Accounts Receivable Indebtedness Liens" means those certain liens on
      --------------------------------------
certain of the Corporation's accounts receivable, securing indebtedness pursuant
to that certain Loan and Security Agreement dated September 12, 1996 by and
between Corporation and Healthpartners Funding, L.P., a Delaware limited
partnership.

     "Agreement" means this Bond Purchase Agreement as amended, modified or
      ---------
supplemented from time to time.

     "Additional Parity Indebtedness" shall have the meaning set forth in the
      ------------------------------
Loan Agreement.

     "Agency" means Massachusetts Industrial Finance Agency.
      ------

     "Amendment" shall mean that certain First Amendment to Limited Liability
      ---------
Company Agreement by and between Seller and Property Acquisition Trust I, a
Delaware business trust.

     "Arbitrage Rebate Fund" shall have the meaning set forth in the Indenture.
      ---------------------

     "Bond Collateral Security Agreements" means collectively (i) the Loan 
      -----------------------------------
Agreement, (ii) the Mortgage, (iii) the Security Agreement, (iv) the Escrow 
Agreement, (v) the Working Capital Loan Agreement, (vi) the Tax Regulatory 
Agreement, (vii) the Subordination Agreement, and (viii) all other agreements, 
instruments, certificates and documents executed or delivered by or on behalf of
Corporation which constitute collateral for the Bonds.

     "Bond Fund Series A Interest Account" and "Bond Fund Series B Interest 
      -----------------------------------       ---------------------------
Account" shall have the respective meanings set forth in the Indenture.
-------

     "Bond Fund Series A Principal Account" and "Bond Fund Series B Principal 
      ------------------------------------       ----------------------------  
Account" shall have the respective meanings set forth in the Indenture.
-------

     "Bond Information Schedule" shall mean the information concerning the Bonds
      -------------------------
set forth on Exhibit A.

     "Bond Files" means all agreements, reports, correspondence, financial
      ----------

                                       2

<PAGE>
 
statements and all other documents received by Seller in connection with or 
related to the Bonds or the Collateral.

     "Bonds", "1989A Bonds" and "1989B Bonds" shall have the respective meanings
      -----    -----------       -----------
set forth in the recitals to this Agreement.

     "Buyer" shall have the meaning set forth in the recitals to this Agreement.
      -----

     "Closing Date" means the date of this Agreement.
      ------------

     "Collateral" means all Collateral which constitutes security for the Bonds,
      ----------
as described more fully in the Indenture and the Bond Collateral Security 
Agreements.

     "CON" shall have the meaning set forth in Section 4.1(AH)(ii).
      ---

     "Corporation" means Hampden Nursing Homes, Inc.
      -----------

     "Debt Service Reserve Fund Series A Account" and "Debt Service Reserve Fund
      ------------------------------------------       -------------------------
Series B Account" shall have the respective meanings set forth in the 
-----------------
Indenture.

     "Determination of Taxability" shall have the meaning set forth in the Loan
      ---------------------------
Agreement.

     "DOH" shall have the meaning set forth in Section 4.1(AH)(i).
      ---

     "Entity" means with respect to each party (a) corporation, if such party is
      ------
listed as a corporation in the first paragraph of this Agreement, (b) limited 
partnership, if such party is listed as a limited partnership in the first 
paragraph of this Agreement or (c) limited liability company, if such party is 
listed as a limited liability company in the first paragraph of this Agreement.

     "Environmental Laws" means any and all applicable federal, state, local 
      ------------------
and foreign laws, rules, regulations or municipal ordinances, each as amended 
from time to time, any judicial or administrative orders, decrees, settlement 
agreements or judgments thereunder, and any permits, approvals, licenses, 
registrations, filings and authorizations, in each case as in effect as of the 
relevant date, relating to the environment, health or safety, or the release or 
threatened release of Hazardous Substances into the indoor or outdoor 
environment including, without limitation, ambient air, soil, surface water, 
ground water, wetlands, land or subsurface strata, or otherwise relating to the 
presence or use of Hazardous Substances.

     "Escrow Account" shall have the meaning set forth in the Loan Agreement.
      --------------


                                       3



<PAGE>
 
     "Escrow Agreement" shall have the meaning set forth in the Loan Agreement.
      ----------------

     "Facility" shall have the meaning set forth in the Loan Agreement.
      --------

     "GMAC" means the GMAC Commercial Mortgage Corporation.
      ----

     "GMAC Debt" means the outstanding principal balance as of the date hereof 
      ---------
due under that certain promissory note in the amount of Fourteen Million Dollars
($14,000,000) dated December 5, 1995 from Seller to GMAC.

     "GMAC Loan and Security Agreement" means that certain Loan and Security 
      --------------------------------
Agreement by and between G&L Realty Partnership, L.P. and GMAC Commercial 
Mortgage Corporation, dated as of December 5, 1995.

     "GMAC Security Interest" means the security interest in the Bonds held, by 
      ----------------------
GMAC pursuant to the GMAC Loan and Security Agreement.

     "Governmental Authority" means any national or federal government, any 
      ----------------------
state, regional, local or other political subdivision thereof with jurisdiction 
and any person with jurisdiction exercising executive, legislative, judicial, 
regulatory or administrative functions of or pertaining to government.

     "Hazardous Substances" means, collectively, (i) any petroleum or petroleum 
      --------------------
products or waste oils, explosives, radioactive materials, asbestos, urea 
formaldehyde foam insulation, polychlorinated biphenyls ("PCBs"), lead in 
                                                          ----
drinking water, and lead-based paint, the presence, generation, use, 
transportation, storage or disposal of or exposure to which (x) is regulated or 
could lead to liability under any Environmental Law or (y) is subject to notice 
or reporting requirements under any Environmental Law, (ii) any chemicals or 
other materials or substances which are now or hereafter become defined as or 
included in the definition of "hazardous substances," "hazardous wastes," 
"hazardous materials," "extremely hazardous wastes," "restricted hazardous 
wastes," "toxic substances," "toxic pollutants," "contaminants," "pollutants" 
or words of similar import under any Environmental Law and (iii) any other 
chemical or any other material or substance, exposure to which is now or 
hereafter prohibited, limited or regulated under any Environmental Law.

     "Indenture" means that certain Indenture of Trust by and between Agency and
      ---------
Maryland National Bank as Trustee, dated as of October 1, 1989, as 
supplemented, amended and modified by that First Supplemental Indenture of Trust
by and between Agency and Maryland National Bank as Trustee, dated as of 
November 1, 1991.

    "Issuance Cost Loan" shall have the meaning set forth in the Loan
     ------------------

                                       4
<PAGE>
 
Agreement.

     "Legal Requirements" means all statutes, laws, rules, orders, regulations, 
      ------------------
ordinances, judgments, decrees and injunctions of Governmental Authorities 
affecting Seller, the Bonds, the Corporation, the Agency, the Indenture, the 
Bond Collateral Security Agreements, the Collateral or any part thereof, or the 
ownership, construction, use, alteration or operation thereof, or any part 
thereof, enacted and in force as of the relevant date, and all permits and 
regulations relating thereto, and all covenants, agreements, restrictions and 
encumbrances contained in any instruments, either of record or known to Seller, 
at any time in force affecting the Collateral or any part thereof, including, 
without limitation, any which (i) may require repairs, modifications, or 
alterations in or to the Collateral or any part thereof, or (ii) in any way 
limit the use and enjoyment thereof, and further including, without limitation,
all Environmental Laws and the Americans with Disabilities Act, as it may be 
amended from time to time, together with all regulations promulgated thereto.

     "Licenses" shall have the meaning set forth in Section 4.1(AH)(ii).
      --------

     "Loan Agreement" means that certain Loan Agreement by and between Agency 
      --------------
and Corporation, dated as of October 1, 1989, as supplemented, amended and 
modified by that certain First Supplemental Loan Agreement by and between Agency
and Corporation, dated as of November 1, 1991.

     "Management Agreement" shall have the meaning set forth in the Loan 
      --------------------
Agreement.

     "Mortgage" shall have the meaning set forth in the Loan Agreement.
      --------

     "Other Indebtedness" shall have the meaning set forth in the Loan 
      ------------------
Agreement.

     "Payment Schedule" means the dates and amounts of each payment received by 
      ----------------
Seller on account of the Bonds, as set forth on Exhibit B.

     "Project Fund General Account" shall have the meaning set forth in the
      ----------------------------
Indenture.

     "Project Fund Option Exercise Account" shall have the meaning set forth in 
      ------------------------------------
the Indenture.

     "Purchase Price" means seven million six hundred and sixty-five thousand 
      --------------
dollars ($7,665,000), which is the amount equal to (i) the sum of the 
outstanding principal balance of the 1989A Bonds as of the Closing Date plus One
Million Dollars


                                       5
<PAGE>
 
($1,000,000), less (ii) the GMAC Debt.

     "Renovations Fund" shall have the meaning set forth in the Indenture.
      ----------------

     "Repair and Replacement Fund" shall have the meaning set forth in the 
      ---------------------------
Indenture.

     "Retained Cash Flow" shall have the meaning set forth in the Loan 
      ------------------
Agreement.

     "Security Agreement" shall have the meaning set forth in the Loan 
      ------------------
Agreement.

     "Subordinated Management Fees" shall have the meaning set forth in the Loan
      ----------------------------
Agreement.

     "Seller" shall have the meaning set forth in the recitals to this 
      ------
Agreement.

     "Subordination Agreement" shall have the meaning set forth in the Loan 
      -----------------------
Agreement.

     "Subordinated Management Fees" shall have the meaning set forth in the Loan
      ----------------------------
Agreement.

     "Tax Regulatory Agreement" shall have the meaning set forth in the Loan 
      ------------------------
Agreement.

     "Third Party Payor's Programs" shall have the meaning set forth in Section 
      ----------------------------
4.1(AH)(v).

     "Trustee" means as of the relevant date, the Trustee under the Indenture.
      -------

     "UCC" means the Uniform Commercial Code as enacted in the relevant 
      ---
jurisdiction.

     "Working Capital Loan" shall have the meaning set forth in the Loan 
      --------------------
Agreement.

     "Working Capital Loan Agreement" shall have the meaning set forth in the 
      ------------------------------
Loan Agreement.


                                       6
<PAGE>
 
                                  ARTICLE II

                               PURCHASE OF BONDS
                               -----------------

     Section 2.1 Agreement to Sell and Purchase Bonds. Upon and subject to the 
                 ------------------------------------
terms and conditions of this Agreement, Seller agrees to sell and Buyer agrees 
to purchase the Bonds.

     Section 2.2 Payment of Purchase Price. Upon satisfaction of the conditions 
                 -------------------------
precedent set forth in Section 3.1, within five (5) days of the Closing Date 
the Buyer shall pay to the Seller the Purchase Price in immediately available 
federal funds.

     Section 2.3 Assumption of GMAC Debt. On or after the Closing Date, Buyer
                 -----------------------
will (if required by GMAC) assume Seller's obligations under the GMAC Loan and
Security Agreement, by the execution of appropriate documents in form and
substance acceptable to Buyer and GMAC.

     Section 2.4 Transfer of Bonds. Within ten (10) days of the Closing Date, 
                 -----------------
Seller shall have caused the Trustee to reissue the Bonds in the name of Buyer.

     Section 2.5 Bond Information Schedule. Within five (5) days of the Closing 
                 -------------------------
Date, Seller shall have provided to Buyer (i) a complete and accurate Bond 
Information Schedule, (ii) a complete and accurate Payment Schedule, (iii) the 
Bond Files, and (iv) such representations and warranties concerning the accuracy
and completeness of the information set forth in the Bond Information Schedule 
and the Payment Schedule as is requested by Buyer.

     Section 2.6 April 1, 1997 Interest Payment. Notwithstanding anything to the
                 ------------------------------
contrary set forth herein, the parties agree that the April 1, 1997 interest 
payment (which payment represents accrued interest in arrears from October 1, 
1996 through March 31, 1997) made in respect of the Bonds shall remain property 
of the Seller.

                                  ARTICLE III

                             CONDITIONS PRECEDENT
                             --------------------

     Section 3.1 Condition Precedent to Buyer's Obligations. As a condition 
                 ------------------------------------------
precedent to Buyer's purchase of the Bonds, Seller shall have satisfied the 
following conditions (unless waived in writing by Buyer) on or before the 
Closing Date.

     (A) Agreement. Seller shall have executed and delivered this Agreement to 
         ---------
Buyer.

                                       7
<PAGE>
 
     (B) Amendment. Seller shall have delivered a duly executed Amendment to 
         ---------
Buyer.

     (C) Trustee Instruction Letter. Within five (5) days of the Closing Date, 
         --------------------------
Seller shall have delivered to Buyer a letter, in form and substance
satisfactory to Buyer, instructing the Trustee to issue new Bonds in the name of
Buyer or its designee, upon surrender of the Bonds endorsed for transfer to the
Trustee.

     (D) Opinions of Counsel. Buyer shall have received from counsel 
         -------------------
satisfactory to Buyer, legal opinions in form and substance satisfactory to 
Buyer in Buyer's sole discretion. All such legal opinions will be addressed to 
Buyer, dated as of the Closing Date, and in form and substance satisfactory to 
Buyer and its counsel. Seller hereby instructs any such counsel, to the extent
that such counsel represents Seller, to deliver to Buyer such opinions addressed
to Buyer.

     (E) Intentionally omitted.

     (F) Representations and Warranties. The representations and warranties 
         ------------------------------
herein shall be true and correct in all material respects.

     (G) No Injunction. No law or regulation shall have been adopted, no order, 
         -------------
judgment or decree of any Governmental Authority shall have been issued, and no 
litigation shall be pending or threatened, which in the good faith judgment of 
Buyer would enjoin, prohibit or restrain, or impose or result in an adverse 
effect upon the consummation of the transactions contemplated hereunder.

     (H) Due Authority. Buyer shall have received any other evidence reasonably
         --------------
required by Buyer or its counsel demonstrating that (i) Seller is an entity in 
good standing under the laws of the State of its formation, and (ii) Seller's 
execution and delivery of this Agreement and the other documents delivered 
pursuant hereto and the consummation of the transactions contemplated hereby 
have been fully authorized.

     (I) Approvals. All requisite Governmental Authority approvals, as well as 
         --------- 
any other approvals required pursuant to the Indenture or any Bond Collateral 
Security Agreement, if any, required to be obtained by Seller shall have been 
obtained.

     (J) Intentionally Omitted.

     (K) Intentionally omitted.

     Section 3.2 Condition Precedent to Seller's Obligations. As a condition 
                 -------------------------------------------
precedent to Seller's sale of the Bonds, Buyer shall have satisfied the 
following conditions (unless waived in writing by Seller) on or before the 
Closing Date.

                                       8

<PAGE>
 
     (A) Agreement. Buyer shall have executed and delivered this Agreement to 
         ---------
Seller.

     (B) Payment. Within five (5) days of the Closing Date, Buyer shall have 
         -------
paid to the Seller the Purchase Price in immediately available federal funds.

     (C) Due Authority. Seller shall have received any other evidence reasonably
         -------------
required by Seller or its counsel demonstrating that (i) Buyer is an entity in 
good standing under the laws of the State of its formation, and (ii) Buyer's 
execution and delivery of this Agreement and the other documents delivered 
pursuant hereto and the consummation of the transactions contemplated hereby 
have been fully authorized.

     (D) Transfer and Recordation Taxes; Other Costs. Seller shall have paid all
         -------------------------------------------
(i) transfer, filing and recording fees and taxes, costs and expenses, (ii) any 
state, county or city documentary taxes relating to the filing or recording of 
any document or instrument contemplated hereby, and (iii) all fees required to 
be paid to Trustee pursuant to the Indenture. Each of Seller and Buyer shall 
sign and deliver, on the closing Date, all transfer tax and related forms 
reasonably required by the other party or required by applicable law.

                                  ARTICLE IV

                        REPRESENTATIONS AND WARRANTIES
                        ------------------------------

     Section 4.1 Representations and Warranties of Seller. Seller represents and
                 ----------------------------------------
warrants that, as of the Closing Date:

     (A) Organization. Seller (i) is a duly organized and validly existing 
         ------------
Entity in good standing under the laws of the State of its formation, (ii) has 
the requisite Entity power and authority to carry on its business as now being 
conducted, and (iii) has the requisite Entity power to execute and deliver, and
perform its obligations under this Agreement.

     (B) Authorization. The execution and delivery by Seller of this Agreement, 
         -------------
Seller's performance of its obligations hereunder and the sale of the Bonds (i) 
have been duly authorized by all requisite Entity action on the part of Seller,
(ii) will not violate any provision of any applicable Legal Requirements, any 
order of any court or other Governmental Authority, any organizational document 
of Seller or any indenture or agreement or other instrument to which Seller is a
party or by which Seller is bound (including, without limitation, the GMAC Loan 
and Security Agreement), (iii) will not be in conflict with, result in a breach 
of, or constitute (with due notice or lapse of time or both) a default under, 
or result in the creation or imposition of any lien of any nature whatsoever 
upon any of the property or assets of Seller pursuant to, any such indenture



                                       9


<PAGE>
 
or agreement or instrument and (iv) have been duly executed and delivered by 
Seller. Other than those obtained or filed on or prior to the Closing Date,
Seller is not required to obtain any consent, approval or authorization from, or
to file any declaration or statement with, any Governmental Authority or other
agency, or any other Entity in connection with or as a condition to the 
execution, delivery or performance of this Agreement and the transactions 
contemplated hereunder, including, without limitation, GMAC.

     (C) Litigation. There are no actions, suits or proceedings at law or in 
         ----------
equity now pending and served or, to the knowledge of Seller, threatened that 
would adversely affect the execution, delivery or enforceability of this 
Agreement or Seller's performance of its obligations hereunder.

     (D) No Bankruptcy Filing. Seller is not contemplating either the filing of 
         --------------------
a petition by it under any state or federal bankruptcy or insolvency laws or the
liquidation of all or a major portion of its assets or property, and Seller has 
no knowledge of any person contemplating the filing of any such petition against
it.

     (E) Full and Accurate Disclosure. No statement of fact made by or on behalf
         ----------------------------
of Seller herein or in any other document or certificate delivered to Buyer by 
Seller contains any untrue statement of a material fact or omits to state any 
material fact necessary to make statements contained herein or therein not 
misleading.

     (F) Location of Chief Executive Offices. The location of Seller's (i) 
         -----------------------------------
principal place of business, (ii) chief executive office, and (iii) books and 
records concerning the Bonds is as follows: G&L Realty Partnership, L.P., a 
Delaware limited partnership with an address of c/o G&L Realty Corp., 439 North 
Bedford, Beverly Hills, California.

     (G) Solvency. Seller has not entered into this Agreement or the 
         --------
transactions contemplated hereunder with the actual intent to hinder, delay, or 
defraud any creditor. Seller has received reasonably equivalent value in 
exchange for its sale of the Bonds. Giving effect to the transactions 
contemplated hereby, the fair saleable value of Seller's assets exceeds and 
will, immediately following the execution and delivery of this Agreement, exceed
Seller's total liabilities, including, without limitation, subordinated, 
unliquidated, or disputed liabilities or contingent obligations. The fair 
saleable value of Seller's assets is and will, immediately following the 
execution and delivery of this Agreement and consummation of the transactions 
contemplated hereunder, be greater than Seller's probable liabilities, including
the maximum amount of its contingent obligations or its debts as such debts 
become absolute and matured. Seller's assets do not and, immediately following 
the execution and delivery of this Agreement and consummation of the 
transactions contemplated hereunder, will not, constitute unreasonably small 
capital to carry out its business as conducted or as proposed to be

                                      10
 





<PAGE>
 
conducted.

     (H) Bond Files Complete. The Bond Files provided or to be provided to Buyer
         -------------------
are complete. The copies of the documents included in the Bond Files are true
and correct copies of the documents they purport to be.

     (I) Seller's Title to Bonds. Seller has good and marketable title to the 
         -----------------------
Bonds and is the sole owner and holder of such Bonds, has full right and 
authority to sell and assign such bonds hereunder, and is transferring such 
bonds to Buyer free and clear of any and all liens, claims, encumbrances, 
participation interests, equities, pledges, charges or security interests of any
nature excepting, however, the GMAC Security Interest.
       ------------------

     (J) Enforceability. The Bonds, the Indenture and each of the Bond 
         --------------
Collateral Security Agreements is the legal, valid and binding obligation of the
maker thereof, enforceable in accordance with its terms.

     (K) No Defenses. There are no valid offsets, defenses, counterclaims or 
         -----------
rights of rescission to the Bonds, the Indenture or any Bond Collateral Security
Agreement.

     (L) No Modifications and/or Releases. The terms of the Bonds, the Indenture
         --------------------------------
and the Bond Collateral Security Agreements, respectively, have not been 
impaired, waived, altered, subordinated, satisfied, released or modified in any 
respect except by written instruments which are in the Bond Files.

     (M) No Defaults, Breaches, Violations or Events or Acceleration. Except for
         ------------------------------------------------------------
those certain nonmonetary defaults set forth on the attached Exhibit C, there 
                                                             ---------
are not and have been no defaults, breaches, violations or events of 
acceleration existing under any of the Bonds, the Indenture or any Bond 
Collateral Security Agreement (for which notice has been given), Seller has not 
waived any such default, breach, violation or event of acceleration, and no 
event has occurred which, with the passing of time or the giving of notice, 
would constitute such a default, breach, violation or event of acceleration.

     (N) No Advances. Seller has not directly or indirectly advanced funds for 
         -----------
the payment of any amount required by the Bonds or the Indenture.

     (O) Legal Compliance. All Legal Requirements applicable to the Bonds, the 
         ----------------
Indenture and the Bond Collateral Security Agreements have been satisfied or 
complied with.

     (P) No Condemnation Proceedings; Condition of Collateral. There is no
         ----------------------------------------------------
         
                                      11
<PAGE>
 
proceeding pending or threatened for the total or partial condemnation of the 
Collateral. The Collateral is in good repair and free and clear of any damage 
that would affect materially and adversely the value of the Collateral as 
security for the use for which the Collateral was intended.

     (Q) Accounts Receivable Indebtedness. The indebtedness secured by the 
         --------------------------------
Accounts Receivable Indebtedness Liens does not exceed, as of the date hereof, 
One Million Five Hundred Thousand Dollars ($1,500,000).

     (R) Taxes, Insurance (etc.) Are Current. There exists no delinquency with 
         -----------------------------------
respect to any taxes, governmental assessments, insurance premiums and water, 
sewer and municipal charges, and ground rents, if any, which previously became 
due and owing in respect of the Collateral, and all such amounts due and owing 
with respect to the Collateral have been paid or an escrow of funds to cover 
such payments has been established.

     (S) Hazard and Liability Insurance. The Collateral is insured by hazard 
         ------------------------------
insurance policies, commercial general liability insurance policies and, if 
applicable, boiler insurance policies providing coverage against risks
ordinarily insured against by persons owning or operating like properties in the
locality of the Collateral, in an amount consistent with that which would be
required by an institutional lender in its normal commercial lending activities
with respect to similar properties in the same locality. All premiums on such
insurance policies have been paid; such insurance policies require prior notice
to the insured of termination or cancellation, and no such notice has been
received which is still in effect.

     (T) Adverse Environmental Condition. There exists no material amount of 
         -------------------------------
Hazardous Substances on, under or at the Collateral. For purposes of this 
Section, "material" shall mean an amount of Hazardous Substances in excess of 
any established level of concentration or action level set forth in any rule, 
policy, regulation or guideline adopted or issued by any Governmental Authority 
or, in the absence of applicable action levels, in amounts that would require 
removal or remediation in accordance with good industry practices. The 
Collateral is not and has never been used for the storage, treatment or disposal
of Hazardous Substances.

     (U) Adverse Engineering Condition. The Collateral is free of any material 
         -----------------------------
structural defects. For purposes hereof, a material structural defect means a 
failure of a building or improvement element or system to function or operate 
for its or their intended purposes (e.g., roof failure, failure of the HVAC 
system to operate correctly, etc.) or any unrepaired damage by fire or other 
casualty which, individually or in the aggregate with respect to the Collateral,
would cost $15,000 or more to remedy. An Adverse Engineering Condition does not 
include normal wear and tear of any building or improvement system or element.

                                      12
<PAGE>
 
     (V)  Bond Information.  As of the date hereof:  (i) the outstanding 
          ----------------
principal balance of the (A) 1989A Bonds is Twenty Million Six Hundred and 
Sixty-Five Thousand Dollars ($20,665,000), and (B) 1989B Bonds is Five Million 
Dollars ($5,000,000) in addition to accrued and unpaid interest of not less than
Two Million Dollars ($2,000,000); (ii) the maturity date of the (A) 1989A Bonds 
is October 1, 2017, and (B) 1989B Bonds is October 1, 2019; and (iii) the 
interest rate of the (A) 1989A Bonds is nine and seventy-five hundredths percent
(9.75%), and (B) 1989B Bonds is nine and fifty hundredths percent (9.50%).

     (W)  Litigation.  There is no litigation pending or threatened against the 
          ----------
Corporation or the Collateral which would materially adversely affect the value 
of the Collateral or adversely impact the ability of the Corporation to satisfy 
its obligations under the Bond Collateral Security Agreements.

     (X)  No Impediment to Discharge of Indenture.  There exists no legal or 
          ---------------------------------------
contractual impediment to a discharge of the Indenture in the manner described 
in the second paragraph of Section 7.1 of the Indenture (which is set forth on 
pages 45-46 of the Indenture).

     (Y)  No Additional Parity Indebtedness. The Corporation has not incurred or
          ---------------------------------
issued any Additional Parity Indebtedness.

     (Z)  Tax Regulatory Agreement.  There exist no defaults under the Tax 
          ------------------------
Regulatory Agreement.

     (AA) Determination of Taxability.  No Determination of Taxability has 
          ---------------------------
occurred.

     (AB) Enforceable Liens on Collateral.  The Bond Collateral Security 
          -------------------------------
Agreements create valid and enforceable first priority liens on the Collateral, 
subject however, to the Accounts Receivable Indebtedness Liens.
------- -------

     (AC) Title Insurance.  That portion of the Collateral which is encumbered 
          ---------------
by the Bond Collateral Mortgage is covered by an American Land Title Insurance 
Company (or comparable) lender's title insurance policy insuring a valid first 
lien on such property, which is in full force and effect, and subject only to 
permitted exceptions.

     (AD) Tax Exempt Bonds. The interest paid on the 1989A Bonds is exempt from
          ----------------
federal income taxation.  The tax exempt status of the 1989B Bonds will not 
hinder, interfere with or otherwise preclude a refinancing or restructuring of 
the Bonds with either the Agency or the United States Department of Housing and 
Urban Development.

                                      13
<PAGE>
 
     (AE) No Bankruptcy of Corporation.  Corporation (i) has not filed and is 
          ----------------------------
not contemplating the filing of a petition under any state or federal bankruptcy
or insolvency laws, and (ii) has not and is not contemplating the liquidation of
all or a major portion of its assets or property.  Seller has no knowledge of 
any person contemplating the filing of a petition under any state or federal 
bankruptcy or insolvency laws against Corporation.

     (AF) As of the date hereof, the GMAC Debt does not exceed Fourteen Million 
Dollars ($14,000,000).  Seller neither has been nor currently is in default of 
its obligations under the GMAC Loan and Security Agreement.

     (AG) No Consultants.  The Corporation has not retained and has not been 
          --------------
obligated to retain a consultant pursuant to Section 7.10 of the Loan Agreement.

     (AH) Use-Specific Representations. 
          ----------------------------

          (i)   Compliance with Laws. The Corporation and each Facility complies
                --------------------
with all applicable Legal Requirements, including, without limitation, federal,
state and local regulations, quality and safety standards, accreditation
standards and requirements of the applicable state Department of Health (each a
"DOH") and all other Governmental Authorities including, without limitation,
 ---
those relating to the quality and adequacy of medical care, distribution of
pharmaceuticals, rate setting, equipment, personnel, operating policies,
additions to facilities and services and fee splitting.

          (ii)  Licenses.  All material governmental licenses, permits, 
                --------
regulatory agreements or other approvals or agreements necessary or desirable 
for the use or operation of each Facility as intended are held by the 
Corporation and are in full force and effect, including, without limitation, a 
valid certificate of need ("CON") or similar certificate, license, or approval 
                            ---
issued by the DOH for the requisite number of beds, and approved provider status
in any approved provider payment program (collectively, the "Licenses").
                                                             --------

          (iii) Ownership of Licenses.  The Licenses, including without 
                ---------------------
limitation, each CON:

                (a) have not been, transferred to any location other than the 
     Facility to which such Licenses relate;

                (b) have not been pledged as collateral security for any other 
     loan or indebtedness; and

                (c) are held free from restrictions or known conflicts which 
     would materially impair the use or operation of each Facility as intended,

                                      14
<PAGE>
 
     and are not provisional, probationary or restricted in any way.

          (iv)   Medicare and Medicaid Compliance.  To the extent applicable, 
                 --------------------------------
each Facility and the Corporation are in compliance with all material 
requirements for participation in Medicare and Medicaid, including without 
limitation, the Medicare and Medicaid Patient and Program Protection Act of 
1987.  To the extent applicable, each Facility and the Corporation are in 
conformance in all respects with all insurance, reimbursement and cost reporting
requirements, and has a current provider agreement which is in full force and 
effect under Medicare and Medicaid.

          (v)    Third Party Payors' Programs. There is no threatened or pending
                 ----------------------------
revocation, suspension, termination, probation, restriction, limitation, or non-
renewal affecting the Corporation or any Facility or any participation or
provider agreement with any third party payor (including Medicare, Medicaid,
Blue Cross and/or Blue Shield, and any other private commercial insurance
managed care and employee assistance program) (such programs, the "Third Party
                                                                   -----------
Payors' Programs") to which the Corporation is subject. All Medicaid, Medicare,
----------------
and private insurance cost reports and financial reports submitted by the
Corporation have been materially accurate and complete and have not been
misleading in any material respects. No cost reports or financial reports for
any Facility remain "open" or unsettled.

          (vi)   Governmental Proceedings and Notices.  Neither the Corporation 
                 ------------------------------------
nor any Facility is currently the subject of any proceeding by any Governmental 
Authority, and no notice of any violation has been received from a Governmental 
Authority that would, directly or indirectly, or with the passage of time:

                 (a)  affect the Corporation's ability to accept and/or retain 
     patients or result in the imposition of a fine, a sanction, a lower rate
     certification or a lower reimbursement rate for services rendered to
     eligible patients;

                 (b)  modify, limit or annul or result in the transfer,
     suspension, revocation or imposition of probationary use on any License;

                 (c)  affect the Corporation's continued participation in the 
     Medicaid or Medicare programs or any other of the Third Party Payors'
     Programs, or any successor programs thereto, at current rate
     certifications.

          (vii)  Physical Plant Standards.  Each Facility and the use thereof 
                 ------------------------
complies in all respects with all local, state and federal building codes, fire 
codes, health care, nursing facility and other similar regulatory requirements 
(the "Physical Plant Standards") and no waivers of Physical Plant Standards 
      ------------------------
exist at such Facility.

          (viii) Past Violations.  There is no pending uncured "Level A" (or
                 ---------------

                                      15
<PAGE>
 
equivalent) violation at any Facility. Each Facility is in material compliance 
with all federal and state laws and regulations relating to, as applicable, 
nursing homes, hospitals or continuing care facilities and no statement of 
charges or deficiencies has been made or penalty enforcement action has been 
undertaken against such Facility or against the Corporation or any officer, 
director or stockholder of the Corporation or any affiliate of the Corporation 
or any manager of any Facility by any Governmental Authority and there have been
no material violations which have threatened such Facility's or the 
Corporation's certification for participation in Medicare or Medicaid or the 
other Third Party Payors' Programs.

         (ix) Audits. There are no current, pending or outstanding Medicaid, 
              ------
Medicare or Third Party Payors' Programs reimbursement audits or appeals pending
at any Facility, and there are no years that are subject to audits.

         (x) Recoupment. There are no current or pending Medicaid or Medicare or
             ----------
Third Party Payors' Programs recoupment efforts at any Facility. The Corporation
is not a participant in any federal program whereby any Governmental Authority 
may have the right to recover funds by reason of the advance of federal funds.

         (xi) Patient Records. All patient or resident records at each Facility,
              ---------------
including patient or resident trust fund accounts, are true and correct in all 
respects.

         (xii) Management Agreements. Each Management Agreement with respect to 
               ---------------------
any Facility is in full force and effect and is not in default by any party 
thereto. In the event any Management Agreement is terminated or in the event of 
foreclosure of any Facility, under applicable Legal Requirements no subsequent 
operator of such Facility is required to obtain a CON (or similar certificate, 
license, or approval issued by the DOH for the requisite number of beds, and 
approval provider status in any approved provider payment program) prior to 
applying for and receiving a license to operate such Facility or prior to 
receiving Medicare or Medicaid payments.

     (AI) Account Balances. The balance in each Account is as set forth on 
          ----------------
Exhibit A.

     (AJ) Corporation's Representations and Warranties. Seller has no knowledge 
          --------------------------------------------
that any of the representations or warranties made by the Corporation in any of 
the Bond Collateral Security Agreements is not true in any material respect.

                                      16
<PAGE>
 
                                   ARTICLE V

                                 MISCELLANEOUS
                                 -------------

     Section 5.1 Survival. This Agreement and all covenants, agreements, 
                 --------
representations and warranties made herein and in the certificates delivered 
pursuant hereto shall survive the execution and delivery of this Agreement and 
the transfer of the Bonds, and shall continue in full force and effect so long 
as any portion of the Bonds remains outstanding and unpaid. Whenever in this 
Agreement any of the parties hereto is referred to, such reference shall be 
deemed to include the successors and assigns of such party. All covenants, 
promises and agreements in this Agreement contained, by or on behalf of Seller, 
shall inure to the benefit of the respective successors and assigns of Buyer.

     Section 5.2 Governing Law. (a) The parties agree that New York State has a 
                 -------------
substantial relationship to the parties and to the underlying transaction 
embodied hereby, and in all respects, including, without limitation, matters of 
construction, validity and performance, this Agreement and the obligations 
arising hereunder shall be governed by, and construed in accordance with, the 
laws (but excluding the law governing choice of law) of the State of New York 
applicable to contracts made and performed in such State and any applicable law 
of the United States of America.

     (b) ANY LEGAL SUIT, ACTION OR PROCEEDING AGAINST ANY PARTY ARISING OUT OF 
OR RELATING TO THIS AGREEMENT SHALL BE INSTITUTED IN ANY FEDERAL OR STATE COURT 
IN NEW YORK, NEW YORK.

     Section 5.3 Modification, Waiver in Writing. No modification, amendment, 
                 -------------------------------
extension, discharge, termination or waiver of any provision of this Agreement 
shall in any event be effective unless the same shall be in a writing signed by 
Buyer and Seller, and then such waiver or consent shall be effective only in the
specific instance, and for the purpose, for which given.

     Section 5.4 Notices. All notices hereunder shall be given in writing and 
                 -------
shall be effective for all purposes if hand delivered or sent by (a) hand 
delivery, with proof of attempted delivery, (b) certified or registered United 
States mail, postage prepaid, (c) expedited prepaid delivery service, either 
commercial or United States Postal Service, with proof of attempted delivery, or
(d) by telecopier (with answerback acknowledged) provided that such telecopied 
notice must also be delivered by one of the means set forth in (a), (b) or (c) 
above, addressed if to Buyer at its address set forth on the first page hereof, 
and if to Seller at its address set forth on the first page hereof, or at such 
other address as shall be designated from time to time by any party hereto, as 
the case may be, in a written notice to the other party hereto in the manner 
provided for in this Section.
                     -------

                                      17
<PAGE>
 
     SECTION 5.5  TRIAL BY JURY.  BUYER AND SELLER, TO THE FULLEST EXTENT THAT 
                  -------------
THEY MAY LAWFULLY DO SO, HEREBY WAIVE TRIAL BY JURY IN ANY ACTION OR PROCEEDING,
INCLUDING, WITHOUT LIMITATION, ANY TORT ACTION, BROUGHT BY ANY PARTY HERETO WITH
RESPECT TO THIS AGREEMENT.

     Section 5.6  Headings.  The Article and Section headings in this Agreement 
                  --------
are included herein for convenience of reference only and shall not constitute a
part of this Agreement for any other purpose.

     Section 5.7  Severability.  Wherever possible, each provision of this 
                  ------------
Agreement shall be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Agreement shall be prohibited by or
invalid under applicable law, such provision shall be ineffective to the extent 
of such prohibition or invalidity, without invalidating the remainder of such 
provision or the remaining provisions of this Agreement.

     Section 5.8  Exhibits Incorporated.  The information set forth on the 
                  ---------------------
cover, heading and recitals hereof, and the Exhibits attached hereto, are hereby
incorporated herein as a part of this Agreement with the same effect as if set 
forth in the body hereof.

     Section 5.9  Counterparts.  This Agreement may be executed in any number of
                  ------------
counterparts, each of which when so executed and delivered shall be an original,
but all of which shall together constitute one and the same instrument.  In 
Buyer's sole discretion, one or more counterparts of this Agreement may be 
executed by telefaxed signature, which telefaxed signature shall be deemed to 
constitute an original signature.

     Section 5.10 Entire Agreement.  This Agreement, together with the Exhibits 
                  ----------------
hereto constitutes the entire agreement among the parties hereto with respect to
the subject matter contained in this Agreement and the Exhibits hereto, and 
supersedes all prior agreements, understandings and negotiations between the 
parties.

     Section 5.11 Further Assurances.  On and after the Closing Date, upon the 
                  ------------------
reasonable request of Buyer, and without payment of further consideration to 
Seller, other than reimbursement for Seller's out-of-pocket expenses, Seller 
will do, execute, acknowledge and deliver, and will cause to be done, executed, 
acknowledged and delivered, all such further acts, assignments, transfers, 
conveyances, powers of attorney and assurances as may be reasonably required in 
order to better assign, transfer, grant, convey, assure and confirm to Buyer 
title and possession of the Bonds.

     Section 5.12 Indemnification.  Seller shall indemnify and hold Buyer and 
                  ---------------
each of its affiliates (including its officers, directors, partners, employees 
and agents and

                                      18
<PAGE>
 
each other person, if any, controlling Buyer or any of its affiliates) (each, 
including Buyer, an "Indemnified Party") harmless against any and all losses, 
                     -----------------
claims, damages, costs, expenses (including the fees and disbursements of 
outside counsel retained by any such person) or liabilities in connection with, 
arising out of or as a result of or in any way related to the Bonds and the 
ownership by Seller thereof prior to the date of this Agreement, except to the 
extent that it is finally judicially determined that any such loss, claim,
damage, cost, expense or liability resulted directly and solely from the fraud
or willful misconduct of such Indemnified Party. In the event that any
Indemnified Party becomes involved in any action, proceeding or investigation in
connection with any transaction or matter referred to or contemplated in this
Agreement, Seller shall periodically reimburse any Indemnified Party upon demand
therefor in an amount equal to its reasonable legal and other expenses
(including the costs of any investigation and preparation) incurred in
connection therewith to the extent such legal or other expenses are the subject
of indemnification hereunder.

                          [Signature pages to follow]

                                      19
<PAGE>
 
          IN WITNESS WHEREOF, the parties hereto have caused this Agreement to 
be duly executed by their duly authorized representatives, all as of the day and
year first above written.

                                        BUYER:

                                        GLN CAPITAL CO. LLC, a Delaware limited 
                                        liability company


                                        By:  G&L REALTY PARTNERSHIP, L.P.

                                             By:  G&L Realty Corp.,
                                                   as General Partner

                                                By:  /s/ Daniel Gottlieb
                                                    ----------------------------
                                                       Name:  Daniel Gottlieb
                                                       Title: Chief Executive
                                                                Officer



                                        By:  PROPERTY ACQUISITION TRUST I

                                                By:  /s/ Sheryl McAfee  
                                                    ----------------------------
                                                       Name:  Sheryl McAfee  
                                                       Title: Designated Officer



                                        SELLER:

                                        G&L REALTY PARTNERSHIP, L.P., a Delaware
                                        limited partnership


                                             By:  G&L Realty Corp.,
                                                   Its General Partner

                                                By:  /s/ Daniel Gottlieb
                                                    ----------------------------
                                                       Name:  Daniel Gottlieb
                                                       Title: Chief Executive
                                                                Officer

                                      20

<PAGE>
 
                                   EXHIBIT A

                           Bond Information Schedule
                           -------------------------

<TABLE> 
<CAPTION> 

                          1989A Bonds                1989B Bonds
<S>                       <C>                        <C> 

Origination Date          October 1, 1989            October 1, 1989

Maturity Date             October 1, 2017            October 1, 2019

Coupon Rate               9.75%                      9.5%

CUSIP No.                 575909AE6                  575909AD8

Description of Lien       First Priority             First Priority

Title Insurance Policy

Outstanding Principal     $20,665,000                $5,000,000 in addition to
Balance 4/1/97                                       accrued and unpaid interest
                                                     of not less than $2,000,000

Interest Payment Dates
and Amounts

Sinking Fund Payments
Dates and Amounts

Description of Collateral

Loan to Value Ratio (as
of 3/1/97)

Debt Service Coverage
Ratio (for year ended
12/31/96)

Identity of Trustee

</TABLE> 


<PAGE>
 
Balances (as of 3/1/97 in 
the following accounts:


-    Bond Fund
     Principal
     Account

-    Bond Fund
     Interest
     Account

-    Debt Service
     Reserve Fund

-    Project Fund
     General 
     Account

-    Project Fund
     Option Exercise
     Account

-    Renovations Fund

-    Repair and
     Replacement
     Fund

-    Arbitrage Rebate
     Fund


Balance (as of 3/1/97) of 
the Working Capital
Loan


Retained Cash Flow as
of 12/31/96



<PAGE>
 
Balance (as of 3/1/97) in
the Escrow Account

Balances as of 3/1/97 of
the Issuance Cost Loan

Balance as of 3/1/97 of 
any Other Indebtedness
Balance as of 3/1/97 of
any Subordinated
Management Fees


<PAGE>
 
                                   EXHIBIT B

                              [Payment Schedule]


<PAGE>
 
                                   EXHIBIT C

                        [Non-Monetary Default Schedule]

     The following items were due The Bank of New York during 1996 but were 
never furnished.  Failure to deliver said requirements constitutes a technical 
default under the financing documents.

     1.   Audited financial statements of Hampden Nursing Homes, Inc.
     2.   Auditors' Report of net income available for debt service and debt 
          service coverage ratio.
     3.   Certificate of no event of default from the accountant.
     4.   Certificate of no event of default from authorized representative 
          of Company.
     5.   Certificate of payment of taxes, government charges and utilities.
     6.   Calculation of the amount to be deposited into the Repair and 
          Replacement account within 120 days of year-end.
     7.   Auditors Report of retained cash flow and cash on hand adjustment.
     8.   Insurance Certificate for period 3/1/96 to 3/1/97.