Home Equity Sharing Agreements in Florida: What Happens When You Sell

A home equity sharing agreement gives you a lump sum of cash today in exchange for a share of your home's value later, and in most cases the bill comes due when you sell. The ads tend to stress "no monthly payments." The part that gets less attention is the payoff at closing, which can take a large bite out of your proceeds. This guide explains how these contracts work, how the company's share is worked out when you sell a Florida home, and what to ask before you sign or list.

Key takeaways

• The Consumer Financial Protection Bureau (CFPB) calls these products home equity contracts. Companies often market them as home equity "investments."
• You repay one lump sum at the end of the term, often 10 to 30 years, or sooner when a trigger event like a sale happens.
• The payoff is based on a formula that uses your home's value, a multiplier and, often, a rate cap. In CFPB examples, the payoff grows at about 20 percent a year in the early years.
• The company generally records a lien on your home, so the title company will pay it from your sale proceeds.
• You pay the costs of selling. The company's share is usually based on the full sale price.

How home equity sharing works

With a home equity contract, a company pays you cash up front. In return, you agree to pay back a single amount later. That amount depends on what your home is worth when the contract ends.

You keep living in the home, and you keep paying the mortgage, taxes, insurance and any HOA dues. There is no monthly payment to the company. Instead, the CFPB says repayment is due at the end of the term or when a trigger event occurs. Selling the home is the most common trigger. Other triggers can include default on your first mortgage, failing to pay property taxes or insurance, or the owner's death.

In its January 2025 report, the CFPB found that people mainly use these contracts for debt consolidation and home improvements. The median customer was in their 50s, and roughly 90 percent or more also had a mortgage that sat ahead of the contract.

Shared appreciation versus shared value

Not every company uses the same formula. According to the CFPB, some apply their multiplier to the home's total value. Others apply it only to the change in value. That difference makes offers hard to compare, so ask each company to run the same price scenarios for you in writing.

How the company's share of home equity is calculated at sale

The CFPB describes four moving parts. Each one changes what you owe.

• The upfront payment. The more you take, the more you repay. Fees come out of it, and the CFPB says processing fees are often 3 to 5 percent of the payment.
• The multiplier. A company might pay you 10 percent of your home's value in exchange for a 20 percent stake. That is a 2x multiple.
• A discounted starting value. Some companies set your home's starting value below its appraised value, for example 25 percent lower. That builds in a cushion for the company.
• The rate cap. Many contracts cap the payoff. As of 2024, the CFPB found several companies with caps around 18 to 20 percent a year, compounded monthly.

When you sell, the final value is typically the sale price. However, the CFPB notes that a company may dispute that value, for example after a distressed sale. In that case, an appraiser hired by the company often sets it. Some companies credit you for improvements that raised the value, and others do not.

A worked example from the CFPB

The CFPB report walks through a hypothetical case. It is not any one company's terms, but it shows how fast the numbers move.

• The home is worth $500,000.
• The owner receives $50,000, which is 10 percent of the value.
• The company gets a 20 percent stake, with a 20 percent annual cap.
• A 4 percent fee and $2,000 in third-party costs cut the cash by $4,000 and $2,000.

If the home gains 6 percent a year, the owner would owe $86,400 to settle in year 3. By the end of year 10, the payoff would be $179,085. Even when the CFPB modeled a drop to $350,000 followed by a slow recovery, the owner would still owe $76,491 in year 3.

In other words, the CFPB found that the repayment amount is significantly larger than the upfront payment under most home price scenarios, even in a weak market.

What home equity sharing does to your net proceeds

When you sell, the title company orders payoff letters for every lien on the home. That includes your first mortgage, any HELOC and, typically, the equity contract. Each one gets paid from the sale before you receive anything.

So your net looks like this: sale price, minus mortgage payoff, minus the equity contract payoff, minus commissions, title costs, documentary stamp tax and other closing costs. The CFPB points out that the homeowner bears all the selling costs, while the company's share is based on the full sale price.

That gap can be large. Say the contract payoff is tied to 20 percent of a $600,000 sale, or $120,000. Your commission and closing costs are figured on the same $600,000, but none of them reduce the company's share. Before you list, ask your agent to build a net sheet that shows the equity contract as its own line. Our seller closing costs calculator can help you rough out the other costs.

The lien and your Florida title

The CFPB says that, generally, these companies put a lien on the house. That lien is usually recorded in the county's official records, the same place deeds and mortgages live. In Palm Beach County that is the Clerk of the Circuit Court and Comptroller. In St. Lucie County, it is that county's clerk.

Because of the lien, you may struggle to refinance or open a new loan without paying the contract off. And when you sell, the title search will find it. If you are not sure what is recorded against your home, our guide to selling a house with a lien explains how title companies handle payoffs.

Questions to ask before you sign a home equity sharing contract

If you have not signed yet, slow down. Consider having a Florida real estate attorney review the contract. Then get clear answers to these questions:

1. What will I owe if my home rises 3, 6 or 8 percent a year, stays flat or falls 20 percent?
2. What starting value will you use, and is it lower than the appraisal?
3. Is there a rate cap, and how does it compound?
4. What fees come out of my payment, and what are the total closing costs?
5. What events, besides a sale, make the full amount due?
6. Can I pay early? Are there limits on early payoff?
7. Do you credit me for improvements I make?
8. Is there an arbitration clause?

Also compare the offer with a HELOC, a cash-out refinance or a sale. Our guide on tapping home equity in Florida walks through those choices.

Listing a home with an equity contract

If you already have a contract and plan to sell, start early. First, request a payoff estimate from the company and read the section on how they set the final value. Next, check whether they require notice before you list. Then share the contract with your agent so pricing, net proceeds and timing all reflect it.

It also helps to know whether the company can dispute your sale price. For example, if you price low to sell fast, they may argue the value should be higher. Pricing from clear comparable sales, with a written record, reduces that risk.

In Palm Beach County, sellers in places like Boca Raton and Wellington often have plenty of equity. Even so, an equity contract can turn a comfortable net into a tight one. Know the number before you set the price.

Plan for the payoff letter

The title company will ask the equity company for a written payoff, just as it does with your lender. Because the amount depends on the final sale price, the company may not give a final figure until the contract is signed. So ask early for an estimate at your expected price, and then again once you accept an offer.

Also, give yourself room in the closing timeline. If the payoff letter is late or the company questions the price, closing can slip. A few extra days in the contract, and a clear line of contact at the company, help keep things on track. Finally, keep a copy of the original agreement handy for your agent and the closing agent.

Frequently asked questions

Is home equity sharing a loan?

Companies often say it is not a loan and involves no debt, according to the CFPB's market review. Either way, you still owe a large lump sum, and a lien usually secures it.

Do I have to sell my home to pay off an equity contract?

Not always. You can pay it off with savings or by borrowing. But the CFPB notes that consumers could be forced to sell their homes to pay off these contracts, and some complained that selling felt like their only way out.

What happens if my home loses value?

You may still owe more than you received. Discounted starting values and multipliers mean the company can come out ahead unless prices fall a lot.

Who pays the closing costs when I sell?

You do. The CFPB notes that the homeowner bears the costs of selling, while the company's share usually comes off the full sale price.

Where can I complain about an equity contract company?

The CFPB accepts complaints at consumerfinance.gov or by phone. You can also contact the Florida Attorney General's office.

Sources

• CFPB, Issue Spotlight: Home Equity Contracts Market Overview (January 2025)
• CFPB, Submit a complaint

This article is general information, not legal, tax or financial advice. Contract terms vary by company, so have a Florida attorney and a tax or financial advisor review your agreement.

Selling a home with an equity contract? We will build a personalized net-proceeds sheet that shows the payoff on its own line. Request your seller net sheet or check your home's value. Buying instead? Talk to our team about your next home.