§ 4610 — Entrance fee escrow account

New York § 4610

• Jurisdiction: New York
• Law PBH: Public Health
• Art. 46: Continuing Care Retirement Communities

Text

§ 4610. Entrance fee escrow account. As a condition for approval to\nadvertise and collect refundable entry fees/deposits:\n 1. The operator shall establish an interest-bearing account with a New\nYork bank, New York savings and loan association, or New York trust\ncompany for any entrance fees received by the operator, which escrow\nfunds shall be subject to release as provided by subdivision seven of\nthis section.\n 2. An escrow agreement shall be entered into between the bank, savings\nand loan association, or trust company and the operator of the\ncommunity. The agreement shall state that its purpose is to protect the\nresident or the prospective resident and that, upon presentation of\nevidence of compliance with applicable portions of this article, or upon\norder of a court of competent jurisdiction, the escrow agent shall\nrelease and pay over the funds, or portions thereof, together with any\ninterest accrued thereon or earned from investment of the funds, to the\noperator or resident as directed.\n 3. Checks, drafts, and money orders for deposit from prospective\nresidents shall be made payable to the escrow agent only.\n 4. All funds deposited in the escrow account shall remain the property\nof the resident until released to the operator in accordance with this\nsection, and the funds shall not be subject to any liens or charges by\nthe escrow agent or judgments, garnishments, or creditor's claims\nagainst the operator or community.\n 5. At the request of the operator, the commissioner, or the\nsuperintendent, the escrow agent shall issue a statement indicating the\nstatus of the escrow account.\n 6. Escrowed funds shall not be released to the operator unless:\n a. construction or purchase of the community has been substantially\ncompleted, an occupancy permit covering the living unit has been issued\nby the local government having authority to issue such permits, and the\nliving unit becomes available for occupancy; or\n b. the operator has submitted an application to the commissioner, on\nforms approved by the department, for authorization to use escrowed\nentrance fees to assist the operator in financing the construction or\npurchase of a proposed community and the commissioner, with the advice\nof the superintendent, and in accordance with such regulations as may be\npromulgated by the council, has approved such application. The\ncommissioner shall not approve such application over the objection of\nthe superintendent, and shall not approve it unless satisfied that the\nfollowing conditions have been met:\n (i) the operator has executed contracts accompanied by an entrance fee\nor entrance fee deposit for at least sixty percent of all proposed\nliving units;\n (ii) the aggregate entrance fees or deposits received by the operator\npursuant to executed contracts equal at least twenty-five percent of the\ntotal of the entrance fees due at occupancy for at least sixty percent\nof all proposed living units, or at least ten percent of the total\nentrance fee due at occupancy for at least seventy percent of all\nproposed living units, whichever is less;\n (iii) the operator has entered into a contract for the construction or\npurchase of the community which contract has a fixed maximum price and,\nif a construction contract, the contractor has secured a performance or\ncompletion bond for the benefit of the operator;\n (iv) the operator has received a firm commitment for a permanent\nmortgage loan or other long term financing and conditions to the\ncommitment prior to disbursement of funds thereunder, other than\ncompletion of construction or purchase, are substantially satisfied;\n (v) the total amount of escrowed entrance fees or deposits that may be\napproved for release under this paragraph shall not exceed fifteen\npercent of the total costs of acquiring, constructing and equipping the\nproposed community;\n (vi) use of the entrance fees or deposits shall not impair the\noperator's ability to comply with the requirements of section forty-six\nhundred eleven of this article;\n (vii) the operator's executed contracts or amended contracts referred\nto in subparagraph (i) of this paragraph, and all contracts generating\nthe entrance fees for which release is sought, contain a provision\nconspicuously disclosing the intended use of entrance fees, and that all\nrefunds shall be in accordance with the otherwise applicable provisions\nof this article, the regulations adopted pursuant thereto and the\ncontract;\n (viii) the use of the entrance fees or deposits under this paragraph\nwill promote the efficient and cost-effective acquisition or development\nof the proposed community; and\n (ix) the release, availability and use of the entrance fees comply\nwith any other conditions the council shall establish.\n 7. If the funds in an escrow account under this section and any\ninterest thereon are not released to the operator within such time as\nprovided by rules and regulations adopted by the council, then such\nfunds shall be returned by the escrow agent to the persons who had made\npayment to the operator.\n 8. An entrance fee held in escrow may be returned by the escrow agent\nto the person who paid the fee upon receipt by the escrow agent of\nnotice from the operator that such person is entitled to a refund of the\nentrance fee.\n 9. Nothing in this section shall be interpreted as requiring the\nescrow of any nonrefundable application fee, designated as such in the\ncontract, received by the operator from a prospective resident.\n 10. Construction of housing or other facilities shall not begin until:\n a. the operator has executed contracts accompanied by a deposit of at\nleast ten percent of the entry fee payment for fifty percent of all\nunits; and\n b. all permits and approvals necessary for operation of the community\nhave been granted except those that depend upon construction;\n Provided, nothing in this subdivision shall prohibit an operator, upon\nthe approval of the council, or an applicant or prospective applicant\nupon the approval of the commissioner pursuant to section forty-six\nhundred twenty-one of this article, from constructing model units and a\nsales office.\n 11. Any entry fee deposit required by an operator shall be fully\nrefundable if the contract is cancelled within seventy-two hours of its\nexecution. In the event of cancellation, the entry fee deposit shall be\nrefunded within three business days of receipt of cancellation.\n