§ 4622 — Priority reservation agreements; after obtaining a certificate of authority

§ 4622. Priority reservation agreements; after obtaining a certificate\nof authority. The provisions of this section apply to entities that seek\napproval to enter into priority reservation agreements and to solicit,\ncollect or receive priority reservation fees, with respect to a\ncontinuing care retirement community, after obtaining a certificate of\nauthority under this article.\n 1. No person, partnership, corporation or other entity shall solicit,\ncollect or receive any priority reservation fee or enter into any\nagreement relating to the payment of any priority reservation fee with\nrespect to any continuing care retirement community operated or to be\noperated within the state without first obtaining the written\nauthorization of the commissioner. The commissioner shall not grant such\nauthorization to an entity that has obtained a certificate of authority\nunless the requirements of this section and any applicable regulations\nare met. Upon obtaining the authorization of the commissioner under this\nsection, an operator may enter into cancelable priority reservation\nagreements with prospective residents and solicit, collect and receive\nrefundable priority reservation fees for direct deposit into an escrow\naccount for the purpose of guaranteeing to prospective residents an\nopportunity for priority placement in the continuing care retirement\ncommunity for which the operator has obtained a certificate of\nauthority. A priority reservation fee shall not exceed two thousand\ndollars unless the commissioner, in the discretion of such commissioner,\nestablishes that a priority reservation fee may exceed two thousand\ndollars. A non-refundable priority reservation agreement application fee\nshall not exceed the maximum amount established by the commissioner, in\nsuch commissioner's discretion.\n 2. In order to receive authorization by the commissioner to enter into\ncancelable priority reservation agreements and to solicit, collect or\nreceive any refundable priority reservation fee, an operator shall apply\nfor such authorization on forms or in a format prescribed by the\ncommissioner and, as part of such application, shall submit the\nfollowing information:\n a. a description of the applicant's plan to implement the process of\nentering into cancelable priority reservation agreements and to solicit,\ncollect or receive refundable priority reservation fees;\n b. the name and address of the escrow agent and a copy of the escrow\nagreement required pursuant to this section;\n c. a copy of the instructions to the escrow agent regarding the\nissuance of refunds;\n d. a copy of the forms to be used to document a request for a refund\nof a priority reservation fee and the issuance of such refund;\n e. draft copies of all proposed marketing materials, provided that\ncopies of the final marketing materials must be submitted as soon as\nthey are available provided further that provision of such materials\nshall not be construed to require approval of such materials by the\ndepartment or the council;\n f. a description of the sales office and drawings of any proposed\nmodel units;\n g. a copy of the proposed priority reservation agreement; and\n h. any other information as may be required by regulations adopted\npursuant to this article.\n 3. a. As a condition to receiving the commissioner's authorization\nunder this section, an operator shall establish a government insured\ninterest-bearing account, which earns interest at a rate which is\nconsistent with prevailing interest rates, and enter into an escrow\nagreement with a New York bank, New York savings and loan association or\nNew York trust company for the deposit of any priority reservation fees\ncollected by the operator pursuant to this section, which escrow funds\nshall be subject to release as provided for in this section.\n b. The escrow agreement shall state that its purpose is to protect\nprospective residents who have paid a priority reservation fee to the\noperator in order to guarantee prospective residents an opportunity for\npriority placement in the continuing care retirement community for which\nthe operator has been issued a certificate of authority and that, upon\npresentation of evidence of compliance with applicable portions of this\narticle, or upon order of a court of competent jurisdiction, the escrow\nagent shall release and pay over the funds, or portions thereof,\ntogether with any interest accrued thereon or earned from investment of\nthe funds, to the operator, the prospective resident or the prospective\nresident's legal representative as directed, within fifteen business\ndays of receipt of the notice by the escrow agent.\n c. Checks, drafts, and money orders for deposit from prospective\nresidents shall be made payable to the escrow agent only.\n d. All funds deposited in the escrow account shall remain the property\nof the prospective residents until released to the operator in\naccordance with this section, and the funds shall not be subject to any\nliens or charges by the escrow agent or judgments, garnishments, or\ncreditors' claims against the operator.\n e. At the request of the operator, the commissioner, or a prospective\nresident, the escrow agent shall issue a statement indicating the status\nof the escrow account.\n f. A prospective resident's escrowed funds shall not be released to an\noperator unless the prospective resident has elected to apply the\npriority reservation fee to an actual entrance fee or deposit on an\nentrance fee. Upon release to the operator, a prospective resident's\nescrowed priority reservation fee funds shall be deposited into the\nentrance fee escrow account provided for in section forty-six hundred\nten of this article; provided that the operator may retain such funds\nand shall not be required to deposit them into the entrance fee escrow\naccount if the prospective resident's living unit is available for\noccupancy.\n g. 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\nthe payments or the person's legal representative.\n h. A priority reservation fee, and the interest accrued thereon, held\nin escrow shall be returned by the escrow agent to the person who paid\nthe fee upon receipt by the escrow agent of notice from the operator or\nthe person who paid the fee or the person's legal representative that\nthe priority reservation agreement has been cancelled. Any priority\nreservation fee, and the interest accrued thereon, shall be returned by\nthe escrow agent to the person who paid the fee or the person's legal\nrepresentative within fifteen business days of receipt by the escrow\nagent of notice of cancellation of the priority reservation agreement.\n i. Refunds of priority reservation fees upon the death of a\nprospective resident will be made upon the same basis as refunds upon\ncancellation of a priority reservation agreement.\n j. Nothing in this section shall be interpreted as requiring the\nescrow of any non-refundable priority reservation agreement application\nfee, designated as such in the cancelable priority reservation\nagreement, which fee is received by the operator from a prospective\nresident.\n 4. Any marketing materials, including all materials associated with a\nsales office and model units, used in the solicitation of priority\nreservation agreements or priority reservation fees shall, at a minimum,\ncontain the following:\n a. a statement that the purpose of the marketing material is for the\noperator to offer prospective residents an opportunity for a guaranteed\npriority placement in a continuing care retirement community by entering\ninto cancelable priority reservation agreements and accepting refundable\npriority reservation fees;\n b. a statement that the cancelable priority reservation agreement is\nnot a continuing care retirement contract and may be cancelled by the\nperson entering the agreement or the person's legal representative at\nany time, without cause; and\n c. a statement that any priority reservation fees paid shall be held\nin escrow and shall be refunded, together with interest accrued at\nprevailing rates, to the person paying the fee or the person's legal\nrepresentative upon request and cancellation of the priority reservation\nagreement.\n 5. Any priority reservation fees with respect to a continuing care\nretirement community may be collected only after issuance of a\ncancelable priority reservation agreement to the person paying the fee,\nwhich agreement shall contain the following information:\n a. the name and location of the community;\n b. the name and address of the operator;\n c. the name, address and phone number of a contact person;\n d. the name and address of the person paying the fee;\n e. the name and address of the escrow agent;\n f. the type of unit being reserved;\n g. the current entry fee and monthly care fee, together with a\nstatement explaining that these fees are subject to change and may be\nchanged by the time the prospective resident enters into a continuing\ncare retirement contract with the operator;\n h. the amount of any non-refundable priority reservation agreement\napplication fee;\n i. a notice in bold twelve point type that the cancelable priority\nreservation agreement does not obligate the person entering into the\nagreement in any way; that there is no guarantee by the operator that\nthe current fees set forth in the agreement will not change; that the\nperson paying the priority reservation fee may receive a refund of the\nfee plus interest accrued at prevailing rates upon request; and that he\nor she shall be entitled on a priority basis to apply the priority\nreservation fee to an actual entrance fee or entrance fee deposit on a\nunit not already under contract;\n j. the signature of the person paying the fee and the signature of the\noperator or the operator's agent; and\n k. a statement that the effective period of the agreement shall not\nexceed the duration of the commissioner's authorization.\n 6. a. In order to approve an application under this section, the\ncommissioner shall have determined that:\n (i) the operator has satisfied the requirements of this section and\nany applicable regulations; and\n (ii) the operator can be expected to meet its obligations in\naccordance with this section and in accordance with its priority\nreservation agreements with prospective residents.\n b. If the commissioner approves an application, the commissioner shall\nissue a written authorization to the operator authorizing the operator\nto enter into cancelable priority reservation agreements and collect\nrefundable priority reservation fees from prospective residents\nconcerning the continuing care retirement community.\n c. The commissioner's authorization shall remain in effect as long as\nthe operator's certificate of authority for its community remains in\neffect; provided that the commissioner may rescind the authorization at\nany time for just cause, including any material misstatement of fact or\nmisrepresentation in any of the application materials or any materials\nsubsequently disseminated.\n d. The operator shall provide written notice to all parties who have\nentered into cancelable priority reservation agreements of the\ncommissioner's recision of authorization to enter into cancelable\npriority reservation agreements.\n e. The commissioner shall provide written notice to the escrow agent\nof the commissioner's recision of authorization to enter into cancelable\npriority reservation agreements, including instructions to release funds\nheld in escrow to the persons who have paid refundable priority\nreservation fees.\n