§ 246.073 — RELEASE TO PROVIDER FOR NEW FACILITY OR EXPANSION.

Texas § 246.073

• Jurisdiction: Texas
• Code HS: Health and Safety Code

Text

Sec. 246.073. RELEASE TO PROVIDER FOR NEW FACILITY OR EXPANSION. (a) This section applies only to:
(1) a newly constructed facility; or
(2) an expansion of an existing facility in which the number of existing living units is increased by 50 percent or more.
(a-1) Except as provided by Subsection (b), an escrow agent shall release an entrance fee to the provider if:
(1) a minimum of 50 percent of the number of living units in the facility have been reserved for residents, as evidenced by:
(A) uncanceled executed continuing care contracts or reservation agreements with those residents; and
(B) the receipt by the agent of entrance fee deposits of at least 10 percent of the entrance fee designated for each reserved living unit;
(2) the total amount of aggregate entrance fees received or receivable by the provider under binding continuing care contracts or reservation agreements, the anticipated proceeds of any first mortgage loan or other long-term financing commitment described under Subdivision (3), and funds from other sources in the actual possession of the provider are equal to or more than the total amount of:
(A) 90 percent of the aggregate cost of constructing or purchasing, equipping, and furnishing the facility;
(B) 90 percent of the funds estimated, in the statement of anticipated source and application of funds included in the disclosure statement, to be necessary to cover initial losses of the facility; and
(C) 90 percent of the amount of any loan reserve fund escrow required to be maintained by the provider under Section 246.077 ; and
(3) a commitment has been received by the provider for any permanent mortgage loan or other long-term financing described in the statement of anticipated source and application of funds included in the current disclosure statement and any conditions of the commitment before disbursement of funds have been substantially satisfied, other than completion of the construction or closing on the purchase of the facility, and if construction of the facility has not been completed:
(A) all necessary government permits or approvals have been obtained;
(B) the provider and the general contractor responsible for construction of the facility have entered into a maximum price contract;
(C) a recognized surety authorized to do business in this state has executed in favor of the provider a bond covering faithful performance of the construction contract by the general contractor and the payment of all obligations under the contract;
(D) the provider has entered a loan agreement for an interim construction loan in an amount that, when combined with the amount of entrance fees in escrow plus the amount of funds from other sources in the actual possession of the provider, equals or exceeds the estimated cost of constructing, equipping, and furnishing the facility;
(E) the lender has disbursed not less than 10 percent of the amount of the construction loan for physical construction or completed site preparation work; and
(F) the provider has placed orders at firm prices for not less than 50 percent of the value of items necessary for equipping and furnishing the facility in accordance with the description in the disclosure statement, including any installation charges;
(G) an occupancy permit covering the living unit has been issued by the local government that has authority to issue the permit; and
(H) the living unit is available for occupancy by the new resident.
(b) Before the date on which the loan reserve fund escrow required under Section 246.077 is first established, the aggregate amount of entrance fees that may be released to the provider under this section may not exceed an amount equal to the aggregate amount of entrance fees received or receivable by the provider under binding continuing care contracts minus the amount of entrance fees received or receivable that are required to be maintained initially in the loan reserve fund escrow.

Legislative History

Acts 1989, 71st Leg., ch. 678, Sec. 1, eff. Sept. 1, 1989. Amended by Acts 1991, 72nd Leg., ch. 14, Sec. 105, eff. Sept. 1, 1991; Acts 1993, 73rd Leg., ch. 953, Sec. 9, eff. Sept. 1, 1993. Amended by: Acts 2025, 89th Leg., R.S., Ch. 836 (S.B. 1522 ), Sec. 11, eff. January 1, 2026. Acts 2025, 89th Leg., R.S., Ch. 836 (S.B. 1522 ), Sec. 12, eff. January 1, 2026.