2005 Connecticut Code - Sec. 17b-525. (Formerly Sec. 17a-365). Reserve fund escrow account.
Sec. 17b-525. (Formerly Sec. 17a-365). Reserve fund escrow account. (a) Except as provided in section 17b-534, on and after the date any facility located in this
state is first occupied by any resident, the provider shall establish and maintain on a
current basis, in escrow with a bank, trust company, or other escrow agent having its
principal place of business in this state, a portion of all entrance fees received by the
provider in an aggregate amount sufficient to cover: (1) All principal and interest, rental
or lease payments due during the next twelve months on account of any first mortgage
loan or any other long-term financing of the facility; and (2) the total cost of operations
of the facility for a one-month period, excluding debt service, rental or lease payments
as described in subdivision (1) of this subsection and excluding capital expenditures.
The escrow agent may release up to one-twelfth of the required principal balance of
funds held in escrow pursuant to said subdivision not more than once during any calendar
month, if the provider so requests in writing. The commissioner may authorize the
escrow agent to release additional funds held in escrow pursuant to subdivisions (1) and
(2) of this subsection, upon application by the provider setting forth the reasons for the
requested release and a plan for replacing these funds within one year; the commissioner
shall respond within fifteen business days. If any escrow funds so released are not replaced within one year the escrow agent shall so notify the commissioner. A provider
shall promptly notify the commissioner in the event such provider uses funds held in
escrow pursuant to subdivisions (1) and (2) of this subsection. Upon written application
by a provider, the commissioner may authorize a facility to maintain a reserve escrow
or escrows in an amount less than the amounts set forth in this section, if the commissioner finds that the contractual liabilities of the provider and the best interests of the
residents may be adequately protected by a reserve escrow or escrows in a lesser amount.
(c) Any affiliate of a provider that controls any part of the reserve escrow funds is liable for the debts of the provider up to the amount of the provider's contribution to the fund plus any prorated interest the fund may earn.
(P.A. 86-252, S. 6, 17; P.A. 90-159, S. 3; P.A. 98-250, S. 24, 39.)
History: P.A. 90-159 in Subsec. (b) prohibited entrance fee escrows from being subordinated to other loans or commitments of any kind; Sec. 17-540 transferred to Sec. 17a-365 in 1991; Sec. 17a-365 transferred to Sec. 17b-525 in 1995; P.A. 98-250 amended Subsec. (a) to require notification of use of escrow funds, effective July 1, 1998.
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