2010 California Code
Health and Safety Code
Article 4. Certificate Of Authority

1786.  (a) The department shall issue a provisional certificate of
authority when an applicant has done all of the following:
   (1) Complied with the approved marketing plans.
   (2) Met and continues to meet the requirements imposed under
subdivision (a) of Section 1783.3. The issuance of the provisional
certificate of authority shall not require, and shall not be
dependent upon the release of escrowed funds. Release of escrowed
funds shall be governed by Section 1783.3.
   (3) Completed construction of the continuing care retirement
community or applicable phase.
   (4) Obtained the required licenses.
   (5) Paid the remainder of the application fee.
   (6) Executed a permanent mortgage loan or other long-term
financing.
   (7) Provided the department with a recorded copy of the Notice of
Statutory Limitation on Transfer required by subdivision (aa) of
Section 1779.4.
   (8) Met all applicable provisions of this chapter.
   (b) The provisional certificate of authority shall expire 12
months after issuance unless both of the following occur:
   (1) No later than 60 days prior to the expiration of the
provisional certificate of authority, the provider petitions the
department and demonstrates good cause in writing for an extension of
the provisional certificate of authority.
   (2) The department determines that the provider is capable of
meeting the requirements of Section 1786.2 during the extension
period.
   (c) The department shall exercise its discretion to determine the
length of the extension period.
   (d) After the provisional certificate of authority is issued
providers may continue to take deposits by modifying the deposit
agreement as appropriate. The new deposit agreement shall clearly
state the rights of the depositor and the provider. The applicant
shall submit the agreements to the department for review and approval
prior to use. A provider that holds a provisional certificate of
authority or certificate of authority may accept fees paid by
potential residents to be placed on a waiting list without using a
deposit agreement. These waiting list fees may not exceed five
hundred dollars ($500), and shall be refunded to the potential
resident upon written request.
   (e) All holders of a provisional certificate of authority shall
request in writing a certificate of authority when the requirements
of Section 1786.2 have been met.


1786.2.  (a) The department shall not issue a certificate of
authority to an applicant or a provider, until the department
determines that each of the following has occurred:
   (1) A provisional certificate of authority has been issued or all
of the requirements for a provisional certificate of authority have
been satisfied. In the case of an application for a new certificate
of authority due to an organizational change, if the continuing care
retirement community is financially sound and operating in compliance
with this chapter, it shall be sufficient for the purposes of this
paragraph that the department has approved the application in
writing.
   (2) One of the following requirements has been met:
   (A) At a minimum, continuing care contracts have been executed for
80 percent of the total residential living units in the continuing
care retirement community, with payment in full of the entrance fee.
   (B) At a minimum, continuing care contracts have been executed for
70 percent of the total residential living units in the continuing
care retirement community, with payment in full of the entrance fee,
and the provider has submitted an updated financial and marketing
plan, satisfactory to the department, demonstrating that the proposed
continuing care retirement community will be financially viable.
   (C) At a minimum, continuing care contracts have been executed for
50 percent of the total residential living units in the continuing
care retirement community, with payment in full of the entrance fee,
and the provider furnishes and maintains a letter of credit or other
security, satisfactory to the department, sufficient to bring the
total amount of payments to a level equivalent to 80 percent of the
total entrance fees for the entire continuing care retirement
community.
   (3) A minimum five-year financial plan of operation remains
satisfactory to the department.
   (4) Adequate reserves exist as required by Sections 1792 and
1792.6. For a new continuing care retirement community without an
operating history, the department may approve calculation of required
reserves on a pro forma basis in conjunction with compliance with
approved marketing plans.
   (5) All applicable provisions of this chapter have been met.
   (b) When issued, the certificate of authority, whether full or
conditioned, shall remain in full force unless forfeited by operation
of law under Section 1793.7, inactivated under Section 1793.8, or
suspended or revoked by the department pursuant to Section 1793.21.
   (c) The provider shall display the certificate of authority in a
prominent place within the continuing care retirement community.