2022 New York Laws
PBH - Public Health
Article 46 - Continuing Care Retirement Communities
4610 - Entrance Fee Escrow Account.

§  4610.  Entrance  fee escrow account. As a condition for approval to
advertise and collect refundable entry fees/deposits:
  1. The operator shall establish an interest-bearing account with a New
York bank, New York savings and loan  association,  or  New  York  trust
company  for  any  entrance  fees received by the operator, which escrow
funds shall be subject to release as provided by  subdivision  seven  of
this section.
  2. An escrow agreement shall be entered into between the bank, savings
and  loan  association,  or  trust  company  and  the  operator  of  the
community. The agreement shall state that its purpose is to protect  the
resident  or  the  prospective  resident  and that, upon presentation of
evidence of compliance with applicable portions of this article, or upon
order of a court of  competent  jurisdiction,  the  escrow  agent  shall
release  and  pay over the funds, or portions thereof, together with any
interest accrued thereon or earned from investment of the funds, to  the
operator or resident as directed.
  3.  Checks,  drafts,  and  money  orders  for deposit from prospective
residents shall be made payable to the escrow agent only.
  4. All funds deposited in the escrow account shall remain the property
of the resident until released to the operator in accordance  with  this
section,  and  the funds shall not be subject to any liens or charges by
the escrow  agent  or  judgments,  garnishments,  or  creditor's  claims
against the operator or community.
  5.   At  the  request  of  the  operator,  the  commissioner,  or  the
superintendent, the escrow agent shall issue a statement indicating  the
status of the escrow account.
  6. Escrowed funds shall not be released to the operator unless:
  a.  construction  or  purchase of the community has been substantially
completed, an occupancy permit covering the living unit has been  issued
by  the local government having authority to issue such permits, and the
living unit becomes available for occupancy; or
  b. the operator has submitted an application to the  commissioner,  on
forms  approved  by  the  department,  for authorization to use escrowed
entrance fees to assist the operator in financing  the  construction  or
purchase  of  a proposed community and the commissioner, with the advice
of the superintendent, and in accordance with such regulations as may be
promulgated  by  the  council,  has  approved  such   application.   The
commissioner  shall  not  approve such application over the objection of
the superintendent, and shall not approve it unless satisfied  that  the
following conditions have been met:
  (i) the operator has executed contracts accompanied by an entrance fee
or  entrance  fee  deposit  for  at  least sixty percent of all proposed
living units;
  (ii) the aggregate entrance fees or deposits received by the  operator
pursuant to executed contracts equal at least twenty-five percent of the
total  of  the entrance fees due at occupancy for at least sixty percent
of all proposed living units, or at  least  ten  percent  of  the  total
entrance  fee  due  at  occupancy  for  at  least seventy percent of all
proposed living units, whichever is less;
  (iii) the operator has entered into a contract for the construction or
purchase of the community which contract has a fixed maximum price  and,
if  a construction contract, the contractor has secured a performance or
completion bond for the benefit of the operator;
  (iv) the operator has received  a  firm  commitment  for  a  permanent
mortgage  loan  or  other  long  term  financing  and  conditions to the
commitment  prior  to  disbursement  of  funds  thereunder,  other  than
completion of construction or purchase, are substantially satisfied;
  (v) the total amount of escrowed entrance fees or deposits that may be
approved  for  release  under  this  paragraph  shall not exceed fifteen
percent of the total costs of acquiring, constructing and equipping  the
proposed community;
  (vi)  use  of  the  entrance  fees  or  deposits  shall not impair the
operator's ability to comply with the requirements of section  forty-six
hundred eleven of this article;
  (vii)  the operator's executed contracts or amended contracts referred
to in subparagraph (i) of this paragraph, and all  contracts  generating
the  entrance  fees  for  which  release  is sought, contain a provision
conspicuously disclosing the intended use of entrance fees, and that all
refunds shall be in accordance with the otherwise applicable  provisions
of  this  article,  the  regulations  adopted  pursuant  thereto and the
contract;
  (viii) the use of the entrance fees or deposits under  this  paragraph
will promote the efficient and cost-effective acquisition or development
of the proposed community; and
  (ix)  the  release,  availability  and use of the entrance fees comply
with any other conditions the council shall establish.
  7. If the funds in an  escrow  account  under  this  section  and  any
interest  thereon  are  not released to the operator within such time as
provided by rules and regulations adopted  by  the  council,  then  such
funds  shall be returned by the escrow agent to the persons who had made
payment to the operator.
  8. An entrance fee held in escrow may be returned by the escrow  agent
to  the  person  who  paid  the  fee upon receipt by the escrow agent of
notice from the operator that such person is entitled to a refund of the
entrance fee.
  9. Nothing in this section  shall  be  interpreted  as  requiring  the
escrow  of  any nonrefundable application fee, designated as such in the
contract, received by the operator from a prospective resident.
  10. Construction of housing or other facilities shall not begin until:
  a. the operator has executed contracts accompanied by a deposit of  at
least  ten  percent  of  the  entry fee payment for fifty percent of all
units; and
  b. all permits and approvals necessary for operation of the  community
have been granted except those that depend upon construction;
  Provided, nothing in this subdivision shall prohibit an operator, upon
the  approval  of  the council, or an applicant or prospective applicant
upon the approval of the  commissioner  pursuant  to  section  forty-six
hundred  twenty-one of this article, from constructing model units and a
sales office.
  11. Any entry fee deposit required  by  an  operator  shall  be  fully
refundable  if the contract is cancelled within seventy-two hours of its
execution. In the event of cancellation, the entry fee deposit shall  be
refunded within three business days of receipt of cancellation.