20-1804

20-1804. Entrance fee escrow

A. As a condition for the issuance of a permit pursuant to section 20-1803, the
director shall require that the provider establish an escrow account with a licensed
agent which provides that all of any entrance fee received by the provider prior to the
date the resident is permitted to occupy his or her living unit in the facility be placed
in escrow with a bank, trust company or other escrow agent approved by the director,
subject to the condition that such funds may be released only as follows:

1. If the entrance fee applies to a living unit which has been previously occupied
in the facility, the entrance fee shall be released to the provider at such time as the
living unit becomes available for occupancy by the new resident.

2. If the entrance fee applies to a living unit which has not previously been
occupied by any resident, the entrance fee, or that portion of the entrance fee not to be
held in escrow pursuant to section 20-1806, shall be released to the provider at such
time as the director is satisfied that all of the following conditions exist:

(a) Construction or purchase of the facility has been substantially completed and
an occupancy permit covering the living unit has been issued by the local government
having authority to issue such permits.

(b) 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 submitted by the provider as part of its permit application, and any
conditions of the commitment prior to disbursement of funds thereunder have been
substantially satisfied.

(c) Aggregate entrance fees received or receivable by the provider pursuant to
binding life care contracts, plus the anticipated proceeds of any first mortgage loan or
other long-term financing commitment are equal to not less than ninety per cent of the
aggregate cost of constructing or purchasing, equipping and furnishing the facility plus
not less than ninety per cent of the funds estimated in the statement of anticipated
source and application of funds submitted by the provider as part of its permit
application, to be necessary to fund start-up losses and assure full performance of the
obligations of the provider pursuant to life care contracts.

B. If the funds in an escrow account required to be established under subsection A
are not released within such time as provided by rules and regulations issued by the
director, then such funds shall be returned by the escrow agent to the persons who had
made payment to the provider.

C. An entrance fee held in escrow may be returned by the escrow agent to the person
or persons who had made payment to the provider at any time upon receipt by the escrow
agent of notice from the provider that such person is entitled to a refund of the
entrance fee.

D. Nothing in this section shall be interpreted as requiring the escrow of any
nonrefundable application fee, designated as such in the permit application required by
section 20-1802, received by the provider from a prospective resident.