NY Pub Health L § 4674 (2021)
2021 New York Laws PBH - Public Health Article 46-A - Fee-for-Service Continuing Care Retirement Communities Demonstration Program 4674 - Priority Reservation Agreements; Prior to Obtaining a Certificate of Authority.

§   4674.  Priority  reservation  agreements;  prior  to  obtaining  a certificate of authority. The provisions of this section shall apply  to entities   that   seek  approval  to  enter  into  priority  reservation agreements and to solicit, collect or receive priority reservation fees, with respect to a proposed fee-for-service  continuing  care  retirement community,  prior  to  obtaining  a  certificate of authority under this article.   1. No person, partnership, corporation or other entity shall  solicit, collect  or  receive  any  priority  reservation  fee  or enter into any agreement relating to the payment of any priority reservation  fee  with respect  to  any fee-for-service continuing care retirement community to be operated  within  the  state  without  first  obtaining  the  written authorization of the commissioner. The commissioner shall not grant such authorization  to  an  entity that has not yet obtained a certificate of authority unless the requirements of this  section  and  any  applicable regulations   are   met.   Upon   obtaining  the  authorization  of  the commissioner under this section, a prospective community applicant or an entity having filed an application for a certificate  of  authority  may enter  into  cancelable priority reservation agreements with prospective residents  and  solicit,  collect  and   receive   refundable   priority reservation  fees  for  direct  deposit into an escrow account, prior to obtaining a certificate of authority,  for  the  purpose  of  evaluating market  demand for a proposed fee-for-service continuing care retirement community and for the purpose of guaranteeing to  prospective  residents an  opportunity  for  priority placement in a fee-for-service continuing care retirement community. A priority reservation fee shall  not  exceed two  thousand  dollars.  A non-refundable priority reservation agreement application fee shall not exceed the maximum amount for such fee as  set forth in regulations adopted by the council.   2. In order to receive authorization by the commissioner to enter into cancelable  priority  reservation  agreements and to solicit, collect or receive any refundable priority reservation fee, a person,  partnership, corporation  or  other  entity, hereinafter designated as the applicant, shall apply for such authorization on forms or in a format prescribed by the commissioner and, as part of  such  application,  shall  submit  the following information:   a.  a  description of the applicant's plan to implement the process of entering into cancelable priority reservation agreements and to solicit, collect or receive refundable priority reservation fees;   b. a general description of  the  proposed  community,  including  the location  and description of the proposed community site; the components to be included in the  community,  such  as  independent  living  units, skilled  nursing  facility and adult care facility; the estimated number of each type of unit or beds; and the services to be provided;   c. an estimate of the pricing structure  of  the  community  including entrance   fees  and  monthly  care  fees  and  the  provisions  of  the fee-for-services rates;   d. a description of the anticipated market to be served;   e. anticipated methods and  sources  of  financing  for  the  proposed community;   f. organizational structure of the applicant;   g.  the  name and address of the escrow agent and a copy of the escrow agreement required pursuant to this section;   h. a copy of the  instructions  to  the  escrow  agent  regarding  the issuance of refunds;   i.  a  copy of the forms to be used to document a request for a refund of a priority reservation fee and the issuance of such refund;    j. a copy of the most  recent  set  of  financial  statements  of  the applicant  prepared  in  accordance  with  generally accepted accounting principles and certified to be  true  and  accurate  by  an  independent certified public accountant;   k.  draft  copies of all proposed marketing materials, including final marketing materials as soon as available; provided that the provision of such material shall  not  be  construed  to  require  approval  of  such materials by the department or the council;   l.  a  description  of  the sales office and a copy of the preliminary site plans and drawings of any proposed model units;   m. a copy of the proposed priority reservation agreement; and   n. any other information as may be  required  by  regulations  adopted pursuant to this article.   3.  Any  change  in  the legal entity authorized under this section to enter into cancelable priority reservation agreements  and  to  solicit, collect  or  receive  refundable priority reservation fees shall require approval in the same  manner  as  the  original  application;  provided, however,  that  the  commissioner  may  waive any requirement to provide information that is not relevant to such change.   4. a. As a condition to  receiving  the  commissioner's  authorization under  this  section,  an applicant shall establish a government insured interest-bearing account, which  earns  interest  at  a  rate  which  is consistent  with  prevailing  interest  rates,  and enter into an escrow agreement with a New York state bank, New York state  savings  and  loan association  or  New  York  state  trust  company for the deposit of any priority reservation fees collected by the applicant  pursuant  to  this section,  which escrow funds shall be subject to release as provided for in this section.   b. The escrow agreement shall state that its  purpose  is  to  protect prospective  residents  who  have paid a priority reservation fee to the applicant in furtherance of the applicant's efforts to  evaluate  market demand   for  a  proposed  fee-for-service  continuing  care  retirement community and to guarantee  prospective  residents  an  opportunity  for priority  placement  in  a  fee-for-service  continuing  care retirement community 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  applicant,   the prospective  resident or the prospective resident's legal representative as directed, within fifteen business days of receipt of  the  notice  by the escrow agent.   c.  Checks,  drafts  and  money  orders  for  deposit from prospective residents shall be made payable to the escrow agent only.   d. All funds deposited in the escrow account shall remain the property of  the  prospective  residents  until  released  to  the  applicant  in accordance  with this article, and the funds shall not be subject to any liens or charges by the  escrow  agent  or  judgments,  garnishments  or creditors' claims against the applicant.   e.  At the request of the applicant, the commissioner or a prospective resident, the escrow agent shall issue a statement indicating the status of the escrow account.   f. A prospective resident's escrowed funds shall not be released to an applicant unless the applicant obtains a  certificate  of  authority  to operate   the   proposed   fee-for-service  continuing  care  retirement community and to enter into fee-for-service continuing  care  contracts, and   the  prospective  resident  has  entered  into  a  fee-for-service continuing care contract with the applicant and has elected to apply the  priority reservation fee to an actual entrance  fee  or  deposit  on  an entrance  fee.  Upon  release  to  the approved applicant, a prospective resident's escrowed priority reservation fee funds  shall  be  deposited into  the  entrance fee escrow account provided for in section forty-six hundred sixty-two of this article.   g. If the funds in an escrow  account  under  this  section,  and  any interest  thereon, are not released to the applicant 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 person who had made the payments or the person's legal representative.   h. A priority reservation fee, and the interest accrued thereon,  held in  escrow  shall be returned by the escrow agent to the person who paid the fee upon receipt by the escrow agent of notice from the applicant or the person who paid the fee or the person's  legal  representative  that the  priority  reservation  agreement  has  been  canceled. Any priority reservation fee, and the interest accrued thereon, shall be returned  by the  escrow  agent  to the person who paid the fee or the person's legal representative within fifteen business days of  receipt  by  the  escrow agent of notice of cancellation of the priority reservation agreement.   i.   Refunds  of  priority  reservation  fees  upon  the  death  of  a prospective resident shall be made upon the same basis as  refunds  upon cancellation of a priority reservation agreement.   j.  Nothing  in  this  section  shall  be interpreted as requiring the escrow of any non-refundable priority reservation agreement  application fee,   designated   as  such  in  the  cancelable  priority  reservation agreement, which fee is received by the  applicant  from  a  prospective resident.   5.  Any marketing materials, including all materials associated with a sales office and model units,  used  in  the  solicitation  of  priority reservation agreements or priority reservation fees shall, at a minimum, contain the following:   a.  a  statement  that  the  purpose  of  the marketing material is to determine the market demand for a  proposed  fee-for-service  continuing care   retirement  community  and  to  offer  prospective  residents  an opportunity for a guaranteed priority  placement  in  a  fee-for-service continuing   care  retirement  community  by  entering  into  cancelable priority  reservation  agreements  and  accepting  refundable   priority reservation fees;   b.  a  statement that the cancelable priority reservation agreement is not a fee-for-service continuing care contract and may  be  canceled  by the  person  entering the agreement or the person's legal representative at any time, without cause; and   c. a statement that any priority reservation fees paid shall  be  held in  escrow  and  shall  be  refunded,  together with interest accrued at prevailing rates, to the person paying the fee  or  the  person's  legal representative upon request and cancellation of the priority reservation agreement.   6.   Any   priority  reservation  fees  with  respect  to  a  proposed fee-for-service continuing care retirement community  may  be  collected only  after  issuance  of a cancelable priority reservation agreement to the person paying the fee, which agreement shall contain  the  following information:   a. the name and location of the proposed community;   b. the name and address of the applicant;   c. the name, address and phone number of a contact person;   d. the name and address of the person paying the fee;   e. the name and address of the escrow agent;   f. the type of unit being reserved;    g.  the estimated entry fee and monthly care fee clearly identified as an estimate;   h.  the  amount  of  any non-refundable priority reservation agreement application fee;   i. a notice in bold twelve point type  that  the  cancelable  priority reservation  agreement  does  not  obligate the person entering into the agreement in any way; that there is no guarantee by  the  applicant  the fees  estimated  in  the  agreement  will not change; that the community described is only a proposed community and  any  model  units  are  only representative  of units in a proposed community which is subject to the submission of a formal application by the applicant and  the  subsequent approval  or  disapproval by the council; that there is no guarantee the unit described in the agreement or represented  by  any  model  will  be built  or  otherwise  made available as described in the agreement or at all; that the person paying the priority reservation fee may  receive  a refund  of  the  fee  plus  interest  accrued  at  prevailing rates upon request; and that, should a certificate of authority be granted,  he  or she  shall  be  entitled  on  a  priority  basis  to  apply the priority reservation fee to an actual entrance fee or entrance fee deposit  on  a unit not already under contract;   j. the signature of the person paying the fee and the signature of the applicant or the applicant's agent;   k.  a statement of the effective period of the agreement not to exceed the duration of the commissioner's authorization; and   l. an outline of the fees, their associative service,  and  guidelines used for changing the residency status of a resident.   7.  a.  In  order  to  approve  an application under this section, the commissioner shall have determined, as applicable, that:  (i) the applicant has satisfied the requirements of this  section  and any applicable regulations; and  (ii) the applicant has demonstrated the capability to conduct a market analysis  of the demand for the proposed fee-for-service continuing care retirement community and can be expected  to  meet  its  obligations  in accordance  with  this  section  and  in  accordance  with  its priority reservation agreements with prospective residents.   b. If the commissioner approves an application, the commissioner shall issue a written authorization to the applicant authorizing the applicant to enter into cancelable priority  reservation  agreements  and  collect refundable   priority   reservation   fees  from  prospective  residents concerning  the  proposed  fee-for-service  continuing  care  retirement community.   c.  The  commissioner's  authorization  shall  remain  in effect for a period not to exceed eighteen months from the date of the commissioner's authorization the commencement of said period to be specifically  stated in such authorization subject to the following:  (i)  the  commissioner  may  rescind  the authorization, including any extension thereof, at any time for just cause,  including  any  material misstatement  of  fact  or  misrepresentation  in any of the application materials or any materials subsequently disseminated;  (ii) the authorization may be extended upon written application to  an approval  of  the commissioner for the duration of time specified in the commissioner's written approval;  (iii) unless already expired,  the  authorization  shall  be  extended automatically  if  an  application  for  a  certificate  of authority is submitted pursuant to this article, and such authorization shall  remain in  effect  as  long  as  the application for a certificate of authority remains active; and  (iv) unless already  expired,  the  authorization  shall  be  extended automatically if a certificate of authority is obtained by the applicant pursuant  to this article, and such authorization shall remain in effect as long as the certificate of authority remains in effect.   d.  The applicant shall provide written notice to all parties who have entered  into  cancelable  priority  reservation   agreements   of   the following:  (i)  notice  of  the commissioner's recision of authorization to enter into cancelable priority reservation agreements;  (ii) notice of the commissioner's extension of authorization to  enter into  cancelable  priority  reservation  agreements  including  the  new expiration date and the reason for such extension; and  (iii) notice upon issuance of a certificate of authority  pursuant  to this  article  that  the  party  to  the  agreement  has the option on a priority basis to apply  the  priority  reservation  fee  to  an  actual entrance fee or a deposit on an entrance fee.   e.  The  commissioner shall provide written notice to the escrow agent of the commissioner's recision of authorization to enter into cancelable priority reservation agreements, including instructions to release funds held in  escrow  to  the  persons  who  have  paid  refundable  priority reservation fees.