NY Pub Health L § 4621 (2021)
2021 New York Laws PBH - Public Health Article 46 - Continuing Care Retirement Communities 4621 - Priority Reservation Agreements; Prior to Obtaining a Certificate of Authority.

§   4621.  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 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 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  continuing  care  retirement  community  applicant or an entity that has 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 continuing care retirement community and for the purpose of guaranteeing to prospective residents an  opportunity for  priority  placement  in  a  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;   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 bank, New York savings and loan association or New York 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  continuing  care  retirement  community and to guarantee prospective residents an opportunity for priority placement in a 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 section, 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 continuing care retirement community and to enter into continuing care retirement contracts, and the prospective  resident has  entered  into  a  continuing  care  retirement  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 ten 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  cancelled.  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  will  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 continuing care retirement community and to  offer  prospective  residents  an  opportunity  for  a guaranteed  priority placement in a 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 continuing care retirement contract and may be  cancelled  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 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 that  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  that 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 that 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; and   k. a statement of the effective period of the agreement not to  exceed the duration of the commissioner's authorization.   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 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 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 and 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.