New Jersey Administrative Code › Title 5 - COMMUNITY AFFAIRS › Chapter 19 - CONTINUING CARE RETIREMENT COMMUNITY RULES › Subchapter 7 - FINANCIAL RESPONSIBILITY › Section 5:19-7.4 - Escrow requirements

Current through Register Vol. 56, No. 14, July 15, 2024
(a) The provider shall
				establish an interest-bearing escrow account with a bank, trust company or other
				escrow agent authorized to do business in the State of New Jersey, as a condition of
				the issuing of a certificate of authority. The provider shall place in the escrow
				account any entrance fees or payments in excess of five percent of the then-existing
				entrance fee for the living unit that are received by the provider prior to the date
				the resident is permitted to occupy the living unit in the facility.
(b) The fees or payments are subject to release
				from the escrow account in the following manner:
1. If the entrance fee gives the resident the
				right to occupy a living unit which has been previously occupied, the entrance fee
				and any interest earned thereon shall be released to the provider when the living
				unit becomes available for occupancy by the new resident.
2. If the entrance fee applies to a living unit
				which has not been previously occupied, the entrance fee and any interest earned
				thereon shall be released to the provider when the Department is satisfied that:
i. Aggregate entrance fees received or receivable
				by the provider pursuant to executed continuing care agreements equal at least 50
				percent of the sum of the entrance fees due at full occupancy of the portion of the
				facility being certified, except that entrance fees receivable pursuant to an
				agreement shall be counted only if the facility has received a deposit of 35 percent
				or more of the entrance fee due from the individual signing the contract;
ii. The aggregate entrance fees received or
				receivable pursuant to the preceding paragraphs plus anticipated proceeds of any
				first mortgage loan or other long-term financing commitment and funds from other
				sources in the actual possession of the provider are equal to at least 50 percent of
				the aggregate cost of constructing or purchasing, equipping and furnishing the
				facility plus at least 50 percent of the funds necessary to fund start-up losses as
				estimated by the provider in the statement of anticipated source and application of
				funds submitted pursuant to
				5:19-4.2(a)11;
				and
iii. The provider has received a
				preliminary commitment for any permanent mortgage loan or other long-term financing
				described pursuant to
				5:19-4.2(a)11  and any
				conditions of the commitment prior to disbursement of funds thereunder, other than
				completion of the construction or closing of the purchase of the facility, are
				substantially satisfied.
3.
				If the funds in the escrow account established pursuant to this section and any
				interest earned thereon are not released within 36 months, or a greater time if so
				specified by the provider with the consent of the Department, the escrow agent shall
				return the funds to the individuals who made payments to the provider.
4. Nothing in this section shall require the
				provider to place any non-refundable application fees charged to prospective
				residents in escrow.
5. In lieu of any
				escrow required pursuant to this section, a provider is entitled to post a letter of
				credit from a financial institution, negotiable securities or a bond by a surety
				authorized to do business in this State, in a form approved by the Department and in
				an amount not to exceed the amount required by (b)2 above. The provider shall
				execute the letter of credit, negotiable securities or bond in favor of the
				Department on behalf of individuals who are entitled to a refund of entrance fees
				from the provider.
6. A provider may
				apply to the Department for a waiver of the applicable escrow requirements of this
				section when a provider constructs additional living units in an amount that does
				not exceed 10 percent of the facility's existing living units for continuing care
				residents. The provider shall apply for the waiver in writing to the Department. The
				Department may grant the waiver which may be effective for a period of one year or
				longer, at the discretion of the Department, if the construction of additional units
				meets the requirements of this subsection.
7. Upon receipt of a notice from the provider that
				an individual is entitled to a refund of an entrance fee, the escrow agent shall
				return the funds held in the escrow account to the individual.