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Title: Section 903.5 - Escrow of priority reservation fees

Effective Date

12/02/1992

Section 903.5 Escrow of priority reservation fees. (a) As a condition of receiving the commissioner's authorization pursuant to section 903.4 of this part, the prospective applicant or applicant or in the case of an existing community, the operator shall:

(1) establish a government insured interest-bearing account or accounts which earn interest at a rate consistent with prevailing rates; and

(2) enter into an escrow agreement with a New York bank, New York savings and loan association or a New York trust company for the direct deposit of all priority reservation fees collected pursuant to this part. Such agreement shall state that:

(i) in the case of a prospective applicant or an applicant which has not yet been issued a certificate of authority, the purpose of the agreement is to protect prospective residents who have paid priority reservation fees for the purpose of allowing the applicant or prospective applicant to test the market demand for the proposed community and/or to allow the prospective residents to place their names on a priority waiting list for the proposed community; or

(ii) in the case of an existing community operating under a certificate of authority, the purpose of the agreement is to protect prospective residents who have paid priority reservation fees to the operator in order to place their names on a priority waiting list for admission to the community; and

(iii) the escrow agent shall release all or a portion of the reservation fees on deposit, including interest earned from the investment of the funds at the prevailing rates, to the operator, prospective residents or the prospective residents' legal representatives upon presentation of evidence of compliance with subdivisions (e), (f), (g) or (h) of this section within fifteen business days of receipt by the escrow agent of such written notice or upon order of a court of competent jurisdiction.

(b) all checks, drafts and money orders for deposit from prospective residents or their legal representatives shall be made payable to the escrow agent only.

(c) All funds deposited in the escrow account shall remain the property of the prospective residents or their legal representatives until release of such funds to the operator pursuant to subdivision (e) and (f) of this section, and the funds shall not be subject to any liens or charges by the escrow agent or judgements, garnishments, or creditors' claims against the applicant, prospective applicant or operator.

(d) The escrow agent shall issue a statement indicating the status of the escrow account upon request of the prospective applicant, applicant, operator, the Commissioner of Health, the prospective resident or the prospective resident's legal representative.

(e) In the case of a prospective applicant or applicant, the escrowed reservation fees including interest earned shall not be released to such applicant or prospective applicant until approved as an operator and shall be released to such operator by the escrow agent only upon written notice to the escrow agent by the commissioner of the issuance of a certificate of authority and presentation to the escrow agent of documentation of a prospective resident's election to enter into a life care contract with the operator and to apply the priority reservation fee including interest earned to an actual entrance fee or deposit on an entrance fee. Upon release to the operator, the funds shall be deposited into the entrance fee escrow account pursuant to section 901.3 of Part 901.

(f) In the case of an existing community operating under a certificate of authority, the escrowed reservation fees including interest earned shall be released by the escrow agent to the operator only upon presentation to the escrow agent of documentation of a prospective resident's election to enter a life care contract with the operator and to apply the priority reservation fee to an actual entrance fee or deposit on an entrance fee. Upon release of such funds to the operator, the funds shall be deposited into the entrance fee escrow account pursuant to section 901.3 of Part 901 unless an appropriate independent living unit is available for occupancy by the prospective resident.

(g) If the authorization to enter into priority reservation agreements expires or is rescinded by the commissioner pursuant to section 903.4(c)(1)(i) or (c)(2) of this part, the escrowed reservation fees including interest earned shall be released to the persons who paid the reservation fees or their legal representatives upon written notice of the commissioner to the escrow agent of such expiration or rescission.

(h) The escrow agent shall release an escrowed reservation fee including interest earned to the person who paid the reservation fee or his or her legal representative within fifteen business days of receipt of written notice of cancellation pursuant to paragraphs (a) and (b) of Section 903.6 or upon written notification of the death of a prospective resident and appointment of a legal representative. (i) The escrow agent shall notify the prospective applicant, applicant, or operator in writing of a refund issued to a prospective resident.
 

Volume

VOLUME E (Title 10)

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