Compilation of Rules and Regulations of the State of Georgia
Department 120 - OFFICE OF COMMISSIONER OF INSURANCE, SAFETY FIRE COMMISSIONER AND INDUSTRIAL LOAN COMMISSIONER
Chapter 120-2 - RULES OF COMMISSIONER OF INSURANCE
Subject 120-2-51 - CONTINUING CARE PROVIDERS AND FACILITIES
Rule 120-2-51-.05 - Escrow Account, Escrow Agreement and Certain Minimum Provisions Required

Universal Citation: GA Rules and Regs r 120-2-51-.05

Current through Rules and Regulations filed through March 20, 2024

(1) Any portion of the entrance fee paid by a resident or prospective resident to the provider shall be held in an escrow account which shall be governed by an escrow agreement, unless the provisions set forth in O.C.G.A. Section 33-45-8regarding the release of escrow funds have been met at the time the entrance fee for a resident owned living unit is paid by the resident to the provider. If an escrow agreement is required, such agreement shall include in writing at least the following minimum provisions:

(a) The purpose of the escrow agreement pursuant to O.C.G.A. Section 33-45-8(a);

(b) Any portion of the entrance fee paid by a resident to the provider shall be held in an escrow account governed by the escrow agreement;

(d) Any portion of the entrance fee paid by a resident or prospective resident to the provider is subject to the terms of the escrow agreement and shall be deposited by the provider with the bank promptly after receipt;

(e) The bank shall be appointed as escrow agent;

(f) The bank shall hold and distribute all entrance fees deposited with the bank in accordance with the escrow agreement;

(g) Any portion of the entrance fee paid by a resident or prospective resident to the provider that is held for ninety (90) days or more shall earn interest. Such interest shall be credited at least quarterly to the resident's account(s) and shall belong to the resident;

(h) The bank shall disburse funds from the escrow account payable to the resident or prospective resident upon the receipt of documentation signed by a representative of the provider certifying that such funds may be released in accordance with the terms of the escrow agreement and any applicable law or regulations, a copy of which shall be attached to the escrow agreement, or upon the bank's determination that such funds may be released to the resident in accordance with O.C.G.A. Section 33-45-8. The bank may rely upon the total disbursement amount included in such signed documentation from the provider and shall have no obligation to verify the accuracy of any such documentation. Upon receipt by the bank of such documentation, the bank shall disburse funds to the resident or prospective resident within five (5) banking business days;

(i) The bank shall disburse funds from the escrow account payable to the provider upon the receipt of documentation signed by a representative of the provider certifying that such funds may be released in accordance with the terms of the escrow agreement and any applicable law or regulations, a copy of which shall be attached to the escrow agreement. The bank may rely upon the total disbursement amount included in such signed documentation from the provider and shall have no obligation to verify the accuracy of any such documentation. Upon receipt by the bank of such documentation, the bank shall disburse funds to the provider in accordance with the provider's instructions within five (5) banking business days;

(j) The bank shall be entitled to rely upon the written notices, instructions and directions of the provider and shall have no liability for any action taken based upon such reliance;

(k) The bank shall not be liable for the following if done in good faith: any errors of judgement, any act committed, any step taken or omitted, any mistake of fact or law, or for anything that the bank may do or refrain from doing in connection therewith. However, the bank shall be liable for its own negligence or willful misconduct;

(l) The bank may consult with legal counsel of its own choice should any dispute or question arise pursuant to the escrow agreement, or bank's duties thereunder. Should a dispute arise related to the proper disbursement of funds by the bank, the bank, upon ten (10) days prior notice to the provider, may file a suit in interpleader for the purpose of determining the rights of the parties to any funds held in escrow and may deposit such funds with the court. The provider shall reimburse the bank for its reasonable and legitimate legal expenses so incurred to the extent allowed by Georgia law;

(m) The escrow agreement may be terminated by either the bank or the provider. Upon termination, the bank shall deliver the escrow agreement and all funds held in the escrow account(s) (including any income earned thereon) and any and all related instruments or documents to a successor escrow agent. Such termination shall become effective upon the date such funds and any related instruments or documents are delivered to the successor escrow agent. Upon delivery of all funds and any related instrument or documents in accordance with this paragraph, the bank shall thereafter be discharged from any further obligations pursuant to the escrow agreement. All power, authority, duties and obligations of the bank shall henceforth apply to the successor escrow agent; and

(n) Contact information, including name and address, for the provider, bank and Department for notice, instruction and direction purposes.

(2) In addition to the required minimum provisions to be included in an escrow agreement pursuant to Regulation 120-2-51-.05(1), as set forth above, the following documents must be attached as exhibits to such escrow agreement:

(a) A document setting forth the bank's fees in connection with the escrow agreement;

(b) A form to be used to request disbursement of funds from the bank to the resident or prospective resident pursuant to Regulation 120-2-51-.05(1)(h). Such form must list the total disbursement amount and must certify that the resident or prospective resident has sent written notice to the provider requesting a refund and that either (i) such resident or prospective resident has rescinded his or her reservation agreement or continuing care agreement within the period provided in such agreements, or (ii) the reservation agreement or continuing care agreement has been terminated by the resident, prospective resident or provider in accordance with its stated terms; and

(c) A form to be used to request disbursement of funds from the bank to the provider pursuant to Regulation 120-2-51-.05(1)(i). Such form must list the total disbursement amount and certify the following:

(i) The provider has presold at least fifty (50) percent of the residential units, having received at least a ten (10) percent deposit on each residential unit presold; AND

(ii) The provider has received a commitment for any first mortgage loan or other financing, and any conditions of the commitment prior to disbursement of funds thereunder have been substantially satisfied; AND

(iii) Aggregate entrance fees received or receivable by the provider pursuant to binding continuing care agreements, plus the anticipated proceeds of any first mortgage loan or other financing commitment, are equal to not less than ninety (90) percent of the aggregate cost of constructing or purchasing, equipping, and furnishing the facility, and not less than ninety (90) percent of the funds estimated in the statement of cash flows submitted by the provider as part of its disclosure statement, to be necessary to fund start-up losses and assure full performance of the obligations of the provider pursuant to continuing care contracts shall be on hand; OR

(iv) The continuing care facility is fully financed or open and operational, the continuing care facility is compliant with the minimum financial reserves required by O.C.G.A. Section 33-45-11, and sufficient funds are maintained in escrow to meet the provider's refund obligations under O.C.G.A. Sections 33-45-8(b)(1),(2) or (3).

O.C.G.A. §§ 33-2-9, 33-45-4, 33-45-8, 33-45-11.

Disclaimer: These regulations may not be the most recent version. Georgia may have more current or accurate information. We make no warranties or guarantees about the accuracy, completeness, or adequacy of the information contained on this site or the information linked to on the state site. Please check official sources.

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