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
Universal Citation: NJ Admin Code 5:19-7.4
Current through Register Vol. 56, No. 18, September 16, 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.
Disclaimer: These regulations may not be the most recent version. New Jersey 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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