(a) In order to seek a release of escrowed funds, the applicant shall petition in writing to the department and certify to each of the following:
(1) The construction of the proposed continuing care retirement community or phase is at least 50 percent completed.
(2) At least 10 percent of the total of each applicable entrance fee has been received and placed in escrow for at least 60 percent of the total number of residential living units. Any unit for which a refund is pending may not be counted toward that 60-percent requirement.
(3) Deposits made with cash equivalents have been either converted into, or substituted with, cash or held for transfer to the provider. A cash equivalent deposit may be held for transfer to the provider, if all of the following conditions exist:
(A) Conversion of the cash equivalent instrument would result in a penalty or other substantial detriment to the depositor.
(B) The provider and the depositor have a written agreement stating that the cash equivalent will be transferred to the provider, without conversion into cash, when the deposit escrow is released to the provider under this section.
(C) The depositor is credited the amount equal to the value of the cash equivalent.
(4) The applicant’s average performance over any six-month period substantially equals or exceeds its financial and marketing projections approved by the department, for that period.
(5) The applicant has received a commitment for any permanent mortgage loan or other long-term financing.
(b) The department shall instruct the escrow agent to release to the applicant all deposits in the deposit escrow account when all of the following requirements have been met:
(1) The department has confirmed the information provided by the applicant pursuant to subdivision (a).
(2) The department has determined that there has been substantial compliance with projected annual financial statements that served as a basis for issuance of the permit to accept deposits.
(3) The applicant has complied with all applicable licensing requirements in a timely manner.
(4) The applicant has obtained a commitment for any permanent mortgage loan or other long-term financing that is satisfactory to the department.
(5) The applicant has complied with any additional reasonable requirements for release of funds placed in the deposit escrow accounts, established by the department under Section 1785.
(c) The escrow agent shall release the funds held in escrow to the applicant only when the department has instructed it to do so in writing.
(d) When an application describes different phases of construction that will be completed and commence operating at different times, the department may apply the 50-percent construction completion requirement to any one or group of phases requested by the applicant, provided the phase or group of phases is shown in the applicant’s projections to be economically viable.
(Amended by Stats. 2011, Ch. 32, Sec. 11. (AB 106) Effective June 29, 2011. Operative January 1, 2012, by Sec. 73 of Stats. 2011, Ch. 32.)