Effective - 28 Aug 1981
376.940. Escrow account for entrance fees required, released when. — 1. As a condition for the issuance of a certificate of authority pursuant to section 376.935, the department shall require that the provider establish an escrow account with a licensed agent which provides that all of any entrance fee received by the provider prior to the date the resident is permitted to occupy his or her living unit in the facility be placed in escrow with a bank, trust company or other escrow agent approved by the department subject to the condition that such funds may be released only as follows:
(1) If the entrance fee applies to a living unit which has been previously occupied in the facility, the entrance fee shall be released to the provider at such time as the living unit becomes available for occupancy by the new resident;
(2) If the entrance fee applies to a living unit which has not previously been occupied by any resident, the entrance fee, or that portion of the entrance fee not to be held in escrow pursuant to section 376.945, shall be released to the provider at such time as the department is satisfied that all of the following conditions exist:
(a) If construction or purchase of the facility has been substantially completed, an occupancy permit covering the living unit has been issued by the local government having authority to issue such permits; or, if construction of the facility has not been substantially completed, then:
a. All governmental permits or approvals necessary prior to the commencement of construction have been obtained;
b. A maximum price contract has been entered into between the provider and a general contractor responsible for construction of the facility, and a bond covering the faithful performance of the construction contract by the general contractor and the payment of all obligations arising thereunder has been executed by a recognized surety authorized to do business in this state in favor of the provider;
c. A loan agreement has been entered into by the provider for an interim construction loan in the amount which, when combined with the amount of entrance fees then held in escrow under the provisions of this section plus the amount of funds from other sources then in the actual possession of the provider, will equal or exceed the estimated cost of constructing, equipping, and furnishing the facility, and not less than ten percent of the amount of such construction loan has been disbursed by the lender for physical construction or site preparation work completed; and
d. Orders at firm prices have been placed by the provider for not less than fifty percent in value, including installation charges if applicable, of items necessary for equipping and furnishing the facility in accordance with the description set forth in the annual statement required by sections 376.915 to 376.930.
(b) A commitment has been received by the provider for any permanent mortgage loan or other long-term financing described in the statement of anticipated source and application of funds submitted by the provider as part of its application for certificate of authority, and any conditions of the commitment prior to disbursement of funds thereunder have been substantially satisfied;
(c) Aggregate entrance fees received or receivable by the provider pursuant to binding life care contracts, plus the anticipated proceeds of any first mortgage loan or other long-term financing commitment are equal to not less than ninety percent of the aggregate cost of constructing or purchasing, equipping, and furnishing the facility plus not less than ninety percent of the funds estimated in the statement of anticipated source and application of funds submitted by the provider as part of its application for certificate of authority, to be necessary to fund start-up losses and assure full performance of the obligations of the provider pursuant to life care contracts.
2. If an entrance fee placed in an escrow account required to be established pursuant to subsection 1 of this section is not released in accordance with subsection 1 within a period of thirty-six months or such greater time as may have been specified by the provider with the consent of the department, or any extensions thereof approved by the department in writing, then such fee shall be returned by the escrow agent to whoever had made payment thereof to the provider.
3. An entrance fee held in escrow may be returned by the escrow agent to the person or persons who had made payment to the provider at any time upon receipt by the escrow agent of notice from the provider that such person is entitled to a refund of the entrance fee.
4. Nothing in this section shall be interpreted as requiring the escrow of any nonrefundable application fee, designated as such in the annual statement required by sections 376.915 to 376.930, received by the provider from a prospective resident.
5. This section shall be applicable only to life care contracts executed after September 28, 1981.
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(L. 1981 S.B. 84 § 6)