(A) A continuing care retirement community is exempt from the provisions of this section if:
(1) it has been operating for at least five years;
(2) for the previous six months it has maintained at least the minimum occupancy rate estimated in its financial feasibility study to achieve a break-even cash flow operating level or seventy-five percent occupancy, whichever is less.
(B) If an entrance fee is received by the operator before the date the resident is permitted to occupy a living unit in the facility, the total amount must be placed in an escrow account with a trust institution. These funds may be released only as follows:
(1) If the entrance fee applies to a living unit that previously has been occupied in the facility, the entrance fee must be released to the operator when the living unit becomes available for occupancy by the new resident.
(2) If the entrance fee applies to a living unit which previously has not been occupied by a resident, the nonrefundable portion, if any, of the entrance fee must be released to the operator when the living unit becomes available for occupancy. The refundable portion, if any, of the entrance fee must be released to the operator when the escrow agent is satisfied that:
(a) construction or purchase of the living unit has been completed, and an occupancy permit, if applicable, covering the living unit has been issued by the local government having authority to issue the permit.
(b) a commitment has been received by the operator for a permanent mortgage loan or other long-term financing, and conditions of the commitment before disbursement of funds have been satisfied substantially.
(c) aggregate entrance fees received or receivable by the operator pursuant to binding continuing care retirement community 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 financial feasibility study required by Section 37-11-30 to be necessary to fund cash shortages during start-up and assure full performance of the obligations of the operator pursuant to continuing care retirement community contracts.
(C) Upon receipt by the escrow agent of a request by the operator for the release of the escrow funds, the escrow agent shall approve release of the funds within five working days unless the escrow agent finds that the requirements of subsection (B) have not been met and notifies the operator of the basis for this finding. The request for release of the escrow funds must be accompanied by documentation the trust institution requires.
If the operator fails to meet the requirements for release of funds held in this escrow account within a time period the escrow agent considers reasonable, the funds must be returned by the escrow agent to the persons who have made payment to the operator. The escrow agent shall notify the operator of the length of this time period when the operator requests release of the funds.
An entrance fee held in escrow may be returned by the escrow agent to the person who made payment to the operator at any time upon receipt by the escrow agent of notice from the operator that this person is entitled to a refund of the entrance fee.
HISTORY: 1989 Act No. 97, Section 1.