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§ 3212. Entrance fee escrow

Purdon's Pennsylvania Statutes and Consolidated StatutesTitle 40 P.S. Insurance

Purdon's Pennsylvania Statutes and Consolidated Statutes
Title 40 P.S. Insurance (Refs & Annos)
Chapter 12. Continuing-Care Provider Registration and Disclosure Act (Refs & Annos)
40 P.S. § 3212
§ 3212. Entrance fee escrow
Currentness
The commissioner shall require, as a condition of issuing a certificate of authority, that the provider establish an interest-bearing escrow account with a bank, trust company or other escrow agent approved by the commissioner. Any entrance fees or payments that are in excess of 5% of the then existing entrance fee for the unit, received by the provider prior to the date the resident is permitted to occupy the living unit in the facilities, shall be placed in the escrow account subject to release as follows:
(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 income earned thereon 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 been previously occupied, the entrance fee shall be released to the provider at such time as the commissioner is satisfied that:
(i) Aggregate entrance fees received or receivable by the provider pursuant to executed continuing-care agreements equal not less than 50% of the sum of the entrance fees due at full occupancy of the portion of the facility under construction. For this paragraph, entrance fees receivable pursuant to an agreement will be counted only if the facility has received a deposit of 35% or more of the entrance fee due from the individual, or individuals, signing the contract.
(ii) The entrance fees received or receivable pursuant to the preceding paragraph plus anticipated proceeds of any first mortgage loan or other long-term financing commitment plus funds from other sources in the actual possession of the provider are equal to not less than 50% of the aggregate cost of constructing or purchasing, equipping and furnishing the facility plus not less than 50% of the funds estimated in the statement of anticipated source and application of funds submitted by the provider as part of its application to be necessary to fund start-up losses of the facility.
(iii) 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 as part of the application for certificate of authority 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, have been substantially satisfied.
(3) If the funds in an escrow account to which paragraphs (1) and (2) apply and any interest earned thereon are not released within 36 months, or such greater time as may have been specified by the provider with the consent of the commissioner, then such funds shall be returned by the escrow agent to the persons who made the payment to the provider.
(4) Nothing in this section shall require the escrow of any nonrefundable application fee charged to prospective residents.
(5) In lieu of any escrow which is required by the commissioner under this section, a provider shall be 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 Commonwealth and approved by the commissioner as to form and in an amount not to exceed the amount required by paragraph (2)(i). The bond, letter of credit or negotiable securities shall be executed in favor of the commissioner on behalf of individuals who may be found entitled to a refund of entrance fees from the provider.
(6) An entrance fee held in escrow may be returned by the escrow agent at any time to the person or persons who paid the fee to the provider upon receipt by the escrow agent of notice from the provider that such person is entitled to a refund of the entrance fee.

Credits

1984, June 18, P.L. 391, No. 82, § 12, effective in 6 months.
40 P.S. § 3212, PA ST 40 P.S. § 3212
Current through Act 10 of the 2024 Regular Session. Some statute sections may be more current, see credits for details.
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