N.Y. Public Health Law § 4663: Release of escrowed funds to the operator

* § 4663. Release of escrowed funds to the operator. Escrowed funds

shall not be released to the operator unless:

1. construction or purchase of the community or an approved phase of a

community has been substantially completed, an occupancy permit covering

the living unit has been issued by the local government having authority

to issue such permits, and the living unit becomes available for

occupancy; or

1-a. the operator has submitted an application to the commissioner, on

forms approved by the department, for authorization to use escrowed

entrance fees to assist the operator in financing the construction or

purchase of a proposed community, and the commissioner, in accordance

with such regulations as may be promulgated by the council, has approved

such application. The commissioner shall not approve such application

unless satisfied that the following conditions have been met:

a. the operator has executed contracts accompanied by an entrance fee

or entrance fee deposit for at least seventy percent of all proposed

living units or an approved phase of a community;

b. the aggregate entrance fees or deposits received or receivable by

the operator pursuant to executed fee for service continuing care

contracts equal at least ten percent of the total of the entrance fees

due at occupancy for at least seventy percent of all proposed living

units or an approved phase of a community;

c. the operator has entered into a contract for the construction or

purchase of the community which contract has a fixed maximum price and,

if a construction contract, the contractor has secured a performance or

completion bond for the benefit of the operator;

d. the operator has received a firm commitment for a permanent

mortgage loan or other long term financing and conditions to the

commitment prior to disbursement of funds thereunder, other than

completion of construction or purchase, are substantially satisfied;

e. the total amount of escrowed entrance fees or deposits that may be

approved for release under this subdivision shall not exceed fifteen

percent of the total costs of acquiring, constructing and equipping the

proposed community;

f. use of the entrance fees or deposits shall not impair the

operator's ability to comply with the requirements of section forty-six

hundred sixty-four of this article;

g. the operator's executed contracts or amended contracts referred to

in paragraph a of this subdivision, and all contracts generating the

entrance fees for which release is sought, contain a provision

conspicuously disclosing the intended use of entrance fees, and that all

refunds shall be in accordance with the otherwise applicable provisions

of this article, the regulations adopted pursuant thereto and the

contract;

h. the use of the entrance fees or deposits under this subdivision

will promote the efficient and cost-effective acquisition or development

of the proposed community; and

i. the release, availability and use of the entrance fees comply with

any other conditions the council shall establish.

2. 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 operator when the

living unit becomes available for occupancy by the new resident; or

3. 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 operator when the commissioner is satisfied

that:

a. Aggregate entrance fees received or receivable by the operator

pursuant to executed fee-for-service continuing care contracts equal at

least ten percent of the total of the entrance fees due at occupancy for

at least seventy percent of all proposed living units or an approved

phase of a community.

b. In lieu of any escrow required pursuant to this article, an

operator 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 commissioner and in

an amount not to exceed the amount established in paragraph a of this

subdivision. The operator shall execute the letter of credit, negotiable

securities or bond in favor of the commissioner on behalf of individuals

who are entitled to a refund of entrance fees from the provider.

* NB There are 2 § 4663's