376.940. Escrow account for entrance fees required, released when.
Escrow account for entrance fees required, released when.
376.940. 1. As a condition for the issuance of acertificate of authority pursuant to section 376.935, thedepartment shall require that the provider establish an escrowaccount with a licensed agent which provides that all of anyentrance fee received by the provider prior to the date theresident is permitted to occupy his or her living unit in thefacility be placed in escrow with a bank, trust company or otherescrow agent approved by the department subject to the conditionthat such funds may be released only as follows:
(1) If the entrance fee applies to a living unit which hasbeen previously occupied in the facility, the entrance fee shallbe released to the provider at such time as the living unitbecomes available for occupancy by the new resident;
(2) If the entrance fee applies to a living unit which hasnot previously been occupied by any resident, the entrance fee,or that portion of the entrance fee not to be held in escrowpursuant to section 376.945, shall be released to the provider atsuch time as the department is satisfied that all of the followingconditions exist:
(a) If construction or purchase of the facility has beensubstantially completed, an occupancy permit covering the livingunit has been issued by the local government having authority toissue such permits; or, if construction of the facility has notbeen substantially completed, then:
a. All governmental permits or approvals necessary prior tothe commencement of construction have been obtained;
b. A maximum price contract has been entered into betweenthe provider and a general contractor responsible forconstruction of the facility, and a bond covering the faithfulperformance of the construction contract by the generalcontractor and the payment of all obligations arising thereunderhas been executed by a recognized surety authorized to dobusiness in this state in favor of the provider;
c. A loan agreement has been entered into by the providerfor an interim construction loan in the amount which, whencombined with the amount of entrance fees then held in escrowunder the provisions of this section plus the amount of fundsfrom 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 tenpercent of the amount of such construction loan has beendisbursed by the lender for physical construction or sitepreparation work completed; and
d. Orders at firm prices have been placed by the providerfor not less than fifty percent in value, including installationcharges if applicable, of items necessary for equipping andfurnishing the facility in accordance with the description setforth in the annual statement required by sections 376.915 to376.930.
(b) A commitment has been received by the provider for anypermanent mortgage loan or other long-term financing described inthe statement of anticipated source and application of fundssubmitted by the provider as part of its application forcertificate of authority, and any conditions of the commitmentprior to disbursement of funds thereunder have been substantiallysatisfied;
(c) Aggregate entrance fees received or receivable by theprovider pursuant to binding life care contracts, plus theanticipated proceeds of any first mortgage loan or otherlong-term financing commitment are equal to not less than ninetypercent of the aggregate cost of constructing or purchasing,equipping, and furnishing the facility plus not less than ninetypercent of the funds estimated in the statement of anticipatedsource and application of funds submitted by the provider as partof its application for certificate of authority, to be necessaryto fund start-up losses and assure full performance of theobligations of the provider pursuant to life care contracts.
2. If an entrance fee placed in an escrow account requiredto be established pursuant to subsection 1 of this section is notreleased in accordance with subsection 1 within a period ofthirty-six months or such greater time as may have been specifiedby the provider with the consent of the department, or anyextensions thereof approved by the department in writing, then suchfee shall be returned by the escrow agent to whoever had madepayment thereof to the provider.
3. An entrance fee held in escrow may be returned by theescrow agent to the person or persons who had made payment to theprovider at any time upon receipt by the escrow agent of noticefrom the provider that such person is entitled to a refund of theentrance fee.
4. Nothing in this section shall be interpreted as requiringthe escrow of any nonrefundable application fee, designated assuch in the annual statement required by sections 376.915 to376.930, received by the provider from a prospective resident.
5. This section shall be applicable only to life carecontracts executed after September 28, 1981.
(L. 1981 S.B. 84 § 6)