Section 4674. Priority reservation agreements; prior to obtaining a certificate of authority

The provisions of this section shall apply  to
  entities   that   seek  approval  to  enter  into  priority  reservation
  agreements and to solicit, collect or receive priority reservation fees,
  with respect to a proposed fee-for-service  continuing  care  retirement
  community,  prior  to  obtaining  a  certificate of authority under this
  article.
    1. No person, partnership, corporation or other entity shall  solicit,
  collect  or  receive  any  priority  reservation  fee  or enter into any
  agreement relating to the payment of any priority reservation  fee  with
  respect  to  any fee-for-service continuing care retirement community to
  be operated  within  the  state  without  first  obtaining  the  written
  authorization of the commissioner. The commissioner shall not grant such
  authorization  to  an  entity that has not yet obtained a certificate of
  authority unless the requirements of this  section  and  any  applicable
  regulations   are   met.   Upon   obtaining  the  authorization  of  the
  commissioner under this section, a prospective community applicant or an
  entity having filed an application for a certificate  of  authority  may
  enter  into  cancelable priority reservation agreements with prospective
  residents  and  solicit,  collect  and   receive   refundable   priority
  reservation  fees  for  direct  deposit into an escrow account, prior to
  obtaining a certificate of authority,  for  the  purpose  of  evaluating
  market  demand for a proposed fee-for-service continuing care retirement
  community and for the purpose of guaranteeing to  prospective  residents
  an  opportunity  for  priority placement in a fee-for-service continuing
  care retirement community. A priority reservation fee shall  not  exceed
  two  thousand  dollars.  A non-refundable priority reservation agreement
  application fee shall not exceed the maximum amount for such fee as  set
  forth in regulations adopted by the council.
    2. In order to receive authorization by the commissioner to enter into
  cancelable  priority  reservation  agreements and to solicit, collect or
  receive any refundable priority reservation fee, a person,  partnership,
  corporation  or  other  entity, hereinafter designated as the applicant,
  shall apply for such authorization on forms or in a format prescribed by
  the commissioner and, as part of  such  application,  shall  submit  the
  following information:
    a.  a  description of the applicant's plan to implement the process of
  entering into cancelable priority reservation agreements and to solicit,
  collect or receive refundable priority reservation fees;
    b. a general description of  the  proposed  community,  including  the
  location  and description of the proposed community site; the components
  to be included in the  community,  such  as  independent  living  units,
  skilled  nursing  facility and adult care facility; the estimated number
  of each type of unit or beds; and the services to be provided;
    c. an estimate of the pricing structure  of  the  community  including
  entrance   fees  and  monthly  care  fees  and  the  provisions  of  the
  fee-for-services rates;
    d. a description of the anticipated market to be served;
    e. anticipated methods and  sources  of  financing  for  the  proposed
  community;
    f. organizational structure of the applicant;
    g.  the  name and address of the escrow agent and a copy of the escrow
  agreement required pursuant to this section;
    h. a copy of the  instructions  to  the  escrow  agent  regarding  the
  issuance of refunds;
    i.  a  copy of the forms to be used to document a request for a refund
  of a priority reservation fee and the issuance of such refund;

    j. a copy of the most  recent  set  of  financial  statements  of  the
  applicant  prepared  in  accordance  with  generally accepted accounting
  principles and certified to be  true  and  accurate  by  an  independent
  certified public accountant;
    k.  draft  copies of all proposed marketing materials, including final
  marketing materials as soon as available; provided that the provision of
  such material shall  not  be  construed  to  require  approval  of  such
  materials by the department or the council;
    l.  a  description  of  the sales office and a copy of the preliminary
  site plans and drawings of any proposed model units;
    m. a copy of the proposed priority reservation agreement; and
    n. any other information as may be  required  by  regulations  adopted
  pursuant to this article.
    3.  Any  change  in  the legal entity authorized under this section to
  enter into cancelable priority reservation agreements  and  to  solicit,
  collect  or  receive  refundable priority reservation fees shall require
  approval in the same  manner  as  the  original  application;  provided,
  however,  that  the  commissioner  may  waive any requirement to provide
  information that is not relevant to such change.
    4. a. As a condition to  receiving  the  commissioner's  authorization
  under  this  section,  an applicant shall establish a government insured
  interest-bearing account, which  earns  interest  at  a  rate  which  is
  consistent  with  prevailing  interest  rates,  and enter into an escrow
  agreement with a New York state bank, New York state  savings  and  loan
  association  or  New  York  state  trust  company for the deposit of any
  priority reservation fees collected by the applicant  pursuant  to  this
  section,  which escrow funds shall be subject to release as provided for
  in this section.
    b. The escrow agreement shall state that its  purpose  is  to  protect
  prospective  residents  who  have paid a priority reservation fee to the
  applicant in furtherance of the applicant's efforts to  evaluate  market
  demand   for  a  proposed  fee-for-service  continuing  care  retirement
  community and to guarantee  prospective  residents  an  opportunity  for
  priority  placement  in  a  fee-for-service  continuing  care retirement
  community and that, upon presentation of  evidence  of  compliance  with
  applicable  portions  of  this  article,  or  upon  order  of a court of
  competent jurisdiction, the escrow agent shall release and pay over  the
  funds,  or  portions thereof, together with any interest accrued thereon
  or  earned  from  investment  of  the  funds,  to  the  applicant,   the
  prospective  resident or the prospective resident's legal representative
  as directed, within fifteen business days of receipt of  the  notice  by
  the escrow agent.
    c.  Checks,  drafts  and  money  orders  for  deposit from prospective
  residents shall be made payable to the escrow agent only.
    d. All funds deposited in the escrow account shall remain the property
  of  the  prospective  residents  until  released  to  the  applicant  in
  accordance  with this article, and the funds shall not be subject to any
  liens or charges by the  escrow  agent  or  judgments,  garnishments  or
  creditors' claims against the applicant.
    e.  At the request of the applicant, the commissioner or a prospective
  resident, the escrow agent shall issue a statement indicating the status
  of the escrow account.
    f. A prospective resident's escrowed funds shall not be released to an
  applicant unless the applicant obtains a  certificate  of  authority  to
  operate   the   proposed   fee-for-service  continuing  care  retirement
  community and to enter into fee-for-service continuing  care  contracts,
  and   the  prospective  resident  has  entered  into  a  fee-for-service
  continuing care contract with the applicant and has elected to apply the

  priority reservation fee to an actual entrance  fee  or  deposit  on  an
  entrance  fee.  Upon  release  to  the approved applicant, a prospective
  resident's escrowed priority reservation fee funds  shall  be  deposited
  into  the  entrance fee escrow account provided for in section forty-six
  hundred sixty-two of this article.
    g. If the funds in an escrow  account  under  this  section,  and  any
  interest  thereon, are not released to the applicant within such time as
  provided by rules and regulations adopted  by  the  council,  then  such
  funds  shall  be returned by the escrow agent to the person who had made
  the payments or the person's legal representative.
    h. A priority reservation fee, and the interest accrued thereon,  held
  in  escrow  shall be returned by the escrow agent to the person who paid
  the fee upon receipt by the escrow agent of notice from the applicant or
  the person who paid the fee or the person's  legal  representative  that
  the  priority  reservation  agreement  has  been  canceled. Any priority
  reservation fee, and the interest accrued thereon, shall be returned  by
  the  escrow  agent  to the person who paid the fee or the person's legal
  representative within fifteen business days of  receipt  by  the  escrow
  agent of notice of cancellation of the priority reservation agreement.
    i.   Refunds  of  priority  reservation  fees  upon  the  death  of  a
  prospective resident shall be made upon the same basis as  refunds  upon
  cancellation of a priority reservation agreement.
    j.  Nothing  in  this  section  shall  be interpreted as requiring the
  escrow of any non-refundable priority reservation agreement  application
  fee,   designated   as  such  in  the  cancelable  priority  reservation
  agreement, which fee is received by the  applicant  from  a  prospective
  resident.
    5.  Any marketing materials, including all materials associated with a
  sales office and model units,  used  in  the  solicitation  of  priority
  reservation agreements or priority reservation fees shall, at a minimum,
  contain the following:
    a.  a  statement  that  the  purpose  of  the marketing material is to
  determine the market demand for a  proposed  fee-for-service  continuing
  care   retirement  community  and  to  offer  prospective  residents  an
  opportunity for a guaranteed priority  placement  in  a  fee-for-service
  continuing   care  retirement  community  by  entering  into  cancelable
  priority  reservation  agreements  and  accepting  refundable   priority
  reservation fees;
    b.  a  statement that the cancelable priority reservation agreement is
  not a fee-for-service continuing care contract and may  be  canceled  by
  the  person  entering the agreement or the person's legal representative
  at any time, without cause; and
    c. a statement that any priority reservation fees paid shall  be  held
  in  escrow  and  shall  be  refunded,  together with interest accrued at
  prevailing rates, to the person paying the fee  or  the  person's  legal
  representative upon request and cancellation of the priority reservation
  agreement.
    6.   Any   priority  reservation  fees  with  respect  to  a  proposed
  fee-for-service continuing care retirement community  may  be  collected
  only  after  issuance  of a cancelable priority reservation agreement to
  the person paying the fee, which agreement shall contain  the  following
  information:
    a. the name and location of the proposed community;
    b. the name and address of the applicant;
    c. the name, address and phone number of a contact person;
    d. the name and address of the person paying the fee;
    e. the name and address of the escrow agent;
    f. the type of unit being reserved;

    g.  the estimated entry fee and monthly care fee clearly identified as
  an estimate;
    h.  the  amount  of  any non-refundable priority reservation agreement
  application fee;
    i. a notice in bold twelve point type  that  the  cancelable  priority
  reservation  agreement  does  not  obligate the person entering into the
  agreement in any way; that there is no guarantee by  the  applicant  the
  fees  estimated  in  the  agreement  will not change; that the community
  described is only a proposed community and  any  model  units  are  only
  representative  of units in a proposed community which is subject to the
  submission of a formal application by the applicant and  the  subsequent
  approval  or  disapproval by the council; that there is no guarantee the
  unit described in the agreement or represented  by  any  model  will  be
  built  or  otherwise  made available as described in the agreement or at
  all; that the person paying the priority reservation fee may  receive  a
  refund  of  the  fee  plus  interest  accrued  at  prevailing rates upon
  request; and that, should a certificate of authority be granted,  he  or
  she  shall  be  entitled  on  a  priority  basis  to  apply the priority
  reservation fee to an actual entrance fee or entrance fee deposit  on  a
  unit not already under contract;
    j. the signature of the person paying the fee and the signature of the
  applicant or the applicant's agent;
    k.  a statement of the effective period of the agreement not to exceed
  the duration of the commissioner's authorization; and
    l. an outline of the fees, their associative service,  and  guidelines
  used for changing the residency status of a resident.
    7.  a.  In  order  to  approve  an application under this section, the
  commissioner shall have determined, as applicable, that:
    (i) the applicant has satisfied the requirements of this  section  and
  any applicable regulations; and
    (ii) the applicant has demonstrated the capability to conduct a market
  analysis  of the demand for the proposed fee-for-service continuing care
  retirement community and can be expected  to  meet  its  obligations  in
  accordance  with  this  section  and  in  accordance  with  its priority
  reservation agreements with prospective residents.
    b. If the commissioner approves an application, the commissioner shall
  issue a written authorization to the applicant authorizing the applicant
  to enter into cancelable priority  reservation  agreements  and  collect
  refundable   priority   reservation   fees  from  prospective  residents
  concerning  the  proposed  fee-for-service  continuing  care  retirement
  community.
    c.  The  commissioner's  authorization  shall  remain  in effect for a
  period not to exceed eighteen months from the date of the commissioner's
  authorization the commencement of said period to be specifically  stated
  in such authorization subject to the following:
    (i)  the  commissioner  may  rescind  the authorization, including any
  extension thereof, at any time for just cause,  including  any  material
  misstatement  of  fact  or  misrepresentation  in any of the application
  materials or any materials subsequently disseminated;
    (ii) the authorization may be extended upon written application to  an
  approval  of  the commissioner for the duration of time specified in the
  commissioner's written approval;
    (iii) unless already expired,  the  authorization  shall  be  extended
  automatically  if  an  application  for  a  certificate  of authority is
  submitted pursuant to this article, and such authorization shall  remain
  in  effect  as  long  as  the application for a certificate of authority
  remains active; and

    (iv) unless already  expired,  the  authorization  shall  be  extended
  automatically if a certificate of authority is obtained by the applicant
  pursuant  to this article, and such authorization shall remain in effect
  as long as the certificate of authority remains in effect.
    d.  The applicant shall provide written notice to all parties who have
  entered  into  cancelable  priority  reservation   agreements   of   the
  following:
    (i)  notice  of  the commissioner's recision of authorization to enter
  into cancelable priority reservation agreements;
    (ii) notice of the commissioner's extension of authorization to  enter
  into  cancelable  priority  reservation  agreements  including  the  new
  expiration date and the reason for such extension; and
    (iii) notice upon issuance of a certificate of authority  pursuant  to
  this  article  that  the  party  to  the  agreement  has the option on a
  priority basis to apply  the  priority  reservation  fee  to  an  actual
  entrance fee or a deposit on an entrance fee.
    e.  The  commissioner shall provide written notice to the escrow agent
  of the commissioner's recision of authorization to enter into cancelable
  priority reservation agreements, including instructions to release funds
  held in  escrow  to  the  persons  who  have  paid  refundable  priority
  reservation fees.