Section 4622. Priority reservation agreements; after obtaining a certificate of authority

The provisions of this section 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
  continuing  care  retirement community, after 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  continuing care retirement community operated or 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 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,  an  operator  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 for the purpose of  guaranteeing  to  prospective  residents  an
  opportunity  for  priority  placement  in the continuing care retirement
  community  for  which  the  operator  has  obtained  a  certificate   of
  authority.  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, an operator 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.  the  name and address of the escrow agent and a copy of the escrow
  agreement required pursuant to this section;
    c. a copy of the  instructions  to  the  escrow  agent  regarding  the
  issuance of refunds;
    d.  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;
    e. draft copies of all proposed  marketing  materials,  provided  that
  copies  of  the  final  marketing materials must be submitted as soon as
  they are available provided further that  provision  of  such  materials
  shall  not  be  construed  to  require approval of such materials by the
  department or the council;
    f. a description of the sales office  and  drawings  of  any  proposed
  model units;
    g. a copy of the proposed priority reservation agreement; and
    h.  any  other  information  as may be required by regulations adopted
  pursuant to this article.
    3. a. As a condition to  receiving  the  commissioner's  authorization
  under  this  section,  an  operator 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 bank, New York savings and loan association or
  New York trust company for the deposit of any priority reservation  fees
  collected  by  the operator 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
  operator in order to guarantee prospective residents an opportunity  for
  priority placement in the continuing care retirement community for which
  the  operator  has been issued a certificate of authority 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 operator, 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  operator  in
  accordance with this section, and the funds shall not be subject to  any
  liens  or  charges  by  the  escrow agent or judgments, garnishments, or
  creditors' claims against the operator.
    e. At the request of the operator, 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
  operator  unless  the  prospective  resident  has  elected  to apply the
  priority reservation fee to an actual entrance  fee  or  deposit  on  an
  entrance  fee.  Upon  release  to the operator, 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
  ten of this article; provided that the operator may  retain  such  funds
  and  shall  not be required to deposit them into the entrance fee escrow
  account if the prospective  resident's  living  unit  is  available  for
  occupancy.
    g.  If  the  funds  in  an  escrow account under this section, and any
  interest thereon, are not released to the operator 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 persons 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 operator or
  the person who paid the fee or the person's  legal  representative  that
  the  priority  reservation  agreement  has  been cancelled. 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 will 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  operator  from  a  prospective
  resident.
    4. 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 for the
  operator to offer prospective residents an opportunity for a  guaranteed
  priority placement in a 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 continuing care retirement contract and may be  cancelled  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.
    5. Any  priority  reservation  fees  with respect to a 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 community;
    b. the name and address of the operator;
    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 current entry  fee  and  monthly  care  fee,  together  with  a
  statement  explaining  that  these fees are subject to change and may be
  changed by the time the prospective resident enters  into  a  continuing
  care retirement contract with the operator;
    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  operator  that
  the  current  fees  set forth in the agreement will not change; 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 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
  operator or the operator's agent; and
    k. a statement that the effective period of the  agreement  shall  not
  exceed the duration of the commissioner's authorization.
    6.  a.  In  order  to  approve  an application under this section, the
  commissioner shall have determined that:
    (i) the operator has satisfied the requirements of  this  section  and
  any applicable regulations; and
    (ii) the   operator  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 operator authorizing the operator
  to enter into cancelable priority  reservation  agreements  and  collect
  refundable   priority   reservation   fees  from  prospective  residents
  concerning the continuing care retirement community.
    c. The commissioner's authorization shall remain in effect as long  as
  the  operator's  certificate  of  authority for its community remains in
  effect; provided that the commissioner may rescind the authorization  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.
    d. The  operator  shall provide written notice to all parties who have
  entered  into  cancelable  priority  reservation   agreements   of   the
  commissioner's  recision  of  authorization  to  enter  into  cancelable
  priority reservation agreements.
    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.