RSA 420-D:10 · Entrance Fee Escrow Account

420-D:10 Entrance Fee Escrow Account. –

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I.

If required, a separate dedicated account for all entrance fees shall be established and approved by the commissioner before a certificate of authority under this chapter shall be issued. The entrance fee account shall hold all entrance fees required by this section which shall not be disbursed except as provided in this section. This account shall not be subject to liens of any creditors, shall not be encumbered, and shall be maintained separately from other accounts. Funds shall be held in escrow, if required, and only released as provided in paragraph III. Entrance fees shall be paid by the resident at the time the continuing care contract is executed unless otherwise agreed to by the parties. Entrance fees paid by residents before occupancy of a facility living unit or by residents under a contract issued, and which total over $1,000 and are not exempt as provided below shall be placed in the entrance fee account. All entrance fees that are not exempt as provided below shall be placed in the entrance fee account on the first working day after receipt. Interest on such fees shall be paid at the current market rate as established by the commissioner until the funds are released to the provider or returned to the resident or prospective resident as provided in paragraph III. In all cases, residents shall have 15 days after execution of the contract by both parties to move out, if a resident has moved in, and to cancel the contract and receive a refund. If entrance fees are paid to a provider over time, these rules shall apply to that portion of the fee that is paid when a refund or transfer of unit is requested.

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II.

The provider shall maintain at all times a written accounting of entrance fees and all bank statements of the entrance fee account. Upon request by the commissioner, the provider shall provide sum totals of all entrance fees paid by each resident, as well as any transactions with residents or prospective residents from the entrance fee account. If an entrance fee is paid by a non-resident, that person shall be named in the list maintained by the provider. It shall be the resident or non-resident's obligation to keep the address information held by the provider current.

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III.

Release of escrowed amounts or determination no escrow is needed shall be made as follows:

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(a)

For living units that have been previously occupied:

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(1)

If occupancy is greater than 80 percent for independent living, the days cash on hand is more than 100 days, and there is no violation of RSA 420-D or material loan covenants, there is no entrance fee escrow requirement.

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(2)

If occupancy is less than or equal to 80 percent for independent living and/or cash on hand is less than 100 days when the new resident and the provider both sign the contract, and 15 days have passed without the new resident canceling the continuing care contract, the entrance fee paid by the new resident may be paid to the provider. Until that time it shall be placed in the entrance fee escrow account.

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(3)

For other violations of subparagraph (1), entrance fee funds shall be placed in an escrow account and released only when the violation is remedied or other arrangements are made with the commissioner.

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(4)

Any funds due to the resident previously occupying the unit of the resident, or the resident's estate, trust, or other designee, pursuant to the previous resident's contract shall be refunded within 45 days of the lapse of the cancellation period. If termination occurs during the cancellation period, the prospective resident shall be entitled to a refund within 45 days written notice of rescission, and the former resident may not be paid, at the latest, until a new resident is obtained and the new cancellation period expires plus 45 days. Refund payments after the cancellation period may be reduced as provided in the continuing care contract by fees and costs incurred by the former resident. A contract shall not be deemed canceled under this provision or RSA 420-D:10-a unless the resident moves out or does not move in.

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(b)

For living units not previously occupied, other than expansions or additions of units when the 15-day cancellation period has passed, payment may be made to the provider from the entrance fee account, provided that subparagraph (1), (2), (3) or (6) is satisfied. Otherwise, the entrance fee shall be held in the entrance fee escrow account until subparagraph (1), (2), (3) or (6) is satisfied and the cancellation period has expired, whichever is later. If termination occurs during the cancellation period, then the requirements of subparagraph (1), (2), (3) or (6) shall not apply and the resident shall be entitled to a refund within 45 days written notice of rescission.

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(1)

The aggregate entrance fees received or receivable are equal to 50 percent of total entrance fees due at full occupancy, except that any entrance fee payments that are less than 35 percent of the amount due from a resident shall not be counted.

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(2)

When entrance fees plus proceeds of any first mortgage or other long term loan or capital infusion plus funds on hand equal 50 percent of the total cost of the facility.

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(3)

When a permanent mortgage has been received and all conditions have been satisfied other than completing construction and closing purchase.

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(4)

For a resident that has not moved into the facility, 15 days after the contract is fully executed by all parties.

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(5)

Notwithstanding anything to the contrary in this section and as long as the provider is in compliance with this chapter, a provider shall be permitted to take non-binding deposits to secure a unit prior to the payment of the entrance fee. Such payment shall be known as a "wait list deposit." Any wait list deposit shall be credited against the entrance fee when it is paid, or it shall be refunded if requested prior to payment of the entrance fee.

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(6)

Otherwise, at the discretion of the commissioner for good cause after request by the provider on notice to the resident. (c)(1) If a wait list deposit exceeds 10 percent of the entrance fee per resident unit, any amounts more than 10 percent of the entrance fee shall be escrowed. Amounts below or equal to 10 percent of the entrance fee need not be escrowed, as long as the provider has at least 80 percent occupancy for independent living occupancy and 100 days cash on hand, and is otherwise in compliance with RSA 420-D and its material loan covenants. All wait list deposits shall be refundable. A maintenance fee may be charged of up to $1,500, as may be adjusted from time to time by the commissioner. The wait list agreement shall be provided to the department annually and the resident shall be given an estimate of when the resident will be reached on the wait list at the time the resident executes the wait list agreement. A resident shall also be told that their payment will not be escrowed if the payment is being placed in a non-escrow account. Deposits existing as of the effective date of this chapter are exempt. However, the provider shall contact all prospective residents on any wait list within one year of the effective date of this chapter to determine whether they are due any refund of existing deposits, and thereafter every 3 years.

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(2)

For any deposits made when a unit becomes available, which shall be known as "hold fees", the hold fees shall be applied towards the resident's entrance fee when paid and shall be refundable during the rescission period.

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(3)

Any fees expended by the provider for upgrades to a unit may be non-refundable, at the option of the provider, if the resident cancels the contract.

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(d)

If the funds deposited pursuant to this section in an escrow account are not released to the provider under the conditions enumerated in paragraph III within 5 years of the escrow date, unless the prospective resident has previously requested a refund, then the funds shall be returned to the resident or prospective resident. The commissioner may extend this period for 2 additional years upon written application by the provider.

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(e)

The escrow provisions for an operating entity under this section shall not apply to nonrefundable application fees that do not exceed one month's periodic payments for services rendered by the provider.

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(f)

If approved by the commissioner, a provider may post a bond, negotiable securities, or a letter of credit with the commissioner in lieu of escrow. The institution providing a bond or a letter of credit shall meet all requirements of and have the full approval of the commissioner. The amount of the bond, negotiable securities, or letters of credit shall be in the same amount as if the funds received from residents or prospective residents had been placed in escrow.

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(g)

An escrow agent shall return funds to the person, or to the estate of the person if deceased, who paid the entrance fee, if a request is made to the provider. A request to return funds to any other person shall be approved by the commissioner. Source. 2025, 296:2, eff. Jan. 1, 2026.

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