SB 475: Continuing care contracts: cancellation: payments.

Existing law requires a continuing care retirement facility, as defined, to possess a certificate of authority issued by the State Department of Social Services before it can enter into a continuing care contract, as defined. Existing law requires that a continuing care contract be in writing and contain specified information. Existing law provides that a continuing care contract may be canceled without cause by written notice from either party within 90 days of the residents initial occupancy.

Existing law requires a provider to pay, during the cancellation period, all refunds owed to a resident within 14 days after a resident makes possession of the living unit available to the provider. Existing law requires a provider to pay a lump-sum payment that is conditioned upon resale of a unit to a resident within 14 days after resale of the unit.

This bill would require a continuing care retirement facility to pay the full lump-sum payment that is conditioned upon resale of a unit to a resident within 14 days after resale of a unit. The bill would require a continuing care retirement facility, for contracts signed after January 1, 2016, to pay a resident or his or her estate a specified portion of the full lump-sum payment, notwithstanding a providers documented good-faith effort to resell the unit, if the unit remains vacant 120 days after the residents termination. The bill would require any payment balance not paid to a resident within 180 days to accrue simple interest, to be compounded annually, at a rate of 4% until the full lump-sum payment is made. The bill would require any payment balance not paid to a resident within 240 days to accrue simple interest, to be compounded annually, at a rate of 6% until the full lump-sum payment is made. The bill would require a facility to make the lump-sum payment to a residents estate if the resident is deceased. The bill would provide that the repayment by a provider of all or a portion of an entrance fee before the resale of a unit would not subject any other entrance fee to the refund reserve requirements, except as provided. The bill would provide that, until January 1, 2017, these provisions do not apply to specified projects that are in development prior to January 1, 2016, provided that the initial contract for the project is entered into on or before January 1, 2017.

The bill would authorize any resident whose contract calls for a lump-sum payment conditioned upon resale of a unit to file a complaint with the department if the unit has not been resold for more than 12 months after possession of the unit was made available to the provider. The bill would require the department, in response to the complaint, to perform an investigation, as specified, to determine whether the provider made a sufficient good-faith effort to resell or reoccupy the unit. The bill would authorize a resident or a provider to submit a written request to the department for a formal review of the determination. The bill would require the provider to repay the full lump-sum payment owed to the resident within 20 business days of the departments final determination that the provider did not make a sufficient good-faith effort to reoccupy or resell the unit.

The bill would make corresponding changes to require a continuing care contract to contain a statement that a provider is prohibited from charging the resident or his or her estate a monthly fee once a unit has been permanently vacated by the resident, unless the fee is part of an equity interest contract. The bill would also require a continuing care contract that provides for a refund or repayment of a lump sum of all or part of the entrance fee to include a statement that the provider will make a good faith effort to reoccupy or resell a unit for which a lump-sum payment is conditioned upon resale of the unit.