Continuing care retirement communities would be required to return refundable entrance fees to former residents or their estates within a year of the unit being vacated, under legislation introduced in February by New Jersey Sens. Richard J. Codey (D) and Nia H. Gill (D). The bill is now in the hands of the Senate’ Health, Human Services and Senior Citizens Committee.
According to the Organization of Residents Associations of New Jersey, approximately 10,000 Garden State residents live in the state’s 26 CCRCs.
If passed, the bill also would require that all CCRC agreements “be written in plain English and in language understandable by a layperson.” Either the provider or the resident would be able to cancel the agreement with 60 day’s notice; after cancellation, the resident would be entitled to receive a refund of the amount of any entrance fee as written in the continuing care agreement.”
Assemblywoman Nancy Muñoz (R-Union) also recently told NJ Advance Media that she plans to introduce legislation to help residents or their survivors get their money back more quickly.
LeadingAge of New Jersey and Delaware said it opposes the existing proposed legislation for economic reasons.
“It would have an adverse economic effect on the market and put CCRC residents and employees at risk,” LeadingAge of New Jersey and Delaware President and CEO James McCracken told the McKnight’s Business Daily. “A one-year refund requirement is problematic from a bondholder perspective and for the community. For example, it can destabilize the finances of the community if there is not significant cash on hand or there is high resident turnover.”
The current legislation would supersede a 2018 law that changed entrance fees refunds to a first in/first out model without a specific time table, he said.
ORANJ leadership at the time believed that setting a definite time frame for refunds could create a burden on CCRCs, Gary Baldwin, chair of the group’s legislative committee, told NJ.com.
“Before that, refunds were issued when the specific unit that was vacated was resold,” McCracken said. “In the first in/first out model, refunds are issued based on seniority, not unit resale. Individuals are placed on a list based on the date they vacated a unit and entrance fees are refunded when units turn over and the pool of money is replenished. The first in/first out model is not unit-specific, and the bill was not damaging to CCRCs. It was just a shift in the way refunds are issued.”
Nevertheless, the legislation is germane to both providers and residents, and it is not a new concern. In 2013, for instance, Springpoint Senior Living, six of its subsidiaries and its then-president, Gary Puma, faced a class action lawsuit over entrance fee refunds. According to NJ.com, a subsidiary still faces complaints about delayed returns.
“We currently follow the laws and requirements of the state. We do and always have followed the guidance of the Department of Community Affairs here in New Jersey,” Julia Zauner, vice president of marketing and communications at Springpoint Senior Living, told the McKnight’s Business Daily.
“All of our contracts are reviewed by the DCA here in New Jersey. They review all of our agreements as we create them for our residents,” Zauner added.
