Section 376.945

Title XXIV BUSINESS AND FINANCIAL INSTITUTIONS

Chapter 376

Effective - 28 Aug 1988, 2 histories, see footnote   (history) 

  376.945.  Escrow account, amount required — principal, how released, investment. — The department shall, as a condition of the issuance of a certificate of authority pursuant to section 376.935, require that the provider establish a reserve of an amount equal to at least fifty percent of any entrance fee paid by the first occupant of a living unit under a life care contract.  The reserve shall be maintained by the provider on a current basis, in escrow with a bank, trust company, or other escrow agent approved by the department.  Such reserve shall be amortized and earned by the provider at the rate of one percent per month on the balance of the reserve, provided, however, that at no time shall the entrance fee reserve together with all interest earned thereon total less than an amount equal to one and one-half times the percentage of the annual long-term debt principal and interest payments of the provider applicable only to living units occupied under life care contracts.  Such portion of each entrance fee as is necessary to maintain the entrance fee reserve as set forth herein shall be paid to the reserve fund for the second and all subsequent occupancies of a living unit occupied under a life care contract.  In addition, each provider shall establish and maintain separately for each facility, a reserve equal to not less than five percent of the facility's total outstanding balance of contractually obligated move-out refunds at the close of each fiscal year.  All reserves required hereunder for move-out refunds shall be held in liquid assets consisting of federal government or other marketable securities, deposits, or accounts insured by the federal government.  This section shall be applicable only to life care contracts executed for occupancy of living units constructed after September 28, 1981.

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(L. 1981 S.B. 84 § 7, A.L. 1988 H.B. 1709)