Today Governor Phil Murphy signed into law a bill introduced by Assembly Members Eric Houghtaling and Joann Downey to limit the time continuing care retirement communities retain refundable entrance fees after a resident vacates a facility.
“We have a duty to ensure our seniors and their families are not being taken advantage of,” said Assemblyman Eric Houghtaling. “Once a resident leaves the retirement community, the refund should be issued, period. Residents, or their families, should not have to jump through hoops to receive money that is rightfully theirs.”
Formerly, a continuing care retirement community may retain an entrance fee for as long as it takes for the unit to be reoccupied by another resident. Absent a maximum refunding period, there is little incentive for the facility managers to aggressively market any particular vacant unit. In some instances, a facility has retained the fee for several years after the unit has been vacated, unreasonably delaying the return of the fee.
Further, if the resident has died, an estate may be forced to pay distribution taxes on money representing the fee refund, years before the estate and beneficiaries receive that fee refund.
“Residents of continuing care communities and their families have a right to a refund within a reasonable time frame. It is utterly ridiculous that a resident or their family should have to wait until their unit is re-occupied, a process that can sometimes take months or even years,” said Assemblywoman Downey. “These practices are unreasonable and our seniors deserve better.”
Under the bill, a refundable fee owed to a resident or resident’s estate for a unit that has been so numbered will be payable based upon the order of the sequential number assigned to the unit section and the availability of funds from the proceeds of resale of all vacated units with refundable entrance fees. Residents should see shorter wait times for their refundable entrance fees as a result of this legislation.