Governor Brown Signs Bill to Protect Residents and Families from Delayed Repayments

July 25, 2016

(SACRAMENTO, CA)  - Today, Governor Brown signed Senate Bill (SB) 939 by Senator Bill Monning (D-Carmel), which gives Continuing Care Retirement Community (CCRC) residents and their estates protections against significant delays in the repayment of residents’ entrance fees when contracts condition the repayment on the resale of CCRC units.  Entrance fees for CCRCs can range from $100,000 to $1 million, and many residents sell their homes and assets to cover the fee.

“I commend the Governor’s decision to sign SB 939,” said Senator Monning.  “The bill will provide meaningful consumer protections to CCRC residents and their estates and this is the result of thoughtful discussions and negotiations.  SB 939 balances the need for steadfast repayment with the financial needs of CCRCs, and I want to thank everyone who worked arduously to pass SB 939.”

SB 939 requires unpaid entrance fee repayments be subject to a fixed interest rate of 4 percent after 180 days of the property being vacated, and a fixed interest rate of 6 percent after 240 days.  It also requires CCRCs to disclose the average and longest length of time for entrance fee repayment.

“The delay in repayment has created many hardships on former residents looking to move or on family members needing to settle estates during difficult times,” said Margaret Griffin, President of the California Continuing Care Residents’ Association (CALCRA).  “CALCRA was proud to sponsor SB 939, which will bring much-needed stability and predictability to CCRC lump-sum repayments.”

Under current law, if the return on an entrance fee, i.e. “lump-sum payment,” in a CCRC contract is “conditioned upon resale” of a unit, providers have no obligation to repay the fee until the unit is sold and there is no definitive timeline for when payment must be made.  These conditional repayments can create a disincentive for CCRC providers to fill an empty unit. 

R. Lynn Davis, a former Executive Director of Legal Services for Seniors in Monterey County, first alerted Senator Monning about the issue after he experienced an almost five year delay in repayment of $250,000 after his mother passed away. 

 

Contact: Elizabeth Stitt, (916) 651-4017