§ 4610. Entrance fee escrow account. As a condition for approval to
advertise and collect refundable entry fees/deposits:

1. The operator shall establish an interest-bearing account with a New
York bank, New York savings and loan association, or New York trust
company for any entrance fees received by the operator, which escrow
funds shall be subject to release as provided by subdivision seven of
this section.

2. An escrow agreement shall be entered into between the bank, savings
and loan association, or trust company and the operator of the
community. The agreement shall state that its purpose is to protect the
resident or the prospective resident and that, upon presentation of
evidence of compliance with applicable portions of this article, or upon
order of a court of competent jurisdiction, the escrow agent shall
release and pay over the funds, or portions thereof, together with any
interest accrued thereon or earned from investment of the funds, to the
operator or resident as directed.

3. Checks, drafts, and money orders for deposit from prospective
residents shall be made payable to the escrow agent only.

4. All funds deposited in the escrow account shall remain the property
of the resident until released to the operator in accordance with this
section, and the funds shall not be subject to any liens or charges by
the escrow agent or judgments, garnishments, or creditor's claims
against the operator or community.

5. At the request of the operator, the commissioner, or the
superintendent, the escrow agent shall issue a statement indicating the
status of the escrow account.

6. Escrowed funds shall not be released to the operator unless:

a. construction or purchase of the community has been substantially
completed, an occupancy permit covering the living unit has been issued
by the local government having authority to issue such permits, and the
living unit becomes available for occupancy; or

b. the operator has submitted an application to the commissioner, on
forms approved by the department, for authorization to use escrowed
entrance fees to assist the operator in financing the construction or
purchase of a proposed community and the commissioner, with the advice
of the superintendent, and in accordance with such regulations as may be
promulgated by the council, has approved such application. The
commissioner shall not approve such application over the objection of
the superintendent, and shall not approve it unless satisfied that the
following conditions have been met:

(i) the operator has executed contracts accompanied by an entrance fee
or entrance fee deposit for at least sixty percent of all proposed
living units;

(ii) the aggregate entrance fees or deposits received by the operator
pursuant to executed contracts equal at least twenty-five percent of the
total of the entrance fees due at occupancy for at least sixty percent
of all proposed living units, or at least ten percent of the total
entrance fee due at occupancy for at least seventy percent of all
proposed living units, whichever is less;

(iii) the operator has entered into a contract for the construction or
purchase of the community which contract has a fixed maximum price and,
if a construction contract, the contractor has secured a performance or
completion bond for the benefit of the operator;

(iv) the operator has received a firm commitment for a permanent
mortgage loan or other long term financing and conditions to the
commitment prior to disbursement of funds thereunder, other than
completion of construction or purchase, are substantially satisfied;

(v) the total amount of escrowed entrance fees or deposits that may be
approved for release under this paragraph shall not exceed fifteen
percent of the total costs of acquiring, constructing and equipping the
proposed community;

(vi) use of the entrance fees or deposits shall not impair the
operator's ability to comply with the requirements of section forty-six
hundred eleven of this article;

(vii) the operator's executed contracts or amended contracts referred
to in subparagraph (i) of this paragraph, and all contracts generating
the entrance fees for which release is sought, contain a provision
conspicuously disclosing the intended use of entrance fees, and that all
refunds shall be in accordance with the otherwise applicable provisions
of this article, the regulations adopted pursuant thereto and the
contract;

(viii) the use of the entrance fees or deposits under this paragraph
will promote the efficient and cost-effective acquisition or development
of the proposed community; and

(ix) the release, availability and use of the entrance fees comply
with any other conditions the council shall establish.

7. If the funds in an escrow account under this section and any
interest thereon are not released to the operator within such time as
provided by rules and regulations adopted by the council, then such
funds shall be returned by the escrow agent to the persons who had made
payment to the operator.

8. An entrance fee held in escrow may be returned by the escrow agent
to the person who paid the fee upon receipt by the escrow agent of
notice from the operator that such person is entitled to a refund of the
entrance fee.

9. Nothing in this section shall be interpreted as requiring the
escrow of any nonrefundable application fee, designated as such in the
contract, received by the operator from a prospective resident.

10. Construction of housing or other facilities shall not begin until:

a. the operator has executed contracts accompanied by a deposit of at
least ten percent of the entry fee payment for fifty percent of all
units; and

b. all permits and approvals necessary for operation of the community
have been granted except those that depend upon construction;

Provided, nothing in this subdivision shall prohibit an operator, upon
the approval of the council, or an applicant or prospective applicant
upon the approval of the commissioner pursuant to section forty-six
hundred twenty-one of this article, from constructing model units and a
sales office.

11. Any entry fee deposit required by an operator shall be fully
refundable if the contract is cancelled within seventy-two hours of its
execution. In the event of cancellation, the entry fee deposit shall be
refunded within three business days of receipt of cancellation.