Section Ins 1807.01 - Entrance Fee Escrow Accounts(a) Escrow accounts established to hold entrance fees pursuant to RSA 420-D:10, I or accounts required by the commissioner to hold liquid reserves, shall comply with each of the following: (1) Escrow account funds shall be kept and maintained in an account separate and apart from the business account of the CCRC;(2) All escrow account funds derived from entrance fees shall remain the property of the resident, prospective resident, or other person making payment on behalf of a resident or prospective resident and shall not be subject to any liens or charges by the escrow agent, or judgments, garnishments, or creditor's claims against the CCRC, until the funds have been released to the CCRC as provided in RSA 420-D:10, III;(3) Interest in an escrow account may be released to a CCRC when any portion of the corresponding entrance fee is released to the CCRC or when the resident makes his or her first monthly payment, whichever occurs first;(4) All records pertaining to the escrow account shall be available for inspection or audit by the commissioner at any time;(5) Any CCRC that establishes an escrow account with an escrow agent shall enter into a written agreement with the escrow agent which: a. States that its purpose is to protect the resident or prospective resident;b. Authorizes the commissioner to inspect the records of the escrow agent relating to the escrow account; andc. Provides that, upon order of the commissioner or a court of competent jurisdiction, the escrow agent shall release and pay over the funds, or a portion thereof, to the CCRC, resident, prospective resident, or other person entitled thereto as ordered; and(6) A copy of each escrow agreement entered into by the CCRC shall be filed with the commissioner for approval.(b) When the escrow agent releases funds to a CCRC, the agent shall adhere to the requirements of RSA 420-D:10, III.(c) In lieu of maintaining entrance fee payments in escrow accounts, a CCRC may, upon the commissioner's approval, post bond, negotiable securities, or a letter of credit, with the commissioner.(d) Approval of the commissioner shall be subject to the following conditions: (1) The institution providing the bond or the letter of credit shall be acceptable to the commissioner. In the case of a letter of credit, the institution issuing the letter of credit shall be a qualified United States financial institution as defined in RSA 406-C:2, IV. In the case of a bond, the surety institution issuing the bond shall be acceptable if it is a surety company authorized to transact business in New Hampshire;(2) The amount of the bond, negotiable securities, or line of credit specified in the letter of credit shall be set by the commissioner as provided in (5) below;(3) Negotiable securities posted in lieu of escrow shall, for the purpose of determining if they satisfy the amount set by the commissioner, be valued at 75 percent of their market value. After posting the initial negotiable securities, the CCRC shall be responsible for monitoring the market value of the negotiable securities on deposit;(4) Should the negotiable securities on deposit at any time be valued at less than 133.3333 percent of the amount required, the CCRC shall post additional negotiable securities as required so that the negotiable securities posted shall at all times be equal to 133.3333 percent of the amount required. Negotiable securities posted shall be securities that are tradable on the New York Stock Exchange, the American Stock Exchange or other comparable securities exchange;(5) In setting the initial amount required for the bond, negotiable securities, or the line of credit specified in the letter of credit, whichever is to be posted, the commissioner shall take into consideration the amount of the entrance fees, interest accrued thereon, and other fees to be charged in addition to the number of life interest or long-term leases to be offered, granted or sold. The commissioner shall revise the amount required to be held in escrow using the same procedure used to set the initial amount required upon review of the CCRCs most recent financial statements;(6) The CCRC requesting that the commissioner approve posting of a bond, negotiable securities, or letter of credit in lieu of maintaining escrow accounts shall demonstrate to the commissioner that it meets a high standard of financial worthiness;(7) To demonstrate that it meets the required standard, the CCRC shall provide the commissioner with data showing either:a. That its standard financial statement ratios are better than the industry-wide continuing care facility average by 25 percent or more; orb. That its liquid assets as shown on the most recent balance sheet, but not including the liquid reserve as determined under Ins1805, are equal to 300 percent of the amount set by the commissioner for the bond, negotiable securities, or letter of credit to be posted;(8) The commissioner shall be a party to any bond posted;(9) No bond posted shall be cancelled except with 90 days prior notice to the commissioner; and(10) CCRCs posting negotiable securities with the commissioner shall file a "Domestic Company Custodial Agreement," NHID-CA1, dated 1990.(e) A CCRC posting negotiable securities shall deposit said securities in a custodial account to be held by the custodian in trust for the benefit and security of policyholders, claimants or creditors of the CCRC.(f) A custodial agreement shall: (1) Be signed by the facility and the custodian;(2) State the amount maintained on deposit with the custodian;(3) Hold securities placed in the custodian account exclusively for the commissioner as trustee in trust for the benefit of New Hampshire policyholders, claimants, or creditors with a claim against the facility;(4) Provide that non-registered securities may be held as follows: b. At book entry in a federal reserve bank; orc. At the depository trust company as either a direct bank or indirect depository participant;(5) Provide that the custodian is liable to the facility and the commissioner for the custodian's negligence, willful misconduct or lack of good faith;(6) Provide that no securities in the account nor any principal is released except upon written request of the facility and written assent to or in the name of the commissioner;(7) Provide that the facility may withdraw securities from the account, with the approval of the commissioner;(8) Provide that the commissioner will approve withdrawals under the circumstances in (7) above so long as other securities are deposited with the custodian with market value equal to those withdrawn;(9) Provide that the custodian may surrender any security held under the agreement for payment upon maturity or redemption so long as the proceeds thereof are held in a principal cash account maintained as part of the custodial account in accordance with the custodial agreement;(10) Provide that all transactions and withdrawals involving deposited securities or principal cash be consummated only upon prior receipt of instructions from the company and written assent of the trustee;(11) Provide that the custodian send advice to the commissioner of security and cash transactions within 10 days after a transaction; and(12) Provide that the custodian send to the commissioner a certificate of account assets by February 1 for the preceding calendar year through December 31.N.H. Admin. Code § Ins 1807.01
#7014, eff 7-1-99; EXPIRED: 7-1-07
New. #8991, eff 10-1-07
Amended by Volume XXXV Number 45, Filed November 12, 2015, Proposed by #10944, Effective 10/8/2015, Expires 10/8/2025.Amended by Volume XXXIX Number 46, Filed November 14, 2019, Proposed by #12912, Effective 10/28/2019, Expires 10/28/2029.