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ARIZONA STATE SENATE
Fifty-Seventh Legislature, First Regular Session
AMENDED
entrance fee; refunds; time frame
Purpose
Effective January 1, 2026, requires a facility in which life care services are provided, within 60 days after the facility receives a resident's notice to vacate, to assign the vacated unit a sequential refund number and provide refunds in order based on sequential number, with exceptions and subject to specified requirements. Applies the sequential refund requirement and outlined refund release exemptions and conditions to life care contracts entered into on or after December 31, 2025.
Background
A life care provider is a person who is issued a permit by the Department of Insurance and Financial Institutions (DIFI) to provide services pursuant to a life care contract. A life care contract is a contractual agreement between a life care provider and a person to provide the person, for the duration of the person's life or for at least one year, with nursing, medical or health-related services in addition to board and lodging for the person in a facility, or nursing, medical or health-related services in the person's private residence with the right to future access to such services, board and lodging in a facility, conditioned on the transfer of an entrance fee to the life care provider in addition to or in lieu of the payment of regular periodic charges for the care and services involved.
A facility is a place in which a life care provider provides nursing, medical or health-related services to a resident, in addition to board and lodging, for a term over one year or for life pursuant to a life care contract and does not include a life care contract holder's private residence. An entrance fee is an initial or deferred transfer of money or property made or promised to be made to a life care provider by a person entering into a life care contract, which assures a resident or contract holder of services pursuant to a life care contract (A.R.S.§ 20-1801).
As a condition for issuing a life care provider permit, the Director of DIFI must require the life care provider to establish an escrow account in which the entire amount of an entrance fee is placed in escrow with a bank, trust company or other escrow agent approved by the Director of DIFI. An entrance fee held in an escrow account may be returned by the escrow agent to the person who made the payment to the provider at any time on receipt of a notice from the lifecare provider that the person is entitled to a refund of the entrance fee (A.R.S. § 20-1804).
There is no anticipated fiscal impact to the state General Fund associated with this legislation.
Provisions
1. Requires a facility in which life care services are provided, within 60 days after the facility receives a resident's notice to vacate, to assign the vacated unit a sequential refund number among all the available units with refundable entrance fees and provide refunds in order based on sequential number.
2. Exempts, from the sequential refund requirement, a life care contract that either:
a) provides for the payment of a refundable portion of an entrance fee, with a maximum waiting period which may not exceed three years from when the resident vacates the unit; or
b) was executed before January 1, 2026.
3. Requires a facility in which life care services are provided to pay the refundable entrance fee in connection with the resident vacating the residential unit to either the resident, the resident’s estate, other resident-designated institutional or personal payees or other payees, if:
a) the refund is owed pursuant to the contract between the facility and the resident;
b) the resident’s residential unit is next in line based on the sequential numbering system to receive a refund; and
c) sufficient monies are available from new residents in the facility to provide the full amount of the refund.
4. Applies the sequential refund requirement and outlined refund release exemptions and conditions to life care contracts entered into on or after December 31, 2025.
5. Makes technical changes.
6. Becomes effective on January 1, 2026.
Amendments Adopted by Committee
1. Removes the requirement for a unit to be restored to its original condition by a facility in which life care services are provided for the facility to assign a sequential refund number.
2. Adds, to the exemptions from the sequential refund requirement, life care contracts that were executed before January 1, 2026.
3. Removes the authorization for a facility to restore the unit to its original condition, impose monthly fees until all personal property is removed and remove any personal property on the 21st day following the resident's notice to vacate.
4. Makes technical and conforming changes.
Amendments Adopted by Committee of the Whole
1. Exempts, from the sequential refund requirement, life care contracts that:
a) were executed before January 1, 2026; or
b) provide for the payment of a refundable portion of an entrance fee, with a maximum waiting period which may not exceed three years from when the resident vacates the unit.
2. Outlines conditions for a life care facility to pay a required entrance fee refund to the resident, the resident’s estate, other resident-designated institutional or personal payees or other payees.
3. Applies the sequential refund requirement and outlined refund release exemptions and conditions to life care contracts entered into on or after December 31, 2025.
4. Makes technical and conforming changes.
House Action Senate Action
COM 2/4/25 DP 8-2-0-0 FIN 3/24/25 DPA 5-2-0
3rd Read 2/18/25 47-13-0
Prepared by Senate Research
May 7, 2025
MG/AL/ci