Entrance fee; refunds; time frame
HB2370 amends Arizona’s life care contract law to change how entrance fees for continuing care retirement/life care facilities are handled, especially when a resident vacates a unit and is owed a refundable entrance fee. The bill requires facilities, within 60 days after receiving a resident’s notice to vacate, to assign the vacated unit a sequential refund number and pay refunds in that order from new resident entrance fees, subject to contract terms and available funds. It also creates exceptions for contracts executed before January 1, 2026, and for contracts that already provide a refundable portion with a waiting period of no more than three years.
The bill also preserves existing escrow rules for entrance fees paid before occupancy or before services begin, and clarifies that nonrefundable application fees do not have to be escrowed. Its applicability is prospective: the new rules apply only to contracts entered into on or after December 31, 2025, and the changes take effect on that same date. In practical terms, the measure affects providers of life care communities, residents, estates, and other designated payees by setting a more specific refund order and timeline for certain refundable entrance fees.
The general sentiment around the bill appears largely favorable, with strong floor support in both chambers and committee approvals, though not unanimous. The House passed it 47-13 on third reading, the Senate passed it 26-0 on third reading, and the final House concurrence vote was 50-5, suggesting broad bipartisan acceptance of the policy change.
The main point of contention is the new refund sequencing requirement and whether it could affect facility cash flow or the timing of resident refunds. Supporters likely viewed the bill as a consumer-protection and transparency measure for seniors entering life care communities, while any opposition appears to have centered on operational and financial concerns for providers, especially because refunds are tied to the availability of new entrance fees and a sequential order system.
HB2370 amends A.R.S. § 20-1804, which governs entrance fee escrow and refundable fees for life care contracts. The bill adds a mandatory sequential refund-number system for vacated units with refundable entrance fees, requires refunds to be paid in order, and limits payment to situations where the refund is contractually owed, the unit is next in line, and sufficient new entrance-fee money is available. It also exempts pre-2026 contracts and contracts with a refundable portion that already includes a waiting period of no more than three years, and it clarifies that nonrefundable application fees are not subject to escrow requirements.
The bill’s overall sentiment was positive and relatively noncontroversial in final passage, as reflected by strong vote margins in both chambers and unanimous Senate third-reading approval. The pattern of committee and floor votes suggests the measure was broadly acceptable to lawmakers, with only a minority of opposition in the House and Senate Finance Committee. The lack of recorded committee transcripts limits insight into detailed debate, but the vote history indicates general support for the bill’s consumer-oriented refund provisions.
The likely contention centered on the new refund sequencing and timing rules for refundable entrance fees. Critics may have worried that requiring refunds to be paid in sequential order, and only when new resident entrance fees are available, could delay payments or create administrative burdens for life care facilities. Supporters, by contrast, likely emphasized predictability and protection for residents and their estates. The bill also drew a line between refundable entrance fees and nonrefundable application fees, which may have been important to providers concerned about escrow obligations.