a. A continuing care agreement executed on or after the effective date of this act shall be written in plain English and in language understandable by a layperson and shall include, but not be limited to, the following:

(1) A provision for the continuing care of one resident, or two or more residents occupying space designed for multiple occupancy under appropriate procedures established by the provider, and a statement showing the value of all property transferred, including donations, subscriptions, fees and any other amounts payable by, or on behalf of, the resident;

(2) A statement on a form provided by the commissioner specifying all services which are to be provided to the resident by the provider, including, in detail, all items which the resident will receive, such as food, shelter, nursing care, pharmaceuticals and burial, and whether the items will be provided for a designated period of time or for life;

(3) A description of the health and financial conditions upon which the provider may have the resident relinquish his space in the designated facility;

(4) A description of the health and financial conditions required for a person to continue as a resident;

(5) A description of the circumstances under which the resident shall be permitted to remain in the facility in the event of financial difficulties of the resident. The stated policy may not be less than the terms stated in subsection e. of this section;

(6) A statement of the fees that will be charged if the resident marries a person who is not a resident of the facility, the terms concerning the entry of a spouse into the facility and the consequences if the spouse does not meet the requirements for entry;

(7) A statement providing that the agreement may be canceled upon giving at least 60 days’ notice by the provider or the resident, except that if an agreement is canceled by the provider because there has been a good faith determination in writing, signed by the medical director and the administrator of the facility, that a resident is a danger to himself or others, only notice that is reasonable under the circumstances is required;

(8) A statement providing in clear and understandable language, in print no smaller than the largest type used in the body of the agreement, the terms governing the refund of any portion of the entrance fee;

(9) A statement of the terms under which an agreement is canceled by the death of the resident, which statement may contain a provision stating that upon the death of the resident the moneys paid for the continuing care of the resident shall be considered earned and become the property of the provider; and

(10) A statement providing for at least 30 days’ advance notice to the resident before any change in fees or changes in the scope of care or services are effective, except for changes required by State or federal assistance programs. b. A resident has the right to rescind a continuing care agreement without penalty or forfeiture, except those costs specifically incurred by the facility at the request of the resident and set forth in writing in a separate addendum signed by both parties to the agreement, within 30 days after making an initial deposit or executing the agreement. A resident shall not be required to move into the facility designated in the agreement before the expiration of the 30 day period.

c. If a resident dies before the occupancy date, or through illness, injury or incapacity is precluded from becoming a resident under the terms of the continuing care agreement, the agreement shall be automatically rescinded and the resident or the resident’s legal representative shall receive a full refund of all moneys paid to the facility, except those costs specifically incurred by the facility at the request of the resident and set forth in writing in a separate addendum signed by both parties to the agreement.

d. No agreement for care shall permit dismissal or discharge of the resident from the facility prior to the expiration of the agreement without just cause for the removaL. For the purposes of this act, “just cause” means but is not limited to a good faith determination in writing, signed by the medical director and the administrator of the facility, that a resident is a danger to himself or others while remaining in the facility. The written determination shall state: (1) that the determination is made in good faith; (2) the reasons supporting the determination that the resident is a danger to himself or others; (3) the basis for the conclusion that there is no less restrictive alternative to dismissal, discharge or cancellation, as the case may be, for abating the dangerousness of the resident; and (4) the basis for the conclusion that the danger is such that a notice period of less than 60 days is appropriate.

If a facility dismisses a resident for just cause, the resident shall be entitled to a refund of his unearned entrance fee, if any, in the same manner as provided in subsection e. of this section. A resident may request a hearing to contest a facility’s decision to dismiss or discharge the resident. The hearing shall be held pursuant to the “Administrative Procedure Act,” P.L. 1968, c. 410 (C. 52:14B-1 et seq.).

e. It shall not be deemed just cause if the resident is unable to pay monthly maintenance fees until the entire unearned entrance fee plus, where applicable, any third-party insurance benefits received, are earned by the facility. For the purpose of this subsection, the unearned portion shall be the difference between the entrance fee paid by, or on behalf of, the resident and the cost of caring for the resident based upon the per capita cost to the facility. In lieu of calculating the actual per capita cost of caring for a resident, a facility may provide, in the agreement for continuing care, that the per capita cost of caring for the resident shall be calculated as follows:

(1) No more than 2% of the entrance fee for each month the resident occupies, or is entitled to occupy, a bed in the residential unit of the facility;

(2) No more than 4% of the entrance fee for each month the resident occupies, or is entitled to occupy, a bed in the nursing unit of the facility; and (3) No more than 10% of the entrance fee as a one-time charge for processing and refurbishment.

If these entrance fees are exhausted within 90 days of the date of failure to pay, the facility may not require the resident to leave before 90 days from the date of failure to pay, during which time the resident shall continue to pay the facility a reduced fee based upon the resident’s current income.

f. No act, agreement or statement of a resident or of an individual purchasing care for a resident under any agreement to furnish care to the resident shall constitute a valid waiver of any provision of this act intended for the benefit or protection of the resident or the individual purchasing care for the resident.

g. An agreement entered into prior to the effective date of this act or prior to the issuance of a certificate of authority to the provider is valid and binding upon both parties in accordance with the terms of the agreement.

h. The provider shall designate and make knowledgeable personnel available to prospective residents to answer questions about any information contained in the agreement for continuing care. The provider shall also advise prospective residents to seek the independent advice of an attorney or financial advisor of their choice concerning the agreement. The agreement shall state on the cover or top of the first page in bold print the following: “This matter involves a substantial financial investment and a legally binding contract. In evaluating the disclosure statement and the contract prior to any commitment, it is recommended that you consult with an attorney and financial advisor of your choice, if you so elect, who can review these documents with you.”

L. 1986, c. 103, s. 15.