(a) The escrow agent shall notify the department of a request for release of funds from the entrance fee escrow account for a facility to the provider in writing within three banking days of receipt of the request. The notice shall be sent to the department on CCRC Form #9 (Notice of Request to Release Entrance Fee Escrow Funds).
(b) The conditions listed in paragraphs (1) - (5) of this subsection must be met before funds in the entrance fee escrow account may be released to the provider.
  (1) At least 50% of the living units in the facility must be reserved for residents or prospective residents. In support of this, the provider must have sufficient binding continuing care contracts and at least 10% of the entrance fees designated in the binding continuing care contracts on deposit in the entrance fee escrow account. For phase-in facilities, in lieu of the 10% deposit, the provider shall deposit in the entrance fee escrow account an amount equal to 10% of the amount of entrance fees required for the facility and provide evidence that the resident has full occupancy of the living unit.
  (2) The sum of the entrance fees received or receivable by the provider under binding continuing care contracts; the anticipated proceeds of any first mortgage loan or other long-term financing commitment described under paragraph (3) of this subsection; and funds from other sources in the provider's actual possession must be equal to or more than the sum of at least 90% of the aggregate cost of constructing, purchasing, or leasing, equipping, and furnishing the facility; at least 90% of the funds estimated as necessary to cover initial losses of the facility as stated in the current disclosure statement on file with the department; and at least 90% of the amount of the loan reserve fund escrow account required under §33.405 of this title (relating to Loan Reserve Fund Escrow Accounts).
  (3) The provider must have commitments for all permanent mortgage loans, other long-term financing, and lease payments described in the statement of anticipated source and application of funds included in the current disclosure statement on file with the department.
  (4) Except for the conditions regarding the completion of construction or closing on the purchase of the facility, the commitment for disbursement of funds must be unconditional.
  (5) Either subparagraph (A) or (B) of this paragraph must be satisfied.
    (A) If construction of the facility is not substantially completed:
      (i) the appropriate party must have obtained all necessary governmental permits or approvals; and
      (ii) the provider and the general contractor responsible for construction of the facility must have entered into a maximum price contract; and
      (iii) a recognized surety authorized to do business in Texas must have executed a construction bond in favor of the provider covering the general contractor's faithful performance and payment of all obligations arising under the construction contract; and
      (iv) the provider must have entered into a loan agreement for an interim construction loan in an amount which, when combined with the amount in the entrance fee escrow account plus the amount of funds from other sources in the provider's actual possession equals or exceeds the estimated cost of constructing, equipping, and furnishing the facility; and
      (v) the lender must have disbursed at least 10% of the amount of the construction loan for physical construction or site preparation work; and
      (vi) the provider must have placed orders at firm prices for at least 50% of the items necessary to equip and furnish the facility in accordance with the current disclosure statement on file with the department, including installation charges if applicable.
    (B) If construction or purchase of the facility is substantially completed, both clauses (i) and (ii) must be satisfied, if appropriate:
      (i) the appropriate local government must have issued an occupancy permit covering the living unit; and
      (ii) if the entrance fee applies to a living unit which has been previously occupied, the living unit must be available for occupancy by the new resident.
(c) The provider shall deliver a completed CCRC #14 (Calculations Concerning Conditions for Release of Entrance Fees to Provider) to the department for release of entrance fees for a facility.
(d) The funds in the entrance fees escrow account that may be released before the facility is complete and before the loan reserve fund escrow is established under §33.405 of this title (relating to Loan Reserve Fund Escrow Accounts), may not exceed the total of entrance fees and reservation agreement deposits received or receivable by the provider under binding continuing care contracts less the amount of funds required to be deposited in the loan reserve fund escrow account.
(e) If the initial release of an entrance fee by an escrow agent for a particular facility has met the criteria under subsection (b) of this section, the department may authorize an escrow agent to continue to release escrowed entrance fees for that facility to the provider without further proof of satisfying the requirements specified in subsection (b) of this section if the provider meets the following conditions:
  (1) the provider provides a quarterly report to the department reflecting an accounting of the activities of the entrance fee escrow account for that particular facility;
  (2) the accounting reflects a beginning balance, dates of each withdrawal from escrow during the reporting period, and an ending balance. This accounting must be verified, attested to in regards to its accuracy, and signed by both the bank escrow agent and the facility's Chief Financial Officer or person of likewise authority; and
  (3) the provider immediately informs the department of any problems, issues, and/or irregularities encountered in the release of entrance fee escrow funds as set forth under this subsection.

Source Note: The provisions of this §33.403 adopted to be effective March 14, 1996, 21 TexReg 1770; amended to be effective March 9, 2009, 34 TexReg 1608