After years of wrangling, lawmakers in Trenton have approved legislation that would ban certain retirement communities from holding onto their residents’ money indefinitely.
The bill is far from perfect, but it’s better than nothing.
Now we’re waiting for Gov. Phil Murphy’s signature.
The governor’s office did not respond to requests for comment.
What’s at stake? Hundreds of thousands of dollars paid by seniors who live in Continuing Care Retirement Communities, or CCRCs.
CCRCs include certain assisted living facilities, independent living communities and long-term care units. Residents pay a move-in fee – often in the six figures – when they take up residence. When the resident moves out or dies, 90 percent of the fee is supposed to be refunded.
There are more than 10,000 seniors who live in 25 CCRCs across New Jersey, according to ORANJ, a group that represents CCRC residents.
The problem, featured multiple times in the Bamboozled column, is that CCRC contracts don’t have a time limit specifying when the 90 percent refund must be returned to the resident or his estate. Instead, the refunds aren’t due unless the resident’s unit is re-occupied, and that sometimes take years.
The bill awaiting Murphy’s signature – again, approved unanimously by both houses of the legislature – doesn’t have a specific time period in which money has to be returned, but the rules are an improvement for future CCRC residents and their families.
Under the bill, when a resident leaves a CCRC, the resident will be placed on a waiting list for refunds. Refunds would be given based on that waiting list rather than relying on when the resident’s specific unit sells, said Assemblywoman Nancy Munoz (R-Union), who co-sponsored the Assembly version of the bill. One unit’s marketability shouldn’t end up penalizing the resident, she said.
The bill’s drawback is that it won’t help seniors who are already living in CRCCs, or those who have already moved out. It will only help seniors who enter into new contracts.
This fight was started by Ed Nagle, a regular guy whose mom lived in a CCRC. Nagle was the driving force behind the legislation.
Nagle’s mom Terry paid $272,821 to move into a CCRC in 2004. She or her estate would receive 90 percent back, or $245,538, after she died or moved out, but not until her unit was reoccupied, the contract said.
She died in 2010 at the age of 84, and Nagle, who was the executor of her estate, waited and waited for the refund so he finish all the paperwork.
Months passed, and even though the refund was pending, Nagle had to file tax returns for his mom’s estate. He used the anticipated 90 percent refund amount as part of the calculation, and the estate owed $14,820 in estate taxes. It was paid.
The years passed. Two years. Three years. Four years.
Five years after Terry Nagle died, her unit remained unoccupied, so there was no refund and the estate couldn’t be closed. Finally, Ed Nagle reluctantly accepted an offer by the CCRC for 63 percent of the value, or $171,877 — $73,661 less than it was supposed to be.
But the smaller amount coming to the estate meant the estate was no longer subject to the estate tax.
And when Nagle applied to the state for a refund of the tax overpayment, he was out of luck.
“Surprise — a catch-22. There is a three-year statute of limitations on refunding paid estate taxes,” Nagle said at the time. “So our family got ripped by the CCRC and then ripped by the state of New Jersey.”
Terry Nagle’s heirs lost $88,481.
Ed Nagle wasn’t the only one waiting for a refund.
Patricia Lund, 79, filed suit against her CCRC in 2017, saying the company held hostage more than $160,000 of her buy-in fee for more than eight years.
“I never expected that eight years after I moved out I would still not have received my money back,” Lund said when the suit was filed.
Her lawsuit was settled for an undisclosed sum.
PASSING THE BILL
Other states offer protection for CCRC residents.
Connecticut says CRCC refunds must be provided within three years of a vacancy for contracts after Oct. 1, 2015. California requires as of 2017 that 4 percent interest be paid on refunds not returned within 180 days after a vacancy, and 6 percent after 240 days until the full refund is granted.
Nagle knew legislation wouldn’t help his family, but he was determined to stop this from happening to anyone else. He wanted New Jersey to put a time limit on the refunds.
He lobbied Sen. Christopher “Kip” Bateman (R-Somerset) to introduce legislation that would require CCRCs to give refunds within a year of vacancy.
Other legislators signed on, and a companion bill was introduced by Munoz in the Assembly.
But alas, no one was in a rush to have committee hearings, much less a full vote. A CCRC industry group called Leading Age fought hard against the bills, according to legislators who met with the group.
The bills died in the last legislative session.
But this year, something changed.
After much haranguing about language in the bill, and after testimony before the legislature by Nagle and others last month, a compromise – a compromise that excluded seniors who already had CRCC contracts – was reached.
The Assembly version of the bill passed unanimously on June 30, followed by a unanimous vote in the Senate on July 1.
Bateman urges the governor to sign.
“We have an obligation to protect our seniors,” Bateman said. “It’s important legislation.”
Leading Age, the CCRC industry group, didn’t respond to our requests for comment about the bill in time for publication.
Nagle credits legislators like Bateman and Munoz, and others including the Bamboozled column, AARP, the Association of Mature American Citizens (AMAC) and ORANJ for applying enough pressure to get the bill done.
“After it is signed by Gov. Murphy, the wording will be incorporated in Residency Agreements for residents moving into New Jersey CCRCs,” said Ron Whalin of ORANJ.
So now it’s up to Murphy.
Come on Gov., what are you waiting for?