(a) A continuing care contract shall contain all of the
(1) The legal name and address of each provider.
(2) The name and address of the continuing care retirement
(3) The resident's name and the identity of the unit the resident
(4) If there is a transferor other than the resident, the
transferor shall be a party to the contract and the transferor's name
and address shall be specified.
(5) If the provider has used the name of any charitable or
religious or nonprofit organization in its title before January 1,
1979, and continues to use that name, and that organization is not
responsible for the financial and contractual obligations of the
provider or the obligations specified in the continuing care
contract, the provider shall include in every continuing care
contract a conspicuous statement that clearly informs the resident
that the organization is not financially responsible.
(6) The date the continuing care contract is signed by the
resident and, where applicable, any other transferor.
(7) The duration of the continuing care contract.
(8) A list of the services that will be made available to the
resident as required to provide the appropriate level of care. The
list of services shall include the services required as a condition
for licensure as a residential care facility for the elderly,
including all of the following:
(A) Regular observation of the resident's health status to ensure
that his or her dietary needs, social needs, and needs for special
services are satisfied.
(B) Safe and healthful living accommodations, including
housekeeping services and utilities.
(C) Maintenance of house rules for the protection of residents.
(D) A planned activities program, which includes social and
recreational activities appropriate to the interests and capabilities
of the resident.
(E) Three balanced, nutritious meals and snacks made available
daily, including special diets prescribed by a physician as a medical
(F) Assisted living services.
(G) Assistance with taking medications.
(H) Central storing and distribution of medications.
(I) Arrangements to meet health needs, including arranging
(9) An itemization of the services that are included in the
monthly fee and the services that are available at an extra charge.
The provider shall attach a current fee schedule to the continuing
(10) The procedures and conditions under which a resident may be
voluntarily and involuntarily transferred from a designated living
unit. The transfer procedures, at a minimum, shall include provisions
addressing all of the following circumstances under which a transfer
may be authorized:
(A) A continuing care retirement community may transfer a resident
under the following conditions, taking into account the
appropriateness and necessity of the transfer and the goal of
promoting resident independence:
(i) The resident is nonambulatory. The definition of
"nonambulatory," as provided in Section 13131, shall either be stated
in full in the continuing care contract or be cited. If Section
13131 is cited, a copy of the statute shall be made available to the
resident, either as an attachment to the continuing care contract or
by specifying that it will be provided upon request. If a
nonambulatory resident occupies a room that has a fire clearance for
nonambulatory residents, transfer shall not be necessary.
(ii) The resident develops a physical or mental condition that
endangers the health, safety, or well-being of the resident or
(iii) The resident's condition or needs require the resident's
transfer to an assisted living care unit or skilled nursing facility,
because the level of care required by the resident exceeds that
which may be lawfully provided in the living unit.
(iv) The resident's condition or needs require the resident's
transfer to a nursing facility, hospital, or other facility, and the
provider has no facilities available to provide that level of care.
(B) Before the continuing care retirement community transfers a
resident under any of the conditions set forth in subparagraph (A),
the community shall satisfy all of the following requirements:
(i) Involve the resident and the resident's responsible person, as
defined in paragraph (6) of subdivision (r) of Section 87101 of
Title 22 of the California Code of Regulations, and upon the resident'
s or responsible person's request, family members, or the resident's
physician or other appropriate health professional, in the assessment
process that forms the basis for the level of care transfer decision
by the provider. The provider shall offer an explanation of the
assessment process. If an assessment tool or tools, including scoring
and evaluating criteria, are used in the determination of the
appropriateness of the transfer, the provider shall make copies of
the completed assessment available upon the request of the resident
or the resident's responsible person.
(ii) Prior to sending a formal notification of transfer, the
provider shall conduct a care conference with the resident and the
resident's responsible person, and upon the resident's or responsible
person's request, family members, and the resident's health care
professionals, to explain the reasons for transfer.
(iii) Notify the resident and the resident's responsible person of
the reasons for the transfer in writing.
(iv) Notwithstanding any other provision of this subparagraph, if
the resident does not have impairment of cognitive abilities, the
resident may request that his or her responsible person not be
involved in the transfer process.
(v) The notice of transfer shall be made at least 30 days before
the transfer is expected to occur, except when the health or safety
of the resident or other residents is in danger, or the transfer is
required by the resident's urgent medical needs. Under those
circumstances, the written notice shall be made as soon as
practicable before the transfer.
(vi) The written notice shall contain the reasons for the
transfer, the effective date, the designated level of care or
location to which the resident will be transferred, a statement of
the resident's right to a review of the transfer decision at a care
conference, as provided for in subparagraph (C), and for disputed
transfer decisions, the right to review by the Continuing Care
Contracts Branch of the State Department of Social Services, as
provided for in subparagraph (D). The notice shall also contain the
name, address, and telephone number of the department's Continuing
Care Contracts Branch.
(vii) The continuing care retirement community shall provide
sufficient preparation and orientation to the resident to ensure a
safe and orderly transfer and to minimize trauma.
(C) The resident has the right to review the transfer decision at
a subsequent care conference that shall include the resident, the
resident's responsible person, and upon the resident's or responsible
person's request, family members, the resident's physician or other
appropriate health care professional, and members of the provider's
interdisciplinary team. The local ombudsperson may also be included
in the care conference, upon the request of the resident, the
resident's responsible person, or the provider.
(D) For disputed transfer decisions, the resident or the resident'
s responsible person has the right to a prompt and timely review of
the transfer process by the Continuing Care Contracts Branch of the
State Department of Social Services.
(E) The decision of the department's Continuing Care Contracts
Branch shall be in writing and shall determine whether the provider
failed to comply with the transfer process pursuant to subparagraphs
(A) to (C), inclusive. Pending the decision of the Continuing Care
Contracts Branch, the provider shall specify any additional care the
provider believes is necessary in order for the resident to remain in
his or her unit. The resident may be required to pay for the extra
care, as provided in the contract.
(F) Transfer of a second resident when a shared accommodation
arrangement is terminated.
(11) Provisions describing any changes in the resident's monthly
fee and any changes in the entrance fee refund payable to the
resident that will occur if the resident transfers from any unit,
including, but not limited to, terminating his or her contract after
18 months of residential temporary relocation, as defined in
paragraph (8) of subdivision (r) of Section 1771.
(12) The provider's continuing obligations, if any, in the event a
resident is transferred from the continuing care retirement
community to another facility.
(13) The provider's obligations, if any, to resume care upon the
resident's return after a transfer from the continuing care
(14) The provider's obligations to provide services to the
resident while the resident is absent from the continuing care
(15) The conditions under which the resident must permanently
release his or her living unit.
(16) If real or personal properties are transferred in lieu of
cash, a statement specifying each item's value at the time of
transfer, and how the value was ascertained.
(A) An itemized receipt that includes the information described
above is acceptable if incorporated as a part of the continuing care
(B) When real property is or will be transferred, the continuing
care contract shall include a statement that the deed or other
instrument of conveyance shall specify that the real property is
conveyed pursuant to a continuing care contract and may be subject to
rescission by the transferor within 90 days from the date that the
resident first occupies the residential unit.
(C) The failure to comply with this paragraph shall not affect the
validity of title to real property transferred pursuant to this
(17) The amount of the entrance fee.
(18) In the event two parties have jointly paid the entrance fee
or other payment that allows them to occupy the unit, the continuing
care contract shall describe how any refund of entrance fees is
(19) The amount of any processing fee.
(20) The amount of any monthly care fee.
(21) For continuing care contracts that require a monthly care fee
or other periodic payment, the continuing care contract shall
include the following:
(A) A statement that the occupancy and use of the accommodations
by the resident is contingent upon the regular payment of the fee.
(B) The regular rate of payment agreed upon (per day, week, or
(C) A provision specifying whether payment will be made in advance
or after services have been provided.
(D) A provision specifying the provider will adjust monthly care
fees for the resident's support, maintenance, board, or lodging, when
a resident requires medical attention while away from the continuing
care retirement community.
(E) A provision specifying whether a credit or allowance will be
given to a resident who is absent from the continuing care retirement
community or from meals. This provision shall also state, when
applicable, that the credit may be permitted at the discretion or by
special permission of the provider.
(F) A statement of billing practices, procedures, and timelines. A
provider shall allow a minimum of 14 days between the date a bill is
sent and the date payment is due. A charge for a late payment may
only be assessed if the amount and any condition for the penalty is
stated on the bill.
(22) All continuing care contracts that include monthly care fees
shall address changes in monthly care fees by including either of the
(A) For prepaid continuing care contracts, which include monthly
care fees, one of the following methods:
(i) Fees shall not be subject to change during the lifetime of the
(ii) Fees shall not be increased by more than a specified number
of dollars in any one year and not more than a specified number of
dollars during the lifetime of the agreement.
(iii) Fees shall not be increased in excess of a specified
percentage over the preceding year and not more than a specified
percentage during the lifetime of the agreement.
(B) For monthly fee continuing care contracts, except prepaid
contracts, changes in monthly care fees shall be based on projected
costs, prior year per capita costs, and economic indicators.
(23) A provision requiring that the provider give written notice
to the resident at least 30 days in advance of any change in the
resident's monthly care fees or in the price or scope of any
component of care or other services.
(24) A provision indicating whether the resident's rights under
the continuing care contract include any proprietary interests in the
assets of the provider or in the continuing care retirement
community, or both. Any statement in a contract concerning an
ownership interest shall appear in a large-sized font or print.
(25) If the continuing care retirement community property is
encumbered by a security interest that is senior to any claims the
residents may have to enforce continuing care contracts, a provision
shall advise the residents that any claims they may have under the
continuing care contract are subordinate to the rights of the secured
lender. For equity projects, the continuing care contract shall
specify the type and extent of the equity interest and whether any
entity holds a security interest.
(26) Notice that the living units are part of a continuing care
retirement community that is licensed as a residential care facility
for the elderly and, as a result, any duly authorized agent of the
department may, upon proper identification and upon stating the
purpose of his or her visit, enter and inspect the entire premises at
any time, without advance notice.
(27) A conspicuous statement, in at least 10-point boldface type
in immediate proximity to the space reserved for the signatures of
the resident and, if applicable, the transferor, that provides as
follows: "You, the resident or transferor, may cancel the transaction
without cause at any time within 90 days from the date you first
occupy your living unit. See the attached notice of cancellation form
for an explanation of this right."
(28) Notice that during the cancellation period, the continuing
care contract may be canceled upon 30 days' written notice by the
provider without cause, or that the provider waives this right.
(29) The terms and conditions under which the continuing care
contract may be terminated after the cancellation period by either
party, including any health or financial conditions.
(30) A statement that, after the cancellation period, a provider
may unilaterally terminate the continuing care contract only if the
provider has good and sufficient cause.
(A) Any continuing care contract containing a clause that provides
for a continuing care contract to be terminated for "just cause,"
"good cause," or other similar provision, shall also include a
provision that none of the following activities by the resident, or
on behalf of the resident, constitutes "just cause," "good cause," or
otherwise activates the termination provision:
(i) Filing or lodging a formal complaint with the department or
other appropriate authority.
(ii) Participation in an organization or affiliation of residents,
or other similar lawful activity.
(B) The provision required by this paragraph shall also state that
the provider shall not discriminate or retaliate in any manner
against any resident of a continuing care retirement community for
contacting the department, or any other state, county, or city
agency, or any elected or appointed government official to file a
complaint or for any other reason, or for participation in a
residents' organization or association.
(C) Nothing in this paragraph diminishes the provider's ability to
terminate the continuing care contract for good and sufficient
(31) A statement that at least 90 days' written notice to the
resident is required for a unilateral termination of the continuing
care contract by the provider.
(32) A statement concerning the length of notice that a resident
is required to give the provider to voluntarily terminate the
continuing care contract after the cancellation period.
(33) The policy or terms for refunding any portion of the entrance
fee, in the event of cancellation, termination, or death. Every
continuing care contract that provides for a refund of all or a part
of the entrance fee shall also do all of the following:
(A) Specify the amount, if any, the resident has paid or will pay
for upgrades, special features, or modifications to the resident's
(B) State that if the continuing care contract is canceled or
terminated by the provider, the provider shall do both of the
(i) Amortize the specified amount at the same rate as the resident'
s entrance fee.
(ii) Refund the unamortized balance to the resident at the same
time the provider pays the resident's entrance fee refund.
(C) State that the resident has a right to terminate his or her
contract after 18 months of residential temporary relocation, as
defined in paragraph (8) of subdivision (r) of Section 1771.
Provisions for refunds due to cancellation pursuant to this
subparagraph shall be set forth in the contract.
(34) The following notice at the bottom of the signatory page:
"This is a continuing care contract as defined by paragraph (8) of
subdivision (c), or subdivision (l) of Section 1771 of the
California Health and Safety Code. This continuing care contract form
has been approved by the State Department of Social Services as
required by subdivision (b) of Section 1787 of the California Health
and Safety Code. The basis for this approval was a determination that
(provider name) has submitted a contract that complies with the
minimum statutory requirements applicable to continuing care
contracts. The department does not approve or disapprove any of the
financial or health care coverage provisions in this contract.
Approval by the department is NOT a guaranty of performance or an
endorsement of any continuing care contract provisions. Prospective
transferors and residents are strongly encouraged to carefully
consider the benefits and risks of this continuing care contract and
to seek financial and legal advice before signing."
(35) The provider may not attempt to absolve itself in the
continuing care contract from liability for its negligence by any
statement to that effect, and shall include the following statement
in the contract: "Nothing in this continuing care contract limits
either the provider's obligation to provide adequate care and
supervision for the resident or any liability on the part of the
provider which may result from the provider's failure to provide this
care and supervision."
(36) Provisions describing how the provider will proceed in the
event of a closure, including an explanation of how the provider will
comply with Sections 1793.80, 1793.81, 1793.82, and 1793.83.
(b) A life care contract shall also provide that:
(1) All levels of care, including acute care and physicians' and
surgeons' services, will be provided to a resident.
(2) Care will be provided for the duration of the resident's life
unless the life care contract is canceled or terminated by the
provider during the cancellation period or after the cancellation
period for good cause.
(3) A comprehensive continuum of care will be provided to the
resident, including skilled nursing, in a facility under the
ownership and supervision of the provider on, or adjacent to, the
continuing care retirement community premises.
(4) Monthly care fees will not be changed based on the resident's
level of care or service.
(5) A resident who becomes financially unable to pay his or her
monthly care fees shall be subsidized provided the resident's
financial need does not arise from action by the resident to divest
the resident of his or her assets.
(c) Continuing care contracts may include provisions that do any
of the following:
(1) Subsidize a resident who becomes financially unable to pay for
his or her monthly care fees at some future date. If a continuing
care contract provides for subsidizing a resident, it may also
provide for any of the following:
(A) The resident shall apply for any public assistance or other
aid for which he or she is eligible and that the provider may apply
for assistance on behalf of the resident.
(B) The provider's decision shall be final and conclusive
regarding any adjustments to be made or any action to be taken
regarding any charitable consideration extended to any of its
(C) The provider is entitled to payment for the actual costs of
care out of any property acquired by the resident subsequent to any
adjustment extended to the resident under this paragraph, or from any
other property of the resident that the resident failed to disclose.
(D) The provider may pay the monthly premium of the resident's
health insurance coverage under Medicare to ensure that those
payments will be made.
(E) The provider may receive an assignment from the resident of
the right to apply for and to receive the benefits, for and on behalf
of the resident.
(F) The provider is not responsible for the costs of furnishing
the resident with any services, supplies, and medication, when
reimbursement is reasonably available from any governmental agency,
or any private insurance.
(G) Any refund due to the resident at the termination of the
continuing care contract may be offset by any prior subsidy to the
resident by the provider.
(2) Limit responsibility for costs associated with the treatment
or medication of an ailment or illness existing prior to the date of
admission. In these cases, the medical or surgical exceptions, as
disclosed by the medical entrance examination, shall be listed in the
continuing care contract or in a medical report attached to and made
a part of the continuing care contract.
(3) Identify legal remedies that may be available to the provider
if the resident makes any material misrepresentation or omission
pertaining to the resident's assets or health.
(4) Restrict transfer or assignments of the resident's rights and
privileges under a continuing care contract due to the personal
nature of the continuing care contract.
(5) Protect the provider's ability to waive a resident's breach of
the terms or provisions of the continuing care contract in specific
instances without relinquishing its right to insist upon full
compliance by the resident with all terms or provisions in the
(6) Provide that the resident shall reimburse the provider for any
uninsured loss or damage to the resident's unit, beyond normal wear
and tear, resulting from the resident's carelessness or negligence.
(7) Provide that the resident agrees to observe the off-limit
areas of the continuing care retirement community designated by the
provider for safety reasons. The provider may not include any
provision in a continuing care contract that absolves the provider
from liability for its negligence.
(8) Provide for the subrogation to the provider of the resident's
rights in the case of injury to a resident caused by the acts or
omissions of a third party, or for the assignment of the resident's
recovery or benefits in this case to the provider, to the extent of
the value of the goods and services furnished by the provider to or
on behalf of the resident as a result of the injury.
(9) Provide for a lien on any judgment, settlement, or recovery
for any additional expense incurred by the provider in caring for the
resident as a result of injury.
(10) Require the resident's cooperation and assistance in the
diligent prosecution of any claim or action against any third party.
(11) Provide for the appointment of a conservator or guardian by a
court with jurisdiction in the event a resident becomes unable to
handle his or her personal or financial affairs.
(12) Allow a provider, whose property is tax exempt, to charge the
resident, on a pro rata basis, property taxes, or in-lieu taxes,
that the provider is required to pay.
(13) Make any other provision approved by the department.
(d) A copy of the resident's rights as described in Section 1771.7
shall be attached to every continuing care contract.
(e) A copy of the current audited financial statement of the
provider shall be attached to every continuing care contract. For a
provider whose current audited financial statement does not
accurately reflect the financial ability of the provider to fulfill
the continuing care contract obligations, the financial statement
attached to the continuing care contract shall include all of the
(1) A disclosure that the reserve requirement has not yet been
determined or met, and that entrance fees will not be held in escrow.
(2) A disclosure that the ability to provide the services promised
in the continuing care contract will depend on successful compliance
with the approved financial plan.
(3) A copy of the approved financial plan for meeting the reserve
(4) Any other supplemental statements or attachments necessary to
accurately represent the provider's financial ability to fulfill its
continuing care contract obligations.
(f) A schedule of the average monthly care fees charged to
residents for each type of residential living unit for each of the
five years preceding execution of the continuing care contract shall
be attached to every continuing care contract. The provider shall
update this schedule annually at the end of each fiscal year. If the
continuing care retirement community has not been in existence for
five years, the information shall be provided for each of the years
the continuing care retirement community has been in existence.
(g) If any continuing care contract provides for a health
insurance policy for the benefit of the resident, the provider shall
attach to the continuing care contract a binder complying with
Sections 382 and 382.5 of the Insurance Code.
(h) The provider shall attach to every continuing care contract a
completed form in duplicate, captioned "Notice of Cancellation." The
notice shall be easily detachable, and shall contain, in at least
10-point boldface type, the following statement: