Iowa Code § 523D.3 - Disclosure statement

1. At the time of, or prior to, the execution of a contract to provide continuing care or senior adult congregate living services, or at the time of, or prior to the provider’s acceptance of part or all of the entrance fee by or on behalf of a prospective resident, whichever occurs first, the provider shall deliver a disclosure statement to the person, and to the person’s personal representative if one is appointed, with whom the contract is to be entered into. Unless incorporated by reference, in whole or in part, the disclosure statement shall not constitute part of the contract between the resident and provider. The disclosure statement shall contain all of the following information unless the information is in the contract, a copy of which must be attached to the statement: a. The name and business address of the provider and a statement of whether the provider is a partnership, corporation, or other legal entity. b. The names and business addresses of the officers, directors, trustees, managing or general partners, and any person having a ten percent or greater equity or beneficial interest in the provider and a description of such person’s interest in or occupation with the provider. c. With respect to each person covered by paragraph “b”, and if the facility or program will be managed on a day-to-day basis by a person identified pursuant to paragraph “b”, or with respect to the proposed manager, the following information: (1) A description of the business experience of the person, if any, in the operation or management of similar facilities. (2) The name and address of any professional service, or other entity in which the person has, or which has in the person, a ten percent or greater interest and which has provided goods, leases, or services to the facility of a value of five hundred dollars or more within the prior twelve months or which has contracted to provide goods, leases, or services to the facility of a value of five hundred dollars or more within a year, including a description of the goods, leases, or services and their actual or anticipated cost to the facility or provider. (3) A description of any matter resulting in the person’s conviction of a felony or a plea of nolo contendere to a felony charge, or a description of any matter where the person was found to be liable or enjoined in a civil action by final judgment if the felony or civil action involved fraud, embezzlement, fraudulent conversion, misappropriation of property, or a similar felony involving theft or dishonesty. (4) A description of any matter in which the person is subject to a currently effective injunctive or restrictive order of a court, or a description of any matter within the past five years where the person has had a state or federal license or permit suspended or revoked as a result of an action brought by a governmental agency of this or any state or the division of insurance, arising out of or relating to business activity or health care, including, without limitation, actions affecting a license to operate a foster care facility, health care facility, retirement home, home for the aged, or facility licensed under this chapter or a similar law of another state. d. A statement, if applicable, containing the following: (1) Whether the provider is or ever has been affiliated with a for-profit organization or with a religious, charitable, or other nonprofit organization. (2) The nature of the affiliation. (3) The extent to which the affiliate organization is responsible for the financial and contractual obligations of the provider. (4) The provision of the federal Internal Revenue Code, if any, under which the provider or affiliate is exempt from the payment of federal income tax. e. The location and description of the physical property or properties of the facility, existing or proposed, and, to the extent proposed, the estimated completion date or dates, whether or not construction has begun, and the contingencies subject to which construction may be deferred. f. The services provided or proposed to be provided under contracts for continuing care or senior adult congregate living services, including the extent to which medical care is furnished. The disclosure statement shall clearly state which services are included in basic contracts and which services are made available at extra charge. g. A description of all fees required of residents, including the entrance fee and periodic charges, if any. The description shall include the manner by which the provider may adjust periodic charges or other recurring fees and the limitations on such adjustments, if any. h. The provisions which have been made or will be made, if any, to provide reserve funding or security to enable the provider to fully perform its obligations under contracts to provide continuing care or senior adult congregate living services, including the establishment of escrow accounts, trusts, or reserve funds, together with the manner in which the funds will be invested and the names and experience of persons who will make the investment decisions. i. Certified financial statements of the provider, for all parts of an operation covered by the contract, including the health center or nursing home portion of the continuing care retirement community, if those services are included in the contract, but the disclosure statement may exclude services or operations not provided to residents as senior adult congregate living services under the contract, which shall include the following: (1) A balance sheet as of the end of the two most recent fiscal years. (2) Income statements of the provider for the two most recent fiscal years or the shorter period of time the provider has been in existence. j. If operation of the facility has not yet commenced, a statement of the anticipated source and application of the funds used or to be used in the purchase or construction of the facility, including the following: (1) An estimate of the cost of purchasing or constructing and equipping the facility, including related costs such as financing expense, legal expense, land costs, occupancy development costs, and all other similar costs the provider expects to incur or become obligated for prior to the commencement of operations. (2) A description of any mortgage loan or other long-term financing intended to be used for the financing of the facility, including the anticipated terms and costs of the financing. (3) An estimate of the total entrance fees to be received from or on behalf of residents at or prior to commencement of operation of the facility. (4) An estimate of the funds, if any, anticipated to be necessary to fund start-up losses and provide reserve funds to assure full performance of the obligations of the provider under contracts for the provision of continuing care or senior adult congregate living services. (5) A projection of estimated income from fees and charges other than entrance fees, showing individual rates presently anticipated to be charged and including a description of the assumptions used for calculating the estimated occupancy rate of the facility and the effect on the income of the facility of government subsidies for health care services, if any, to be provided pursuant to contracts for continuing care or senior adult congregate living services. (6) A projection of estimated operating expenses of the facility, including a description of the assumptions used in calculating the expenses and separate allowances, if any, for the replacement of equipment and furnishings and anticipated major structural repairs or additions. (7) Identification of any assets pledged as collateral for any purpose. (8) An estimate of annual payments of principal and interest required by a mortgage loan or other long-term financing. k. Other material information concerning the facility, the program, or the provider required by the division of insurance or which the provider wishes to include. l. The cover page of the disclosure statement shall state, in a prominent location and typeface, the date of the disclosure statement. m. A copy of the standard form or forms of contract for continuing care or senior adult congregate living services used by the provider, attached as an exhibit to each disclosure statement. n. (1) A description of transactions in which the provider obtains real or personal property or construction services from any of the following: (a) The developer of the facility, or a person who is under the control of the developer. (b) If the provider is a business entity, any person holding an executive position in the business entity, including but not limited to a member of a board of directors or an officer of a corporation, a manager of a limited liability company, a general partner of a limited partnership, or a trustee of a trust. (c) If the provider is a business entity, any person who holds a ten percent or greater equity or beneficial interest in the business entity. (d) Any person who directly or indirectly by acting through one or more intermediaries controls management decisions of the facility. (2) A transaction shall include each purchase or lease of real property or personal property by the provider, and any construction services provided to the provider. The description shall include transactions which have occurred or which are planned to occur. The description shall also include whether the terms of the transaction were or will be on terms which are at least as favorable to the provider as those terms which would be generally available from an unaffiliated third party. 2. The provider shall prepare an annual disclosure statement which shall contain the information required by this chapter for the initial disclosure statement. The annual disclosure statement shall also be accompanied by a narrative describing: a. Any material differences between the pro forma cash flow projection prepared pursuant to this chapter as part of the most recent annual disclosure statement and the actual results of operations during the fiscal year, if the material differences substantially affect the financial safety or soundness of the community. b. A revised pro forma cash flow projection for the next fiscal year. 3. The provider shall prepare the annual disclosure statement not later than five months following the end of the provider’s fiscal year. The provider shall retain a record of each annual disclosure statement prepared under this section for at least five years. 4. If an amendment is prepared pursuant to subsection 5, the provider shall deliver a copy of the amendment or the amended disclosure statement to a prospective resident and to a prospective resident’s personal representative if one is appointed prior to the provider’s acceptance of part or all of the entrance fee or the execution of the continuing care or senior congregate living services contract by the prospective resident. 5. The provider may amend its current annual disclosure statement at any other time if, in the opinion of the provider, an amendment is necessary to prevent the disclosure statement and annual disclosure statement from containing any material misstatement of fact or omission to state a material fact required to be included in the statement. The amendment or amended disclosure statement shall be kept with the records of the provider’s annual disclosure statements. The provider shall deliver a copy of the amendment to a resident or prospective resident and a personal representative of a resident or prospective resident in the same manner as the annual disclosure statement. 89 Acts, ch 217, §3; 90 Acts, ch 1168, §54; 91 Acts, ch 205, §12, 13; 92 Acts, ch 1078, §10; 2004 Acts, ch 1104, §34, 35; 2012 Acts, ch 1023, §157; 2024 Acts, ch 1031, §8, 9 Referred to in §523D.6