Updated August 3, 2026. Quick answer: you are handing a six-figure sum to a single business and becoming one of its unsecured creditors for decades. Ask for four documents. If any of them is refused, that answer is itself information.
The four documents
- The most recent audited financial statements — audited, not a summary, and with the notes. The notes are where the debt covenants and contingencies live.
- The actuarial study, where the state requires one. A Type A community is carrying a lifetime care obligation, and the actuarial study is the only document that says whether the fees being charged actually fund it.
- The disclosure statement the state requires, in full.
- The resale history — average and longest time to resell a unit over the last five years. Why that number is the most informative one available.
What to look for once you have them
- Occupancy. A community fills its units or it does not. Persistent low occupancy pressures everything else, and it also lengthens resale times, which is what your refund depends on.
- Days cash on hand and the trend over several years. One year tells you little; a direction tells you a lot.
- Debt, and what secures it. If the buildings are mortgaged, that lender ranks ahead of your refund claim.
- Entrance-fee refund liability — what the community owes to current and former residents, and whether it is funded or paid out of new residents’ entrance fees. A structure that relies on new entrants to repay old ones is worth understanding clearly before joining it.
- The auditor’s opinion, including any going-concern language.
- Capital plans. An ageing physical plant with no funded plan is a future fee increase.
State review is not a solvency endorsement
California’s contract disclosure statute requires notice that the department ‘does not approve or disapprove any of the financial or health care coverage provisions in this contract’. State review is procedural, not a solvency endorsement.
Communities sometimes present state registration as reassurance. Where the statute says what California’s says, it is a statement that the paperwork is complete.
Reserves and escrow, where they exist
- California: statutory liquid reserve covering debt service and operating reserves (Health & Safety Code 1792), with authority to require the provider to place the reserve into escrow if it becomes financially unsound; deposit escrow (1783.2); resale-time disclosure (1788(a)(33)(E)).
- Florida: entrance fees and deposits held in escrow with an approved agent, released only on compliance (Fla. Stat. 651.033); minimum liquid reserve (651.035); refund within 45 days of vacating (651.061).
Texas and Pennsylvania primary text could not be retrieved. No claim is made about them, positive or negative.
Two questions that come after the financial vetting
- Negotiating CCRC fees — what actually moves
- Paying the entrance fee from a house sale — the order matters
Who should read this for you
Audited financial statements are not general-reader documents, and this is a defensible place to pay someone for a few hours. An accountant or a fee-only adviser with no connection to the community can tell you in an afternoon whether the numbers behave the way the sales conversation implies. Against a six-figure entrance fee it is a rounding error, and it is the one expense in this process that is genuinely on your side of the table.
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General information drawn from IRS, Medicare, HUD and state statute and regulation, not legal, tax or financial advice. Continuing-care law is state law and differs materially between states; every figure here is year-labelled and every source named so you can check it against your own contract. Read your own signed agreement before relying on any general description, including this one.