Thanks for posting. Article mentions there are a total of 1900 CCRC’s with 900,000 residents. That is huge. One comment mentions that a CCRC has not returned refund to heirs, as stipulated in contract, for over 3 years saying that vacant apartment is not occupied yet.
The need for doing a thorough due diligence is obvious.
Here is an article on the troubled Charlotte area CCRC and what to look for when vetting communities.
One lesson is to keep an eye on the financials after you move in, and involve the state overseer if things don’t look right. At my CCRC we get an updated Financial Dashboard every couple of months, including Operating Income or Loss, Days Cash on Hand, Debt Service Coverage ratio, etc.
The complicated financing of these retirement communities can also put a strain on the services offered. My relative’s continuing care place is nice, but the food is pretty bad—the chain spends only 53% on services according to their nonprofit 990 filing while the CEO makes $1.5 million a year. The food service is contracted out to a financially troubled national healthcare catering company for over $20 million a year.
I found the piece very scary. The man in the photograph has a background in finance as do his two sons. They all went through the financial documentation carefully, but that clearly wasn’t enough. In addition, some of the people who commented on the article also mentioned the difficulty they had dealing with the financial data at other CCRCs. And this all happened in NYS where I’d guess there is some regulation of the industry.
The article says: “But in 2023, the Harborside, for the third time since it opened in 2010, declared bankruptcy.”
Why would someone, who supposedly has some financial savvy, move there?
In North Carolina CCRCs are required to file detailed financial and management “Disclosure Statements” in a specified format with the NC DOI. These are available on the DOI website, and CCRCs are required to provide a copy to prospective residents. That is how I discovered that one CCRC I was considering didn’t own its land and buildings, and that another was, at that time, operating at a loss. The ownership structure of some of the for-profit operations is extremely complex, and I wouldn’t go near them.
According to the article, they moved in before the 2023 bankruptcy—apparently. 2021. The problem the article seems to be highlighting is the huge entrance fees CCRCs require. When the places go bankrupt, some of the residents may not have other resources they can rely on.
Meaning after the preceding two bankruptcies. Why do that?
Not all CCRCs have such high entry fees. Not all entry fees are fully or partly refundable. I paid considerably less than that, although my fee is non-refundable after the first four years (it declines at 2%/month). NC has some escrow requirements, although they are complex.
I don’t have this year’s list of entry fees for my CCRC, but in 2023 they ranged from $75,000 (non-refundable) for a studio in the original building to $1.6 million (90% refundable) for a three bedroom with den in a new building. The non-refundable fee for the three bedroom with den was about half the 90% refundable fee. There were two bedroom units with non-refundable fees in the two to four hundred range.
“Why would someone, who supposedly has some financial savvy, move there?” One could say the same about those in fire zones in California, or certain areas of the Gulf Coast and Florida.
This possibility is why you need to examine the financials, and the management structure, of any retirement community with care. According to the article this is the third time the community in question has been in bankruptcy – why would anyone move there after the first time? The one I live in has been in operation, successfully, for 30 years. It has a “benevolent fund” and no-one, in that 30 years, has had to move out because they ran out of money.
There are several articles on this site describing the different CCRC structures and considerations for choosing one. I would only consider non-profits that promise to keep me if I run out of money, for instance. It also matters which state you live in. North Carolina’s Department of Insurance regulates CCRCs under a statute written with input from residents. The Charlotte operation that has been in trouble is being turned around, but it does underscore the need for residents to keep an eye on operations. We have a Residents Council that meets monthly with management, and representation on the governing board.
It does require a NYT subscription. However, here is a legal site that described what a CCR is, and the consequences of bankruptcy. I’m not promoting any law firm or organization. BTW, there are similar situations that occur with mobile home businesses, and tenants find themselves stranded. Here’s an excerpt from the site:
“Americans Risk Losing Life Savings When CCRCs Go Bankrupt”
CCRCs often promise (verbally) partial or full refunds to residents of entrance fees once the resident dies or moves out permanently. However, residents considering a move to a CCRC must read the entrance agreement carefully and should have it reviewed by an attorney experienced with these contracts. Most CCRCs don’t agree to refund entrance fees until a new resident moves into the unit. In some cases, residents have been left with as little as 25 cents on the dollar because of a bankruptcy and the fact that a resident of a CCRC is not a secured creditor in bankruptcy.
Thanks for posting. Article mentions there are a total of 1900 CCRC’s with 900,000 residents. That is huge. One comment mentions that a CCRC has not returned refund to heirs, as stipulated in contract, for over 3 years saying that vacant apartment is not occupied yet.
The need for doing a thorough due diligence is obvious.
Here is an article on the troubled Charlotte area CCRC and what to look for when vetting communities.
One lesson is to keep an eye on the financials after you move in, and involve the state overseer if things don’t look right. At my CCRC we get an updated Financial Dashboard every couple of months, including Operating Income or Loss, Days Cash on Hand, Debt Service Coverage ratio, etc.
The complicated financing of these retirement communities can also put a strain on the services offered. My relative’s continuing care place is nice, but the food is pretty bad—the chain spends only 53% on services according to their nonprofit 990 filing while the CEO makes $1.5 million a year. The food service is contracted out to a financially troubled national healthcare catering company for over $20 million a year.
I found the piece very scary. The man in the photograph has a background in finance as do his two sons. They all went through the financial documentation carefully, but that clearly wasn’t enough. In addition, some of the people who commented on the article also mentioned the difficulty they had dealing with the financial data at other CCRCs. And this all happened in NYS where I’d guess there is some regulation of the industry.
The article says: “But in 2023, the Harborside, for the third time since it opened in 2010, declared bankruptcy.”
Why would someone, who supposedly has some financial savvy, move there?
In North Carolina CCRCs are required to file detailed financial and management “Disclosure Statements” in a specified format with the NC DOI. These are available on the DOI website, and CCRCs are required to provide a copy to prospective residents. That is how I discovered that one CCRC I was considering didn’t own its land and buildings, and that another was, at that time, operating at a loss. The ownership structure of some of the for-profit operations is extremely complex, and I wouldn’t go near them.
According to the article, they moved in before the 2023 bankruptcy—apparently. 2021. The problem the article seems to be highlighting is the huge entrance fees CCRCs require. When the places go bankrupt, some of the residents may not have other resources they can rely on.
Meaning after the preceding two bankruptcies. Why do that?
Not all CCRCs have such high entry fees. Not all entry fees are fully or partly refundable. I paid considerably less than that, although my fee is non-refundable after the first four years (it declines at 2%/month). NC has some escrow requirements, although they are complex.
I don’t have this year’s list of entry fees for my CCRC, but in 2023 they ranged from $75,000 (non-refundable) for a studio in the original building to $1.6 million (90% refundable) for a three bedroom with den in a new building. The non-refundable fee for the three bedroom with den was about half the 90% refundable fee. There were two bedroom units with non-refundable fees in the two to four hundred range.
“Why would someone, who supposedly has some financial savvy, move there?” One could say the same about those in fire zones in California, or certain areas of the Gulf Coast and Florida.
I do.
I believe this is the article. I am sharing it.
This possibility is why you need to examine the financials, and the management structure, of any retirement community with care. According to the article this is the third time the community in question has been in bankruptcy – why would anyone move there after the first time? The one I live in has been in operation, successfully, for 30 years. It has a “benevolent fund” and no-one, in that 30 years, has had to move out because they ran out of money.
There are several articles on this site describing the different CCRC structures and considerations for choosing one. I would only consider non-profits that promise to keep me if I run out of money, for instance. It also matters which state you live in. North Carolina’s Department of Insurance regulates CCRCs under a statute written with input from residents. The Charlotte operation that has been in trouble is being turned around, but it does underscore the need for residents to keep an eye on operations. We have a Residents Council that meets monthly with management, and representation on the governing board.
Thank you. This might be helpful too:
https://moneywise.com/retirement/elderly-couple-spent-840k-moving-into-retirement-home-that-went-bankrupt
Thanks for the link and additional commentary.
It does require a NYT subscription. However, here is a legal site that described what a CCR is, and the consequences of bankruptcy. I’m not promoting any law firm or organization. BTW, there are similar situations that occur with mobile home businesses, and tenants find themselves stranded. Here’s an excerpt from the site:
“Americans Risk Losing Life Savings When CCRCs Go Bankrupt”
https://www.farrlawfirm.com/elder-law-blogs-news/americans-risk-losing-life-savings-when-ccrcs-go-bankrupt/
Thanks for the link. I know people who have paid $400k plus to join CCRCs in Charlotte area. I wonder if they have any idea of the risks?
BTW, if CCRCs are dependent upon new people joining with these high fees to maintain financial viability, isn’t this a form of a Ponzi scheme?
Can’t get anything.