Residency Agreement Requires CCRC to Refund Entrance Fee

Reversing a trial court, an Arizona appeals court rules that the estate of a CCRC resident is entitled to a full refund of the resident's entrance fee, finding that a provision in the facility's standard agreement is inconsistent with an addendum to that agreement. Hanson v. Tempe Life Care Village (Ariz. Ct. App., Div. 1, No. 1 CA-CV 06-0274, July 12, 2007).

Amy Hanson moved to Tempe Life Care Village, a continuing care retirement community (CCRC), on December 18, 2002, after paying a $144,000 entrance fee and agreeing to pay $1,760 in monthly fees. Ms. Hanson signed the standard residency agreement and an addendum, each of which imposed conditions on the refund of a resident's entrance fee. The standard agreement allowed a resident to terminate the agreement, provided certain conditions were met, effective 120 days after notice was given. The addendum provided that a resident who both gave notice and vacated the CCRC within a year was entitled to a full refund.

On November 28, 2003, specifically referencing the addendum's refund terms, Ms. Hanson gave notice to the Village of her intention to terminate the contract. She moved out of the Village on December 17, 2003, and died on February 15, 2004. The Village informed Ms. Hanson's estate that it was not entitled to a refund of the entrance fee. At the ensuing trial, the Village essentially asserted that the addendum should be read to incorporate the 120-day effective period from the standard agreement. The trial court ruled for the CCRC and Ms. Hanson's estate appealed.

The Arizona Court of Appeals reverses, finding that the standard agreement's 120-day provision was inconsistent with the addendum. The court reasoned, '[g]iven the plain language of the Addendum that a resident may choose to terminate the Agreement within the first twelve months of occupancy, we find an interpretation that requires the choice be made within the first eight months to be untenable.'

To download the full text of this decision in PDF format, go to: https://www.cofad1.state.az.us/opinionfiles/CV/CV06-0274.pdf.
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