The following case illustrates the necessity to pore through the fine print when making a major investment such as a move into a Continuing Care community. In this case, the individual needed to pursue a lawsuit.
Continuing Care Retirement Communities (“CCRC”) in New Jersey are regulated by the NJ Department of Community Affairs (NJDCA). When a person wants to move into such a community, they select the unit they wish to occupy and pay an entrance fee based on the value of the unit. In a common scenario, the elderly individual has sold their home and is using the proceeds to pay the entrance fees. The individual is not actually buying the land or the unit. There are generally several different options available, including some sort of refundable option. Click here to see a Consumer handbook published by the NJ DCA: CCRC consumer handbook
Springpoint Senior Living Inc. operates a CCRC in New Jersey. In DeSimone v. Springpoint Senior Living Inc., App. Div.case no. 09-2-6912 (decided June 2015), the occupant of the unit had died and her Estate sought a refund of 90% of the entrance fee, which is what was allegedly promised in the advertising and in oral and written promotional information. However, the actual contract provided that the amount of the refund would be the lesser of the entrance fee or the fee paid by the next incoming occupant of that unit. The Executor of her estate sued, alleging a violation of the NJ Consumer Fraud Act and the NJ Continuing Care Retirement Community Regulation and Financial Disclosure Act. CCRC Regs NJAC 5 19 The suit also alleged that the defendant corporation committed fraud and negligent misrepresentation and violated the implied covenant of good faith and fair dealing which is an implicit part of contracts. The trial court granted the motion of the defendant to dismiss the claim for failure to state a cause of action, and denied leave to amend the complaint. On appeal, the Appellate Division reversed, in an unpublished opinion, and held that the plaintiff was entitled to try his case. The Court held that failure to disclose these limiting variables, if proven, could constitute a violation of the statutes at issue.
The moral of this story is that the devil is in the details, and consumers have remedies when sellers misrepresent or omit the material details.