Health & Saf. Code, § 1771.4

An entity may conduct a market test for a proposed continuing care retirement community and collect reservation fees from persons interested in residing at the proposed continuing care retirement community without violating this chapter if all of the following conditions are met:

(a) The entity has filed with the department an application for a permit to accept deposits and a certificate of authority for the project.

(b) The entity’s application includes the proposed reservation agreement form and a proposed escrow agreement that provide all of the following:

(1) All fees shall be deposited in escrow.

(2) Refunds shall be made within 10 calendar days after the payer’s or proposed resident’s request or 10 days after denial of the application for a permit to accept deposits.

(3) All reservation fees shall be converted to deposits within 15 days after a permit to accept deposits is issued.

(c) The department has acknowledged in writing its receipt of the entity’s application and its approval of the entity’s proposed reservation agreement between the payer and the entity and the escrow agreement between the escrow holder and the entity.

(d) The amount of any reservation fee collected by the entity does not exceed one thousand dollars ($1,000) or 1 percent of the average entrance fee amount as determined from the entity’s application, whichever is greater.

(e) The entity places all reservation fees collected by the entity into an escrow under the terms of the approved reservation agreement and escrow agreement.