An 89-year-old Long Island widow who sold her family’s house to pay the nearly $1 million fee to live at a local retirement home had to move out of the facility after it fell into bankruptcy — one of hundreds of residents nationwide who have lost their nest eggs.
Arlene Kohen moved into Harborside, a luxury senior community in Port Washington, in January 2020 after selling her family’s home in Great Neck for $838,000 to afford the required $945,000 entrance fee.
Harborside, which filed for bankruptcy three times — in 2014, 2021 and 2023 — had assured her that 75% of the entrance fee would be refundable to her heirs or returned if she left the facility.
By the end of her stay, she was also paying $5,700 in monthly fees, according to the Wall Street Journal.
But after the last bankruptcy and sale to a new investor, Kohen had to move out because the new owner scaled back on care services, according to the Journal.
Her daughter, Beverly Kohen Fried, told the Journal that the family now expects to recover less than one-third of the $710,000 refund they were promised.
“That’s money that I’ll never see,” Fried said.
The financial devastation is not limited to Harborside. The collapse of a growing number of continuing-care retirement communities (CCRCs) across the United States has left thousands of elderly residents facing the loss of their homes, promised care and substantial portions of their life savings.
At least 16 CCRCs have filed for bankruptcy since 2020, impacting over 1,000 families and wiping out more than $190 million in entrance fees, according to court filings and data from healthcare restructuring firm Gibbins Advisors.
Henry Ford Village in Michigan, Unisen Senior Living in Florida and Casey’s Pond in Colorado are among other CCRCs that have filed for bankruptcy in recent years.
At Henry Ford Village, $112 million in unpaid refunds went to unsecured creditors. In the case of Unisen, more than 100 residents were evicted after the facility shut down.
At Casey’s Pond, a $30 million fundraising effort was needed to keep the community afloat despite $68.4 million owed to bondholders.
CCRCs are designed to allow seniors to age in place, starting with independent living and transitioning to assisted living or memory care as needed. In return, residents pay steep upfront entrance fees — typically between $200,000 and $1 million — based on contracts that often include a promise of partial refunds.
However, in bankruptcy proceedings, these residents are treated as unsecured creditors and often receive only a fraction of their expected refunds.
Although bankruptcies remain rare — less than 1% of the nearly 1,900 CCRCs nationwide have filed since 2020 — the consequences for those affected can be devastating. About 623,000 people lived in such communities as of 2023, according to the National Investment Center for Seniors Housing & Care.
The structure of the CCRC business model makes them particularly vulnerable to economic downturns and shifts in the housing market. Many rely on the sale of new entrance fees to service debt or fund day-to-day operations, while maintaining modest reserves.
The inability of prospective residents to sell their homes during housing slumps — such as during the subprime mortgage crisis or the COVID-19 pandemic — can quickly lead to financial instability.
That was the case with Harborside, which opened in 2010, just after the housing crash. Entrance fees ranged from $425,000 to $1.7 million, and the owner — a nonprofit subsidiary of Amsterdam Continuing Care Health System — used those upfront payments to pay down $120 million in construction bonds.
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But the community filled less than 60% of its 229 independent-living units in two years and filed its first bankruptcy in 2014. After briefly stabilizing, the COVID pandemic stalled new move-ins, leading to further defaults and bankruptcy filings.
Although bondholders supported financial restructuring during Harborside’s earlier bankruptcies, preserving residents’ contracts, a final default in 2022 forced a sale of the property.
Focus Healthcare Partners, a Chicago-based investor, purchased Harborside out of bankruptcy.
“I’m sympathetic to the situation,” Curt Schaller, a principal at the firm, told the Journal but he noted that his company had no control over how sale proceeds were divided between bondholders and residents.
The Post has sought comment from Schaller.
Under the terms of the latest bankruptcy plan, 187 current and former Harborside residents have agreed to accept up to 32% of their entry fees, totaling about $121 million.
Among them is Bob Curtis, an 88-year-old who paid $840,000 under a 50% refund plan. Curtis remains in his one-bedroom apartment, but had to move his wife Sandy, who needed memory care, to a new facility in February. She died in April due to complications from a fall.
Curtis hopes to receive a $50,000 refund this fall, with another $100,000 potentially coming later, contingent on the sale of an affiliated asset in Manhattan.
The US Senate Special Committee on Aging warned in 2010 that CCRCs are “particularly vulnerable during economic downturns” and urged states to strengthen consumer protections. But regulation has remained uneven.
As the population ages and demand for senior housing grows, the financial and emotional risks tied to the CCRC model have come under increasing scrutiny.
With more than 5% of the $36 billion in municipal bonds issued for these facilities currently in default, experts warn that without stronger oversight and protections, more seniors could find their life savings and long-term care promises vanish overnight.
Florida, which treats CCRCs as a specialty insurance product, was still unable to prevent the closure of Unisen and the eviction of its residents. Efforts to strengthen protections failed after industry advocates argued the reforms would raise costs for seniors.
“Many states…lack the expertise” to regulate CCRCs effectively, Katherine Pearson, a law professor at Pennsylvania State University’s Dickinson Law, told the Journal.
“You need expertise that’s equivalent of insurance commissioners’ expertise if you’re going to regulate that.”
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