Erickson Retirement Communities files for Chapter 11

Discussion in 'Economics' started by kxvid, Oct 29, 2009.

  1. kxvid

    kxvid

    I personally have 2 relatives living in Erickson retirement communities. This is a prime example of why you should not trust the system.

    Erickson communities builds mega sized retirement communities for wealthy retirees. I was truly in awe the first time I visited it, they are like small self contained towns. They have many communal amenities such as a heated indoor pool, billiard rooms, computer rooms, classrooms, projector rooms, etc. The residents and guests are allowed to use all these amenities anytime.

    Now the model works like this: you pay a deposit to get yourself an "apartment". These deposits are expensive and range from around 200k - 600k. You also pay a monthly fee which is expensive, I believe around 1,500 a month. This covers utilities, one "free" meal a day, and general maintenance.

    Remember that this is all being run by a for profit corporation. Now the deposit is supposedly fully refundable (but no appreciation) if you die or move out. However residents don't "own" anything. It is not the same as owning a condo, there is absolutely no legal ownership, just an agreement.

    Worse yet, the deposit is only refundable if another person moves into your apartment if you decide to leave. That person must pay at least as much as you paid for the apartment to get your money refunded.

    So you can imagine the mess now that the whole thing collapsed. :eek: There are 23,000 residents affected by this. Nobody knows for sure what is going to happen to the deposit money. Its not looking good, though.

    http://weblogs.baltimoresun.com/bus...09/10/how_will_ericksons_bankruptcy.html#more
     
  2. Why do people complicate their lives with this kind of stuff.
     
  3. My god 200k-600k deposit? Are you sure? We looked at a 5 star for my Mom in OC, CA, luckily she got better and didn't have to go, and the entrance fee was 3k and 3k a month for studio with 3 meals and it was really 5 star.

    We put down a deposit on another 2k, and then canceled within the agreed period, they were slow to refund until I threatened to have the CC co. charge them back. That's why it's necessary to have CC's.
     
  4. it is because they want to relax in retirement and not worry. so they pay some one to do everything for them. i guess it back fired. sad but then what do you expect.

    everything is a con these days. the only people who don't do things for something in return are religious people and they get trashed by the government so why bother.
     
  5. kxvid

    kxvid

    You might have been able to get in for a bit cheaper than 200k, but not by much. The idea is you sell your home and put the proceeds down as a fully refundable deposit. BTW this is independent senior living, not like a nursing home.

    Now nobody will want to move in since the company's future is uncertain. The deposits are certainly in jeopardy and illiquid. Think of the 23,000 depressed people at these retirement centers across the country. Their deposit money was stolen by these crooks.

    Now the thing that gets me more is what Erickson salespeople told my relatives. They told my aunt who moved in a few months ago that she had to put money down or else she might not be able to get in. She fell for it and put down a large amount to get an apartment. How she fell for that pitch is hard for me to comprehend. Since the community is only for 65+ people are always going to be dying off, and apartments vacating. I guess I have dumb relatives.

    But seriously, this should be national news. This is a bankruptcy that effects a tremendous amount of wealthy people. Very troubling.
     
  6. MattF

    MattF

    not the only one. I had a retirement community near me file Chapter 11 some months ago. Not as wealthy/big as this one, but probably more of you might say an "average" one.

    These places just burn through money that the salespeople rope the elderly/their families into paying to get in, pocket some, then claim they are broke. But don't worry! Everything is fine...

    Most people are too ill-equipped and not knowledgeable when it comes to these things...they just know they can't burden and take care of their parent/relative anymore because their life is a struggle/barely getting by as is...
     
  7. Most of the second and third world wouldn't think of sticking their seniors into a home. All generations live together. The US was like this until 40 years ago.

    The emphasis on youth and the fact that it is the young who lead us into the technology future devalues the usefulness of the elderly.
    In most other societies it is the elderly that has the knowledge. In the US it is teens and tweens you need to fix your computer.
     
  8. ba1

    ba1

    This is an opening shot in America's retirement of the 21st century. I have a parent in a newish (2-3 yo) upscale assisted living in a formerly low cost area. Labor rates, costs are going up. The crash is straining new applications, the home is cutting corners, mostly through less staff and chintzy charges (laundry, tp, and soap) to keep the first sticker shock down.