Financial risks of retirement communities


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At the age of 102, Constance Browne expected to live out her days in a small but luxurious apartment in Harborview Towers, a high-rise located in coastal Morehead City, North Carolina.

Elderly residents paid $150,000 to $220,000 in occupancy fees to secure their places in the 50-unit complex. But when the company went belly up, those left in the partially occupied building were given a couple of weeks to relocate. Browne, like most other residents, had sold her home to finance her move into Harborview. Suddenly, at an age when she shouldn’t have to worry about her future, she found herself facing homelessness.

And the blow wasn’t only financial. Residents also lost their community and support networks.

The proprietors of the business told news reporters and the North Carolina attorney general’s office, which investigated the closure, that the failure was not due to mismanagement. Instead, they said, the 2008 financial crisis devalued the homes of prospective residents, who subsequently couldn’t afford to move, leaving Harborview with an abundance of unoccupied units and increasing overhead. The combination led to the family-owned company defaulting on contracts with about 40 seniors. Last year, the company filed for bankruptcy.

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