(a) This chapter shall not apply to either of the following:

1. (1) An arrangement for the care of a person by a relative.
2. (2) An arrangement for the care of a person or persons from only one family by a friend.

(b) This chapter shall not apply to any admission or residence agreements offered by residential communities for the elderly or residential care facilities for the elderly that promise residents preferred access to assisted living services or nursing care, when each of the following conditions is satisfied:

1. (1) Residents pay on a fee-for-service basis for available assisted living services and nursing care.
2. (2) The fees paid for available assisted living services and nursing care are the same for residents who have previously occupied a residential living unit as for residents who have not previously occupied a residential living unit.
3. (3) No entrance fee or prepayment for future care or access, other than monthly care fees, is paid by, or charged to, any resident at the community or facility. For purposes of this paragraph, the term entrance fee shall not include initial, deferred, or amortized payments that cumulatively do not exceed seven thousand five hundred dollars ($7,500).
4. (4) The provider has not made a continuing care promise of preferred access, other than a promise as described in paragraph (5).

5. (5) The admission or residence agreement states:

   1. (A) “This agreement does not guarantee that an assisted living or nursing bed will be available for residents, but, instead, promises preferred access to any assisted living or nursing beds that are available at the community or facility. The promise of preferred access gives residents who have previously occupied a residential living unit a right over other persons to such beds.”
   2. (B) “A continuing care contract promises that care will be provided to residents for life or for a term in excess of a year. (Name of community or facility) is not a continuing care retirement community and (name of provider) does not hold a certificate of authority to enter into continuing care contracts and is not required to have the same fiscal reserves as a continuing care provider. This agreement is not a continuing care contract and is exempted from the continuing care statutes under subdivision (b) of Section 1771.3 of the Health and Safety Code so long as the conditions set forth in that section are met.”
6. (6) The admission or residence agreement also states the policies and procedures regarding transfers to higher levels of care within the community or facility.

(d) The department shall issue a Letter of Exemption to a requesting entity if the department determines either of the following:

1. (1) The requesting entity satisfies each of the requirements for an exemption under subdivision (b).

2. (2) The requesting entity satisfies each of the requirements for an exemption under subdivision (b) other than the requirements of paragraph (2) of subdivision (b), and there is no substantial difference between the following:

   1. (A) The fees for available assisted living services and skilled nursing care paid by residents who have previously occupied a residential living unit.
   2. (B) The fees for available assisted living services and skilled nursing care paid by residents who have not previously occupied a residential living unit.

(e) An application to the department for a Letter of Exemption shall include all of the following:

1. (1) A nonrefundable one thousand dollar ($1,000) application fee.
2. (2) The name and business address of the applicant.
3. (3) A description of the services and care available or provided to residents of the community or facility.

4. (4) Documentation establishing that the requesting entity satisfies the requirements for an exemption under this section, including all of the following:

   1. (A) A schedule showing all fees for assisted living services and skilled nursing care charged to residents at the facility or community who have previously occupied a residential living unit.
   2. (B) A schedule showing all fees for assisted living services and skilled nursing care charged to residents at the facility or community who have not previously occupied a residential living unit.
   3. (C) A description of the differences between the fees for assisted living services and skilled nursing care charged to residents who have not previously occupied a residential unit and the fees for assisted living services and skilled nursing care charged to residents who have previously occupied a residential unit.
   4. (D) A schedule showing any other fees charged to residents of the community or facility.
   5. (E) Copies of all admission and residence agreement forms that have been entered into, or will be entered into, with residents at the community or facility.
5. (5) Any other information reasonably requested by the department.