514E-17 Release of purchaser's funds, notes, and contracts from escrow without a closing. A purchaser's funds, negotiable instruments, and purchase money contracts may be released from escrow without a closing as follows:

(1) If a purchaser or developer gives a valid notice of cancellation of the contract pursuant to section 514E-8, all of the purchaser's funds and any negotiable instruments and purchase money contracts made by the purchaser shall be returned to the purchaser within fifteen days after the notice of cancellation is received.

(2) If a purchaser or developer properly terminates a contract pursuant to its terms, or if a developer or prospective purchaser terminates a reservation agreement, all of the purchaser's funds and any negotiable instruments and purchase money contracts made by the purchaser or prospective purchaser shall be delivered in accordance with the contract or reservation agreement.

(3) If the purchaser defaults in the performance of the purchaser's obligations under the contract, all of the purchaser's funds and any negotiable instruments or purchase money contracts made by the purchaser under the contract shall be delivered in accordance with the contract.

(4) If purchaser's funds are to be used for construction the funds may be disbursed by the escrow agent from time to time to pay for:

(A) Construction costs of the buildings and improvements in proportion to the valuation of the work completed by the contractor in accordance with the contract documents, as certified by a registered architect or engineer and approved for payment by the construction lender;

(B) Architectural, engineering, and interior design service fees in proportion to the services performed within each phase of services, as approved by the construction lender;

(C) The costs of purchasing furnishings and fixtures for the time share units, as approved by the construction lender; and

(D) Finance and legal fees, and other incidental expenses of constructing the time share units or developing the time share plan as approved by the construction lender;

provided that no such disbursements shall be made unless the developer first deposits with the director (i) a copy of the executed construction contract, (ii) a copy of executed performance and labor and material payment bonds in an amount which is not less than one hundred per cent of the cost of construction and covering any changes to the contract which do not in the aggregate increase the amount of the construction contract by more than ten per cent, (iii) a verified statement showing all costs involved in completing the project, and (iv) satisfactory evidence acceptable to the director of funds sufficient to cover the total costs of constructing, furnishing, and completing the project from purchaser's funds, equity funds, interim or permanent loan commitments or other sources. [L 1982, c 186, 4; gen ch 1985]

 

Revision Note

 

Subsection (a) designation deleted pursuant to 23G-15.

 

 

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