41-2180

41-2180. Trust and escrow requirements; rules;
exemptions

A. Each dealer or broker who is licensed pursuant to this article and who sells
manufactured homes, mobile homes or factory-built buildings designed for use as
residential dwellings shall maintain a trust account or an escrow account with a
financial institution or escrow agent located in this state and shall deposit all earnest
money received for the sale of manufactured homes, mobile homes or factory-built
buildings designed for use as residential dwellings in such account. The department shall
conduct an audit of each dealer's or broker's trust or escrow account at least once every
two years.

B. All dealers or brokers shall notify the deputy director in writing when the
trust or escrow account has been established by indicating the name and number of the
account and the name and location of the financial institution used.

C. The dealer or broker, in writing, shall authorize the depository to release any
and all information relative to trust or escrow accounts to the deputy director or his
agent, employee or deputy.

D. The dealer's or broker's earnest money receipt book shall reflect all earnest
monies received and shall be at the minimum in duplicate and consecutively numbered.

E. All earnest monies shall be deposited in the escrow account or trust fund
account no later than the close of the second banking business day after receipt.

F. A dealer or broker may deposit and maintain up to two hundred dollars in the
trust account to offset service charges that may be assessed by the financial
institutions.

G. Every deposit into a trust account shall be made with a deposit slip which
identifies each transaction as follows:

1. The amount of deposit.

2. The names of all parties involved in the transaction.

All receipts for monies deposited in escrow shall be made accountable by containing the
same information.

H. A complete record shall be retained by the dealer's or broker's office of all
earnest monies received. The record shall contain provisions for entering:

1. The amount received.

2. From whom the money was received.

3. The date of receipt.

4. The place of deposit.

5. The date of deposit.

6. The daily balance of the trust fund account deposit of each transaction.

7. When the transaction has been completed.

8. Date and payment for all goods and services the dealer has contracted to
provide.

I. All earnest money deposited in the trust or escrow account shall be held in such
account until one of the following is completed:

1. An application for title transfer has been made.

2. The transaction involved is consummated or terminated and a complete accounting
is made.

J. Upon completion of subsection I of this section the earnest money deposit shall
be conveyed to the lending institution or the dealer, broker, purchaser, seller,
manufacturer or lienholder, whichever is applicable.

K. The dealer or broker shall retain true copies of the purchase agreements,
earnest money receipts, depository receipts, evidence of delivery documents and evidence
of consummation of sale or termination of sale for a period of three years.

L. The deposits referred to in this section shall not be utilized for any purpose
other than the transaction for which they were provided.

M. Notwithstanding any other provision of this section, before an event listed
under subsection I of this section is completed, a licensed dealer may release trust
account earnest monies to pay for flooring or inventory for the unit that is the subject
of the transaction for which the earnest monies were provided. Either a licensed dealer
or broker may release trust account earnest monies to pay other lawfully imposed interim
loan amounts and charges imposed by a financial institution or other bona fide lender on
the unit that is the subject of the transaction for which the earnest monies were
provided. The dealer or broker shall not make any payment out of trust account monies
pursuant to this subsection unless done in compliance with all of the following:

1. The payment is made no more than ten business days prior to the completion date
pursuant to subsection I of this section.

2. The payment is made directly to the financial institution or other bona fide
lender.

3. The payment is recorded in the dealer's or broker's records under this section
and documented by a receipt, a payment record or any other evidence from the financial
institution or lender.

4. If the transaction is terminated, the dealer or broker replaces the amount of
the payment in the trust account within three business days after receiving written
notification of the termination.

This subsection does not affect any other rights or obligations between the purchaser and
the licensed dealer or broker.

N. The board shall adopt separate rules for dealer trust and escrow accounts and
broker trust and escrow accounts. At a minimum, these rules shall contain trust and
escrow account requirements for the following:

1. Record keeping.

2. Administration.

3. Service fees or charges.

4. Deposits.

5. Advances or payments out of trust and escrow accounts.

6. Closing or termination of sales transactions.

7. Auditing or investigation of trust or escrow account complaints.

O. This section shall not apply to a real estate broker or salesperson licensed
pursuant to section 32-2122 and pursuant to this article when the unit is sold in
conjunction with real estate.