[§514A-64.5]  Protection of purchasers'
funds. (a)  If the commission issues an effective date for a contingent
final public report for a project, the escrow agent shall deposit all
purchasers' funds in a federally-insured, interest-bearing account at a bank,
savings and loan association, or trust company authorized to do business in the
State.  The escrow agent shall not disburse the purchasers' funds from the
account until the commission issues an effective date for a final public report
for the project.



(b)  If the commission does not issue an
effective date for a final public report for a project by the date on which the
project's contingent final public report expires, then the developer shall
promptly notify all purchasers thereof by certified mail and the developer or
the purchaser, after the expiration of the contingent final public report, may
rescind the purchaser's sales contract by giving written notice thereof to the
other.  In the event of rescission pursuant to this subsection a purchaser shall
be entitled to a prompt and full refund of the purchaser's entire deposit
together with all interest earned thereon, reimbursement of any required escrow
fees, and, if the developer required the purchaser to secure a financing
commitment, the purchaser shall also be entitled to reimbursement by the
developer of any fees the purchaser incurred in securing that financing
commitment.



(c)  If the commission issues an effective date
for a contingent final public report for a project, the following notice shall
be included in the contingent final public report and the receipt and notice
required under section 514A-62(d):



"The effective date
for the Developer's Contingent Final Public Report was issued before the
Developer submitted to the Real Estate Commission: the executed and recorded
deed or master lease for the project site; the executed construction contract
for the project; the building permit; satisfactory evidence of sufficient funds
to cover the total project cost; or satisfactory evidence of a performance bond
issued by a surety licensed in the State of not less than one hundred per cent
of the cost of construction, or such other substantially equivalent or similar
instrument or security approved by the Commission.  Until the Developer submits
each of the foregoing items to the Commission, all Purchaser deposits will be
held by the escrow agent in a federally-insured, interest-bearing account at a
bank, savings and loan association, or trust company authorized to do business
in the State.  If the Developer does not submit each of the foregoing items to
the Commission and the Commission does not issue an effective date for the
Final Public Report before the expiration of the Contingent Final Public
Report, then:



(1)  The Developer will notify the Purchaser thereof
by certified mail; and



(2)  Either the Developer or the Purchaser shall
thereafter have the right under Hawaii law to rescind the Purchaser's sales
contract.  In the event of a rescission, the Developer shall return all of the
Purchaser's deposits together with all interest earned thereon, reimbursement
of any required escrow fees, and, if the Developer required the Purchaser to
secure a financing commitment, reimburse any fees the Purchaser incurred to
secure that financing commitment."



 



[L 1997, c 135, pt of §2]