§514E-16  Deposit of purchaser's funds,
notes, and contracts into escrow.  (a)  All funds and any negotiable
instruments and purchase money contracts received before closing from or on
behalf of purchasers or prospective purchasers in connection with the purchase
or reservation of time share interests must be placed in an escrow account. 
However, the developer or a sales agent may hold, until the expiration of the
seven-day-cancellation period provided by section 514E-8 or any longer
purchaser cancellation period provided in the sales contract, a negotiable
instrument, or purchase money contract made by a purchaser:



(1)  For which subsequent holders cannot claim holder
in due course status within the meaning of article 3 of chapter 490; or



(2)  Where the payee is:



(A)  The escrow agent; or



(B)  The trustee of a lien payment trust.



(b)  The escrow agent must be a bank, savings
and loan association, or a trust company authorized to do business in the State
under an escrow arrangement or a corporation licensed as an escrow depository
under chapter 449.  However, in connection with sales made out of the State for
the use of time share units located in the State, the escrow agent may be
located in and the purchasers' funds, negotiable instruments, and purchase
money contracts may be impounded in the jurisdiction where the sale is made, if
the law of such jurisdiction requires it.  In such event, the out-of-state
escrow agent shall be subject to the approval of the director.



(c)  The establishment of such an escrow
account shall be evidenced by a written escrow agreement between the developer
and the in-state or out-of-state escrow agent.  The escrow agreement must
provide for the handling of purchaser's funds, negotiable instruments, and
purchase money contracts as required by this chapter and must contain any
provisions required by rules adopted by the director pursuant to chapter 91. [L
1982, c 186, §3; am L 1985, c 114, §5]



 



Cross References



 



  Leasehold time share interests, see §§501-241 to 501-248.