41-4030. Trust and escrow requirements for dealers that are not also owners of mobile home parks; rules; exemptions
A. Each dealer licensed pursuant to this article shall establish an independent escrow account with an independent financial institution or escrow agent authorized to handle such an account in this state as prescribed by title 6, chapter 7 or 8 for each transaction involving:
1. A new manufactured home.
2. A new factory-built building designed for use as a residential dwelling.
3. A manufactured home, mobile home or factory-built building designed for use as a residential dwelling that is previously owned and that has a purchase price of $50, 000 or more.
B. For the purposes of subsection A of this section, a financial institution or escrow agent is independent if the individual or entity is not controlled by the licensee, a family member of the licensee or a business affiliated with the licensee and the licensee, family member or business affiliate does not have a majority interest in the financial institution or escrow agent.
C. Each dealer that sells new manufactured homes or factory-built buildings designed for use as residential dwellings or a manufactured home, mobile home or factory-built building designed for use as a residential dwelling that is previously owned and that has a purchase price of less than $50, 000 shall maintain a licensee's trust account or open an escrow account with an independent financial institution or escrow agent located in this state and shall deposit all earnest monies received for the sale of manufactured homes, mobile homes or factory-built buildings designed for use as residential dwellings in that account. The department shall conduct an audit of each dealer's trust or escrow account, including any transactions with an independent escrow account, at least once every two years. A purchaser of a mobile home, used manufactured home or used factory-built building designed for use as a residential dwelling may request that the dealer establish an independent escrow account and if such a request is made in writing not later than the time the purchase contract is signed, and the seller consents, the dealer shall comply with this subsection by complying with subsection A of this section. A licensee that handles a transaction under this subsection shall disclose to the purchaser, in writing and before or at the time the purchaser signs the purchase contract, that the purchaser may request in writing the use of an independent escrow account, and that the transaction will otherwise be handled through a trust account controlled by the licensee.
D. All dealers shall notify the 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.
E. The dealer, in writing, shall authorize the depository to release any and all information relative to trust or escrow accounts to the director or the director's agent, employee or deputy.
F. The dealer's earnest monies receipt book shall reflect all earnest monies received and shall be at the minimum in duplicate and consecutively numbered.
G. All earnest monies shall be deposited in the escrow account or trust fund account not later than the close of the second banking business day after receipt.
H. The terms or instructions for any escrow account opened under subsection A or C of this section are deemed to be enforceable as part of the purchase contract. All parties to the purchase contract and the licensee shall sign the terms and instructions. If practicable, the escrow terms or instructions shall be included in the purchase contract or stated in an addendum to the purchase contract. The licensee shall provide a copy of the purchase contract to the escrow agent even if the escrow terms or instructions are contained in a separate document. The licensee shall promptly provide the escrow account information to all parties to the purchase contract once the account is opened.
I. At a minimum, the escrow terms or instructions shall contain:
1. Identification of the escrow agent with information containing at least the name, address and telephone number of the escrow agent.
2. All conditions or requirements that affect or pertain to closing the escrow account and disbursement of the monies in the escrow account.
3. Any conditions or requirements where monies are to be disbursed from the escrow account in advance of the escrow account being closed.
4. Any conditions or requirements where additional monies or documents must be deposited with an escrow agent after the escrow account is opened.
J. A dealer or broker may deposit and maintain up to $200 in the trust account to offset service charges that may be assessed by the financial institution.
K. Every deposit into a trust account shall be made with a deposit slip that 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.
L. 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 monies were 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. The date and payment for all goods and services the dealer has contracted to provide.
M. All earnest monies deposited in the trust or escrow account shall be held in such account until one of the following is completed:
1. The consummation of sale.
2. The termination of sale, including a complete accounting of all monies.
N. On completion pursuant to subsection M of this section, the earnest monies deposit shall be conveyed to the lending institution or the dealer, purchaser, seller, manufacturer or lienholder, whichever is applicable.
O. The dealer shall retain true copies of the purchase agreements, earnest monies receipts, depository receipts, evidence of delivery documents and evidence of consummation of sale or termination of sale for a period of three years.
P. The deposits referred to in this section shall not be used for any purpose other than the transaction for which they were provided.
Q. Notwithstanding any other provision of this section and except that this subsection does not apply to an independent escrow account established pursuant to subsection A of this section, before an event listed under subsection M 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. A licensed dealer 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 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 not more than ten business days before the completion date pursuant to subsection M 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 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 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.
R. The board shall adopt separate rules for dealer trust and escrow accounts trust and escrow accounts. At a minimum, these rules shall contain trust and escrow account requirements for the following:
1. Recordkeeping.
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.
S. 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.