Any deposit made in connection with the purchase or reservation of a unit from a person required to deliver a disclosure statement pursuant to Subsection C of Section 54 [47-7D-2 NMSA 1978] of the Condominium Act shall be placed in escrow and held either in this state or in the state where the unit is located in an account designated solely for that purpose until:
A. delivered to the declarant at closing;
B. delivered to the declarant because of the purchaser's default under a contract to purchase the unit; or
C. refunded to the purchaser.
History: Laws 1982, ch. 27, § 62.
ANNOTATIONSCompiler's notes. — This section is similar to § 4-110 of the Uniform Condominium Act, with the following main exceptions: "disclosure" is substituted for "public offering" in this section of the state Condominium Act; and both the unbracketed and bracketed language, relating to permissible escrow agents, is deleted, preceding "until" near the end of the introductory paragraph of this section of the state Condominium Act.
COMMISSIONERS' COMMENT
1. This section applies to the sale by persons required to furnish public offering statements of residential units and of non-residential units unless waived pursuant to the provisions of § 4-101 [47-7D-1 NMSA 1978]. It does not apply, however, to resales of units between private parties. Escrow provisions are not part of the law in several jurisdictions.
2. This section provides declarant a number of choices as to the appropriate escrow agent. Whether the escrow agent must deposit the funds in an insured institutional depository, or in a particular type of account, depends on state law or the agreement of the parties. To minimize record keeping, of course, the institutional depository could itself be the escrow agent. The section does not require a separate account for each unit, so that mingling of funds in a single escrow account would be permitted. The account may be held whether in the state where the unit is located, or in the enacting state, in recognition that buyers are often from outside the state where the unit is located.
3. The escrow requirements of this section apply in connection with any deposit made by a purchaser, whether such deposit is made pursuant to a binding contract or pursuant to a nonbinding reservation agreement (with respect to which no public offering statement is required under § 4-101(b)(6) [47-7D-1B(6) NMSA 1978]).
4. In some states current practice permits escrows to be held by certain title insurance or escrow companies, attorneys or real estate brokers. Accordingly, the bracketed language should be included or deleted in accordance with local practice.
5. Under this section, any interest earned on an escrow deposit may, but need not, be credited to the purchaser at closing, added to any deposit forfeited to the seller or added to any deposit refunded to the purchaser. In short, disposition of any interest is left to agreement of the parties.
6. In some states, such as New York, the substitution of a bond in place of a deposit escrow is permitted. The evidence indicates, however, that in many instances the use of the bonding device has forced purchasers to incur substantial costs and delay prior to obtaining refunds to which they are entitled. For this reason, this act does not include bonding as an alternative to the required escrow of deposits.
Am. Jur. 2d, A.L.R. and C.J.S. references. — 15A Am. Jur. 2d Condominiums and Cooperative Apartments §§ 21, 22.
31 C.J.S. Estates § 153 et seq.