707.49 Deposits; escrow requirement.
(1) Definitions. In this section:
(a) “Completion of construction" means that all accommodations of the time-share unit and all buildings, improvements and other facilities of the time-share property, including campground amenities, are available for use in a manner identical in all material respects to the manner portrayed by the time-share instrument, promotional materials, advertising and the time-share disclosure statements.
(b) “Deposit" means any money or property given by a purchaser as earnest money, downpayment or other payment in connection with the purchase of a time share, whether the payment is intended to be applied toward the purchase price or other obligation or returned to the purchaser, but excluding any dues payment.
(c) “Escrow account" means an account established solely for the purposes set forth in this section with a financial institution, as defined in s. 705.01 (3), which is located within this state and the accounts of which are insured by a governmental agency or instrumentality.
(d) “Escrow agent" means any of the following:
1. A savings and loan association, savings bank, bank or trust company located in this state.
2. An attorney who is a member of the State Bar of Wisconsin.
3. A real estate broker licensed under ch. 452.
4. A title insurance company authorized to do business in this state.
(2) Escrow agent.
(a) Designation. Except as provided in sub. (4), before the sale of any time shares in a project, the developer shall establish an escrow account and shall designate an escrow agent for the purpose of protecting the deposits of purchasers. All escrow agents shall be independent of the developer, and the developer, any affiliate of the developer or any officer, director, subsidiary or employee of the developer shall not serve as escrow agent.
(b) Duties. An escrow agent designated under par. (a) shall do all of the following:
1. Maintain, in accordance with generally accepted accounting practices, separate books and records for each time share.
2. Maintain the accounts required by this section only in such a manner as to be under the direct supervision and control of the escrow agent.
3. Retain for 5 years all affidavits received under sub. (3) (b).
4. Upon receipt of conflicting demands for the escrowed funds or property, immediately and with the consent of all parties either submit the matter to arbitration or, by interpleader or otherwise, seek an adjudication of the matter in court.
(3) Escrow agreement; release of funds.
(a) Until the deposit may be released from escrow under par. (b), an amount equal to 50 percent of the deposit shall be deposited in an escrow account under an escrow agreement.
(b) The escrow agreement shall provide that the deposit may be released from escrow only as follows:
1. If a purchaser gives a valid notice of cancellation under s. 707.47 (5) or is otherwise entitled to cancel the sale, the deposit shall be returned to the purchaser under s. 707.47 (6).
2. After expiration of the cancellation period under s. 707.47 (2), if the purchaser defaults in the performance of his or her obligations under the contract to purchase, the developer shall provide an affidavit to the escrow agent requesting release of the escrowed deposit and shall provide a copy of the affidavit to the purchaser who has defaulted. The developer's affidavit shall include all of the following:
a. A statement that the purchaser has defaulted and that the developer has not defaulted.
b. A brief explanation of the nature of the default and the date of default.
c. A statement that the developer is entitled under the contract to the deposit held by the escrow agent.
d. A statement that the developer has not received from the purchaser any written notice of a dispute between the purchaser and developer or a claim by the purchaser to the escrowed deposit.
3. If no cancellation or default has occurred, the escrow agent may release the escrowed deposit upon presentation by the developer of an affidavit and, if the project is subject to a blanket encumbrance, as defined in s. 707.38 (1), a certified copy of a recorded nondisturbance agreement. The developer's affidavit shall state that all of the following have occurred:
a. Expiration of the cancellation period.
b. Completion of construction of the time-share unit and amenities or, if ownership is not related to a specific unit, completion of construction of sufficient units to provide appropriate use of the completed time-share units by the purchaser.
c. Completion of the closing.
d. Execution and recording of a nondisturbance agreement meeting the requirements of s. 707.38 (1m).
(4) Surety bond and other options. Instead of placing deposits in an escrow account, a developer may obtain a surety bond issued by a company authorized to do business in this state or obtain and maintain an irrevocable letter of credit or a similar arrangement, in an amount which at all times is not less than the amount of the deposits otherwise subject to the escrow requirements of this section. The bond, letter of credit or similar arrangement shall be filed with the department of agriculture, trade and consumer protection and made payable to the department of agriculture, trade and consumer protection for the benefit of aggrieved parties.
History: 1987 a. 399; 1991 a. 221; 1995 a. 27; 2001 a. 103; 2005 a. 213.