779.87 Escrow account or bond requirement.
(1) Requirement. A seller who enters a regulated prepaid maintenance agreement shall either maintain an escrow account or maintain a bond.
(2) Escrow account.
(a) Surety. If a seller maintains an escrow account, all proceeds received under any regulated prepaid maintenance agreement shall be deposited in the escrow account for the benefit of any customer who suffers a loss of prepayments for maintenance due to the bankruptcy or cessation of business by the seller.
(b) Not to be commingled. The seller shall not commingle the proceeds received under a regulated prepaid maintenance agreement with any other funds and any other funds which are commingled become a part of and shall be deposited in the escrow account. The seller may aggregate the proceeds received under several prepaid maintenance agreements in one escrow account.
(c) Interest. The seller may withdraw and retain for his or her own use any interest payments received on the escrow account.
(d) Not to be used prior to discharge. The seller may not withdraw or use the proceeds received under a regulated prepaid maintenance agreement which are deposited in an escrow account prior to the discharge of the prepaid maintenance lien under s. 779.91.
(e) Not subject to attachment. Until all prepaid maintenance liens are discharged, the escrow account is not subject to garnishment, execution, levy, attachment or foreclosure except as provided under s. 779.92.
(3) Bond.
(a) Surety. If a seller maintains a bond, it shall be issued by a surety company licensed to do business in this state.
(b) Amount; filed. The principal sum of the bond shall be $25,000 at all times. A copy of the bond shall be filed with the department of financial institutions.
(c) For benefit of customer. The bond shall be in favor of the state for the benefit of any customer who suffers a loss of prepayments for maintenance due to the bankruptcy or cessation of business by the seller. Any customer claiming against the bond may maintain an action against the seller and the surety.
(d) Surety's obligation. If the seller fails to perform maintenance under a regulated prepaid maintenance agreement, the surety shall either perform or procure the performance of that maintenance or pay the customer the amount of the prepayment made under the agreement.
(e) No lien. If a seller maintains a bond under this subsection, a customer does not have a prepaid maintenance lien under s. 779.88.
History: 1977 c. 296; 1979 c. 32 ss. 57, 92 (9); Stats. 1979 s. 779.87; 1995 a. 27.