32-2181.03. Lot reservations; expiration

A. The notice of intent required by section 32-2181, subsection A or section 32-2195, subsection B and the issuance of a public report required by section 32-2183, subsection A or section 32-2195.03, subsection A are not required for any party to enter into a lot reservation on property located in this state.

B. Before the issuance of a public report, a deposit may be accepted from a prospective buyer as a lot reservation if all of the following requirements are met:

1. Before accepting any lot reservation, the prospective seller shall mail or deliver written notice of the seller's intention to accept lot reservations to the department. The notice shall include:

(a) The name, address and telephone number of the prospective seller.

(b) The name, address and telephone number of any real estate broker retained by the prospective seller to promote the lot reservation program.

(c) The name and location of the project for which lot reservations are to be offered.

(d) The form to be used for accepting lot reservations, subject to approval by the commissioner.

2. The reservation deposit for a single lot or parcel shall not exceed five thousand dollars.

3. Within one business day after a reservation is accepted by the prospective seller, the reservation deposit shall be delivered to an escrow agent licensed pursuant to title 6, chapter 7 and deposited by the escrow agent in a depository insured by an agency of the United States. The escrow account may be interest bearing at the direction of either the prospective seller or prospective buyer. Payment of any account fees and payment of interest monies shall be as agreed to between the prospective buyer and prospective seller. All reservation deposits shall remain in an escrow account until cancellation or termination of the lot reservation or execution of a purchase contract.

4. Within fifteen calendar days of receipt by the prospective seller of the public report issued by the commissioner relative to the reserved lot or parcel, the prospective seller shall provide the prospective buyer with a copy of the public report and a copy of the proposed purchase contract for the sale of the lot or parcel. The prospective buyer and prospective seller have seven business days after the prospective buyer's receipt of the public report and the proposed purchase contract within which to enter into a contract for the purchase of the lot or parcel. If the prospective buyer and prospective seller do not enter into a contract for the purchase of the lot or parcel within the seven business day period, the reservation automatically terminates. The prospective seller has no cancellation rights other than as provided in this paragraph.

5. A prospective buyer may cancel a lot reservation at any time before the execution of a purchase contract by delivering written notice of termination to the prospective seller.

6. Within five business days after a lot reservation has been terminated for any reason, the prospective seller shall refund to the prospective buyer all reservation deposits made by the prospective buyer including any interest monies earned less any account fees agreed upon, if applicable. The escrow agent shall refund to the prospective buyer all reservation deposits made by the prospective buyer including any interest monies earned less any account fees agreed upon if the prospective seller is not available. After this refund neither the prospective buyer nor the prospective seller has any obligation to the other arising out of the lot reservation.

7. A prospective buyer may not transfer rights under a reservation without the prior written consent of the prospective seller, and any purported transfer without the consent of the prospective seller is voidable at the sole discretion of the prospective seller.

8. If the department denies an application for a public report on the development on which lot reservations were taken, within five business days of notification by the department, the prospective seller shall notify in writing each prospective buyer who entered into a lot reservation agreement. The prospective seller shall return any reservation deposits previously taken.

9. All notices required by this section to be given to the department, the prospective buyer or the prospective seller shall be in writing and either hand delivered or sent by certified mail, return receipt requested, with postage fully prepaid. Notices sent by mail are deemed delivered on the earlier of actual receipt, as evidenced by the delivery receipt, or seven calendar days after being deposited in the United States mail.

10. Each lot reservation form shall contain the following statement:

The state real estate department has not inspected or approved this project and no public report has yet been issued for the project. No offer to sell may be made and no offer to purchase may be accepted before issuance of a public report for the project.

C. The commissioner may deny authorization to accept lot reservations under this section to any person who has violated or is in violation of any provision of this chapter.

D. The authority to take lot reservations under this section expires two years after the date the commissioner receives notice of the intent to take lot reservations from a developer.