(A) A seller of a vacation time sharing plan shall deposit into an escrow account maintained by an independent third-party agent one hundred percent of the funds received from the purchasers of the plans. The deposit of the funds must be evidenced by an executed escrow agreement between the escrow agent and the seller, which must include provisions that:

(1) funds may be disbursed to the seller by the escrow agent from the escrow account only after the expiration of the purchaser's cancellation period and in accordance with the purchase contract, subject to subsection (B) of this section; and

(2) if the purchaser properly cancels the contract pursuant to its terms, the funds must be paid to the purchaser pursuant to Section 27-32-40 or 27-32-50.

(B) If a seller contracts to sell an interest in a vacation time sharing plan and the construction of the property in which the interest of the vacation time sharing plan is located has not been substantially completed, the seller, upon expiration of the cancellation period, shall continue to maintain in an escrow account all funds received by or on behalf of the seller from the purchaser under the contract. Funds must be released from escrow as follows, if:

(1) a purchaser properly cancels the contract pursuant to its terms, the funds must be paid to the purchaser;

(2) the purchaser defaults in the performance of his obligations under the contract, the funds must be paid to the seller;

(3) the seller defaults in the performance of his obligations under the contract, the funds must be paid to the purchaser; and

(4) the funds of a purchaser have not been previously disbursed in accordance with the provisions of this subsection, they may be disbursed to the seller by the escrow agent upon the issuance of acceptable evidence of substantial completion of construction.

(C) The commission may audit or examine the escrow account. The seller shall make available documents relating to the escrow account or escrow obligation to the commission upon the commission's request. The seller shall maintain disputed funds in the escrow account until either:

(1) receipt of written direction agreed to by signature of all parties; or

(2) deposit of the funds with a court of competent jurisdiction in which a civil action regarding the funds has been filed.

(D) An escrow agent holding funds escrowed pursuant to this section may invest the escrowed funds in securities of the United States government, or an agency of it, or in savings or time deposits in an institution insured by an agency of the United States government. Interest generated by the investments must be paid to the party to whom the escrowed funds are paid, unless otherwise specified by contract.

(E) An escrow agent holding funds escrowed pursuant to this section shall maintain separate books and records for each time sharing plan in accordance with generally acceptable accounting practices.

(F) Notwithstanding the other provisions of this section, the commission may accept from the seller a surety bond, irrevocable letter of credit, or other financial assurance acceptable to the commission in an amount equal to or in excess of the funds that otherwise would be placed in escrow.

HISTORY: 1978 Act No. 640, Section 1; 1979 Act No. 179, Section 1; 1982 Act No. 416, Sections 4, 6, 8; 2003 Act No. 84, Section 1.