55-375 - Escrow of deposits.
§ 55-375. Escrow of deposits.
A. Any deposit made in connection with the purchase or reservation of aproduct shall be held in escrow. All cash deposits shall be held in aseparate bank account labeled and designated solely for that purpose.
Such escrow account shall be insured by an instrumentality of the federalgovernment and located in Virginia. All deposits shall be held in escrowuntil (i) delivered to the developer upon expiration of the purchaser'scancellation period provided the purchaser's right of cancellation has notbeen exercised, (ii) delivered to the developer because of the purchaser'sdefault under a contract to purchase a time-share, or (iii) refunded to thepurchaser. Failure to establish escrow accounts or to make the deposits asrequired by this section is prima facie evidence of willful violation of thissection.
B. The developer shall disclose in the contract or in the public offeringthat the deposit may not be held in escrow after expiration of thecancellation period and that such deposit is not protected as an escrow afterexpiration of the cancellation period. This disclosure shall include astatement of whether or not the developer reserves the option to sell orassign any promissory note given by a purchaser to another entity, whether ornot such entity is affiliated with the developer. Both disclosures shallappear in boldfaced type of a minimum size of 10 points.
C. There shall be filed with the Common Interest Community Board a bond,letter of credit, or cash for the purpose of protecting all deposits escrowedpursuant to subsection A, in favor of the time-share purchasers. The bond,letter of credit, or cash shall be in an amount equal to the total of thedeposits in escrow at any given time or $25,000, whichever is greater. Suchbond, letter of credit, or cash shall be maintained for so long as thedeveloper offers time-shares in the project. The bond shall be with a suretycompany authorized to do business in Virginia.
(1981, c. 462; 1984, c. 429; 1985, c. 517; 1994, c. 580; 1998, c. 460; 2006,c. 653; 2008, cc. 851, 871.)