55-79.95 - Escrow of deposits.
§ 55-79.95. Escrow of deposits.
A. Any deposit made in regard to any disposition of a unit, including anonbinding reservation agreement, shall be held in escrow until delivered atsettlement. Such escrow funds shall be deposited in a separate accountdesignated for this purpose which is federally insured and located inVirginia; except where such deposits are being held by a real estate brokeror attorney licensed under the laws of this Commonwealth such funds may beplaced in that broker's or attorney's regular escrow account and need not beplaced in a separate designated account. Such escrow funds shall not besubject to attachment by the creditors of either the purchaser or thedeclarant.
B. In lieu of escrowing deposits as provided in subsection A, the declarantof a condominium consisting of more than 50 units may:
1. Obtain and maintain a corporate surety bond issued by a surety authorizedto do business in the Commonwealth, in the form and amount set forth below, or
2. Obtain and maintain an irrevocable letter of credit issued by a financialinstitution whose accounts are insured by the FDIC, in the form and amountset forth below.
The surety bond or letter of credit shall be maintained until (i) thegranting of a deed to the unit, (ii) the purchaser's default under a purchasecontract for the unit entitling the declarant to retain the deposit, or (iii)the refund of the deposit to the purchaser, whichever occurs first.
C. The surety bond shall be payable to the Commonwealth for the use andbenefit of every person protected under the provisions of this chapter. Thedeclarant shall file the bond with the Common Interest Community Board. Thesurety bond may be either in the form of an individual bond for each depositaccepted by the declarant or, if the total amount of the deposits accepted bythe declarant under this chapter exceeds $10,000, it may be in the form of ablanket bond. If the bond is a blanket bond, the amount shall be as follows.If the amount of such deposits is:
1. $75,000 or less, the blanket bond shall be $75,000;
2. More than $75,000 but less than $200,000, the blanket bond shall be$200,000;
3. $200,000 or more but less than $500,000, the blanket bond shall be$500,000;
4. $500,000 or more but less than $1 million, the blanket bond shall be $1million; and
5. $1 million or more, the blanket bond shall be 100 percent of the amount ofsuch deposits.
D. The letter of credit shall be payable to the Commonwealth for use andbenefit of every person protected under this chapter. The declarant shallfile the letter of credit with the Common Interest Community Board. Theletter of credit may be either in the form of an individual letter of creditfor each deposit accepted by the declarant or, if the total amount of thedeposits accepted by the declarant under this chapter exceeds $10,000, it maybe in the form of a blanket letter of credit. If the letter of credit is ablanket letter of credit, the amount shall be as follows. If the amount ofsuch deposits is:
1. $75,000 or less, the blanket letter of credit shall be $75,000;
2. More than $75,000 but less than $200,000, the blanket letter of creditshall be $200,000;
3. $200,000 or more but less than $500,000, the blanket letter of creditshall be $500,000;
4. $500,000 or more but less than $1 million, the blanket letter of creditshall be $1 million; and
5. $1 million or more, the blanket letter of credit shall be 100 percent ofthe amount of such deposits.
For the purposes of determining the amount of any blanket letter of creditthat a declarant maintains in any calendar year, the total amount of depositsconsidered held by the declarant shall be determined as of May 31 in eachcalendar year and the amount of the letter of credit shall be in accordancewith the amount of deposits held as of May 31.
(1974, c. 416; 1977, c. 91; 2007, c. 445; 2008, cc. 851, 871.)