§514E-16 Deposit of purchaser's funds, notes, and contracts into escrow. (a) All funds and any negotiable instruments and purchase money contracts received before closing from or on behalf of purchasers or prospective purchasers in connection with the purchase or reservation of time share interests must be placed in an escrow account. However, the developer or a sales agent may hold, until the expiration of the seven-day-cancellation period provided by section 514E-8 or any longer purchaser cancellation period provided in the sales contract, a negotiable instrument, or purchase money contract made by a purchaser:
(1) For which subsequent holders cannot claim holder in due course status within the meaning of article 3 of chapter 490; or
(2) Where the payee is:
(A) The escrow agent; or
(B) The trustee of a lien payment trust.
(b) The escrow agent must be a bank, savings and loan association, or a trust company authorized to do business in the State under an escrow arrangement or a corporation licensed as an escrow depository under chapter 449. However, in connection with sales made out of the State for the use of time share units located in the State, the escrow agent may be located in and the purchasers' funds, negotiable instruments, and purchase money contracts may be impounded in the jurisdiction where the sale is made, if the law of such jurisdiction requires it. In such event, the out-of-state escrow agent shall be subject to the approval of the director.
(c) The establishment of such an escrow account shall be evidenced by a written escrow agreement between the developer and the in-state or out-of-state escrow agent. The escrow agreement must provide for the handling of purchaser's funds, negotiable instruments, and purchase money contracts as required by this chapter and must contain any provisions required by rules adopted by the director pursuant to chapter 91. [L 1982, c 186, §3; am L 1985, c 114, §5]
Cross References
Leasehold time share interests, see § §501-241 to 501-248.
Structure Hawaii Revised Statutes
514E-1.5 Time share administrator; duties.
514E-2.5 Licensing of sales agents and acquisition agents.
514E-2.6 REPEALED. L 2001, c 71, §1.
514E-5 Geographic limitations.
514E-5.5 Foreign time share plans; exemption.
514E-6 Time sharing in projects.
514E-6.5 Voting rights for time share units.
514E-8 Mutual right to cancel.
514E-8.6 One-to-one use-right to use-night requirement.
514E-9.1 Disclosure statement; prospective purchasers.
514E-9.5 Exchange program; general provisions.
514E-10.5 Consultant review of developer filing.
514E-11.1 Deceptive trade practices.
514E-11.3 Remedies; sales voidable; when and by whom.
514E-12 Civil penalty; suspension or revocation of registrations.
514E-12.5 Statutory or common-law remedies.
514E-13 Authority of director.
514E-14 Preexisting time share units and plans.
514E-16 Deposit of purchaser's funds, notes, and contracts into escrow.
514E-17 Release of purchaser's funds, notes, and contracts from escrow without a closing.
514E-18 Release of purchaser's funds, notes, and contracts from escrow upon closing.
514E-19 Protection of purchasers from blanket liens.
514E-20 Effect of recording a nondisturbance agreement.
514E-21 Effect of recording a notice of time share plan.
514E-22 General requirements for trusts.
514E-23 Requirements for trustees.
514E-24 Additional requirements for lien payment trusts.
514E-26 Termination of a trust.
514E-27 Alternative arrangements for purchaser protection.
514E-28 Requirements for surety bonds and letters of credit.