§ 42-1904.09 — Escrow of deposits; to bear interest; not subject to attachment.

District of Columbia § 42-1904.09

• Jurisdiction: District of Columbia
• Title 42: Real Property.
• Ch. 19: Condominiums.
• Subch. IV: Registration and Offering of Condominiums.

Text

(a) Any deposit made in regard to any disposition of a unit, including a nonbinding reservation agreement, shall be held in escrow until either delivered at settlement or returned to the prospective purchaser. Such escrow funds shall be deposited in a separate account for each condominium in a financial institution the accounts of which are insured by a federal or state agency. These deposits shall bear interest at the passbook rate then prevailing in the District of Columbia beginning with the first business day after the date deposited with declarant or declarant’s agent. Earned interest shall be credited to the prospective purchaser’s deposit. Such escrow funds shall not be subject to attachment by the creditors of either the purchaser or the declarant.

(b) The declarant of a condominium may:

(1) Obtain and maintain a corporate surety bond issued by a surety authorized to do business in the District, in the form and amount set forth in subsection (e) of this section; or

(2) Obtain and maintain an irrevocable letter of credit issued by a financial institution insured by the federal government, in the form and amount set forth in subsection (f) of this section.

(c) Except as provided in subsection (d) of this section, the declarant shall maintain the surety bond or letter of credit until the first of the following occurs:

(1) A deed to the unit is granted to the purchaser;

(2) The purchaser defaults under a purchase contract for the unit entitling the declarant to retain the deposit; or

(3) The deposit is refunded to the purchaser.

(d) The declarant may make withdrawals from an escrow account established under subsection (a) of this section that consists of sum received to finance the construction of a unit to pay, in accordance with a draw schedule agreed to by the purchaser in writing, documented claims of persons who have furnished labor or material for the construction of the unit.

(e) The surety bond shall be payable to the District for the use and benefit of every person protected under the provisions of this chapter. The declarant shall file the bond with the Department of Housing and Community Development. The surety bond may either be in the form of an individual bond for each deposit the declarant accepts or, if the total amount of the deposits the declarant accepts under this chapter exceeds $ 10,000, it may be in the form of a blanket bond. If the bond is a blanket bond, the amount of the bond shall be equal to the amount of the deposits.

(f) The letter of credit shall be payable to the District for the use and benefit of persons protected under the provisions of this chapter. The declarant shall file the letter of credit with the Department of Housing and Community Development. The letter of credit may be in the form of an individual letter of credit for each deposit the declarant accepts or, if the total amount of the deposits the declarant accepts under this chapter exceeds $ 10,000, it may be in the form of a blanket letter of credit. If the letter of credit is a blanket letter of credit, the amount of the letter of credit shall be equal to the amount of the deposits.

(g) For the purpose of determining the amount of any blanket bond or blanket letter of credit that a declarant maintains, the total amount of deposits considered held by the declarant shall be determined as of May 31 of any given calendar year, and the amount of the bond or letter of credit shall be in accordance with the amount of deposits held as of that May 31 until May 31 of the following calendar year.

(g) For the purpose of determining the amount of any blanket bond or blanket letter of credit that a declarant maintains, the total amount of deposits considered held by the declarant shall be determined as of May 31 of any given calendar year, and the amount of the bond or letter of credit shall be in accordance with the amount of deposits held as of that May 31 until May 31 of the following calendar year.

(h) Nothing in this section shall be construed to modify or limit the requirements imposed on a declarant by § 42-1903.16 .

Legislative History

Mar. 29, 1977, D.C. Law 1-89, title IV, § 409, 23 DCR 9532b; June 21, 2014, D.C. Law 20-109, § 2(o), 61 DCR 4304