Deposit
Protection Requirements
A builder is required by law to secure consumer deposits in an escrow account
or with a surety bond or letter of credit if:
- the builder
sells or builds single-family homes that are not completed at the time the
contract of sale is signed, and
- the purchaser
is obligated to pay any sum of money to the registrant before the home is
completed and the property is transferred to the purchaser.
The original Surety Bond or Letter of Credit must be provided to the Home
Builder Registration Unit.
A builder may be exempt from the requirement to secure consumer deposits in
an escrow account or with a surety bond or letter of credit if:
- the purchaser
is not obligated to pay any sum of money before the home is completed, or
- all sums of money
in the nature of deposits, escrow money, or binder money are paid to a licensed
real estate broker and held in the escrow account
of the broker, or
- the builder builds
homes on the home buyer’s land and does not
receive payment in excess of 5 percent of the home contract price in advance
for any labor or materials not yet provided.