Before transferring or negotiating to transfer any subdivision or part of a subdivision, a developer is required to apply for registration with the real estate commission (commission). Current law requires that, with permission from the commission, any reservation fees that a developer receives from prospective purchasers while the developer's registration application is pending must be held in trust by a third party and be fully refundable.
If the subdivision is a time share estate, the act requires that, after the commission has approved a developer's registration application, any earnest money received by the developer from a prospective purchaser must be held in trust by an independent third party. The act creates an exception to this requirement for earnest money deposits received from an accredited investor. A developer may use funds from an accredited investor's deposit for development purposes only if the purchase contract or other written disclosure clearly sets forth:
To whom the funds will be delivered;
When the delivery will occur;
How the funds will be used; and
Any restrictions on the use of the funds.
APPROVED by Governor May 28, 2024
EFFECTIVE August 7, 2024(Note: This summary applies to this bill as enacted.)

Statutes affected:
Signed Act (05/29/2024): 12-10-501
Final Act (05/14/2024): 12-10-501