2792.9. Assuring Operating and Maintenance Fund for Common Facilities and Services.

2792.9. Assuring Operating and Maintenance Fund for Common Facilities and Services.
(a) To assure the availability of funds, or sources of funds, to defray the costs of common facilities and services during
the early stages of ownership and operation by the Association and to assure the fulfillment of the subdivider’s
obligation to pay assessments as an owner of subdivision interests, the Commissioner will ordinarily require that:
(1) No sale of a subdivision interest be closed until 80% of all subdivision interests covered by the final subdivision
public report have been conveyed (or leased if that is the marketing plan) and are simultaneously closed; or

(2) The subdivider furnish funds, a surety bond to the Association as obligee, or other security convertible to cash
by the escrow depository to assure the fulfillment of the subdivider’s obligations as an owner of separate interests
covered by the final subdivision public report to pay regular and special assessments; or
(3) The subdivider present an alternative arrangement satisfactory to the Commissioner to secure the fulfillment of
the subdivider’s obligations to the Association as an owner of separate interests covered by the final subdivision
public report.
(b) The security referred to in (a)(2) or (a)(3) above shall ordinarily:



(1) Be in an amount which is equal to six (6) months’ regular assessments for the separate interests covered by the
final subdivision public report.
(2) Be subject to terms and conditions which will assure that the subdivider pays, as and when due, all regular and
special assessments which are levied by the Association against separate interests owned by the subdivider in the
subdivision until title to 80% of the separate interests which are covered by the final subdivision public report have
been conveyed (or leased if that is the marketing plan).
(3) Be the subject of a contract signed on behalf of the subdivider and the Association covering release and
enforcement of the security.

(4) Be delivered to a neutral escrow depository acceptable to the Commissioner along with instructions to the
depository signed on behalf of the subdivider and the Association covering handling of the security, return of the
security to the subdivider, and remittance of the security to the Association, including the following:
(A) The escrow instructions shall include a procedure under which the security shall be returned to the
subdivider upon the Association’s failure to give the escrow depository within 40 days the Association’s written
objection to return of the security. The return of the security shall be made but only if the subdivider’s demand
for return of the security is accompanied by the subdivider’s written statement that the subdivider has paid, as
and when due, all regular and special assessments which have been levied by the Association against separate
interests which are covered by the final subdivision public report owned by the subdivider. Before the security
shall be returned, the subdivider shall certify that title to 80% of the separate interests which are covered by the
final subdivision public report have been conveyed (or leased if that is the marketing plan).
(B) The escrow instructions shall include a procedure under which all or some specified portion of the security
shall be remitted to the Association upon the subdivider’s failure to give the escrow depository within 40 days
the subdivider’s written objection to remittance of the security, but only if the Association’s demand for
remittance of all or some specified portion of the security is accompanied by a written statement signed by an
officer of the Association that the subdivider is delinquent in the payment of regular or special assessments
which have been levied by the Association against separate interests covered by the final subdivision public
report owned by the subdivider.

(C) The escrow instructions shall provide that, in the event the escrow depository receives conflicting
instructions from the subdivider and the Association, the escrow holder is authorized, in its sole discretion, to
(1) interplead the security or (2) retain the security until the security is disposed of in accordance with (i) the
joint or mutual instructions of the subdivider and the Association, (ii) the order of a court of competent
jurisdiction or (iii) in accordance with the final binding decision rendered in an alternative dispute resolution
proceeding.
(D) If the security is a letter of credit, the escrow instructions shall include a procedure under which the escrow
depository shall draw upon the letter of credit prior to the expiration of the time for drawing thereupon, or upon
the subdivider’s failure to give the escrow depository within 40 days the subdivider’s written objection to
remittance of the security to the Association.