1746                             Laws of Maryland                       Ch. 615

CHAPTER 615
(House Bill 901)

AN ACT to repeal Section 43 of Article 21 of the Annotated Code of
Maryland (1969 Supplement), title "Conveyancing," subtitle
"Deposits on New Homes," and to enact new Section 43 in lieu
thereof, to stand in the place of the section repealed, changing in

certain respects the incidence of such section; to provide for the

approval by the Attorney General of the surety bond allowed

therein; to prescribe in general the form of such surety bond; to

provide for the deposit of such surety bond with the Special Assist-
ant Attorney General in charge of consumer protection and to
provide a schedule of amounts of such surety bonds; and relating
generally to deposits on new homes. PROVIDE FOR THE MAIN-
TENANCE OF A SECURITY BOND OR ESCROW ACCOUNT
BY A SELLER OR BUILDER OF NEW SINGLE FAMILY
RESIDENTIAL UNITS: TO PROVIDE FOR APPROVAL OF
SUCH BOND BY THE STATE INSURANCE DEPARTMENT;
TO PROSCRIBE IN GENERAL THE FORM OF SUCH BOND;
TO PROSCRIBE IN GENERAL THE FORM OF SUCH SURETY
BOND; TO PROVIDE A SCHEDULE OF AMOUNTS OF SUCH
BONDS; TO PROVIDE PENALTIES FOR FAILURE TO MAIN-
TAIN SUCH BONDS OR ESCROW ACCOUNTS; AND RELAT-
ING GENERALLY TO DEPOSITS ON NEW HOMES.

Section 1. Be it enacted by the General Assembly of Maryland,
That Section 43 of Article 21 of the Annotated Code of Maryland
(1969 Supplement), title "Conveyancing," subtitle "Deposits on New-
Homes," be and it is hereby repealed; and that new Section 43 of
said Article, title and subtitle be and it is hereby added, to stand in
the place of the section repealed and to read as follows:

[43. Surety bond or escrow account to be maintained by seller re-
ceiving deposit.

(a)    In any contract of sale, whether verbal or written, for the
purchase of a new home which is situated in a development or sub-
division containing ten or more new homes under construction and
which contract obligates the purchaser to make or pay an initial
deposit prior to the completion of the home, the builder or seller shall
either obtain a corporate surety bond in an amount equal to the
deposit or hold the deposit in an escrow account in order to guarantee
return of the deposit to the purchaser in the event the purchaser
becomes entitled to a return of such deposit. The surety bond or
escrow account shall be maintained until such time as the deed to
the new home is delivered to the purchaser, his heirs or assigns or
until the deposit is returned to the purchaser, except where deposit is
forfeited due to the fault of the buyer.

(b)    Failure to obtain and maintain either a corporate surety
bond or an escrow account as provided for in subsection (a) of this
section is a misdemeanor, and is punishable, upon conviction, by a
fine not to exceed five hundred dollars ($500.00) or imprisonment
not to exceed ninety days or both. If the violations [violation] is
by a corporation, then any officer, director, or employee who know-
ingly violates this section is subject to the penalties of this sub-
section.