Marvin Mandel, Governor                       1073

10-205. Conveyance to intermediate vendee to evade liability.

In the event that a seller conveys an improvement to an inter-
mediate vendee for the purpose of evading liabilities to users and
buyers imposed by this subtitle, the seller shall be liable upon the
subsequent sale of the improvement by the intermediate vendee as if
the subsequent sale had been effectuated by the seller without regard
to the intervening conveyance.

Subtitle 3. Deposits on New Homes

10-301. Surety bond or escrow account to be maintained by seller
receiving deposit.

(a)    Whenever, in connection with the sale and purchase of a new
single family residential unit located in this State, which unit shall not
have been completed at the time of contracting the sale, the seller or
builder shall obligate the purchaser to pay and shall receive from the
purchaser any sum of money prior to completion of the residential
unit and conveyance of the realty to the purchaser, the builder or
seller shall either:

(1)    Deposit or hold such sum of money in an escrow account
segregated from all other funds of said seller or builder to be held
to assure the return of the sum of money to the purchaser in the
event the purchaser shall become entitled to a return of such sum of
money; or

(2)    Obtain and maintain a corporate surety bond in the form
and in the amounts set forth in subsection (b) hereof conditioned
upon the return of such sum of money to the purchaser in the event
the purchaser shall become entitled to the return of such sum of
money.

The escrow account or surety bond shall be maintained by such
seller or builder until the happening of the earlier of (1) the
conveyancing of a deed to the realty upon which the residential unit
is situated, to the purchaser, his heirs or assigns; or (2) the return of
the sum of money to the purchaser, his heirs or assigns; or (3) the
forfeiture of the sum of money by the purchaser, his heirs, or assigns,
under the terms of the contract of sale relating to the purchase of
the residential unit.

(b)    The corporate surety bond allowed to be obtained pursuant
to the provisions of subsection (a) hereof shall be in a form approved
by the State Insurance Department and shall be payable to the State
of Maryland for the use and benefit of all persons protected by the
provisions of this subtitle and shall be deposited by each seller or
builder with the State Insurance Department. Such corporate surety
bonds may be either in the form of individual bonds for each deposit
accepted by a seller or builder, or where the total amount of money
and all deposits accepted by such builder or seller shall exceed the
sum of $10,000 may be in the form of a blanket bond assuring the
return of the deposits received by said seller or builder. Where the
bond shall be a blanket bond, the penalty of the bond shall be in
accordance with the following schedule:

Total Amount of Deposits Held            Penalty of Bond

1.    $10,000 to $75,000                  Full Amount of Deposits Held

2.    $75,000 to $200,000                     $75,000

3.    $200,000 to $500,000                  $200,000
4. Over $500,000                           $500,000