3476                                          LAWS OF MARYLAND                                      Ch. 853

A JOINT OR COMMON INTEREST, OR ANY OTHER LEGAL OR COMMERCIAL

ENTITY.

10-502.

ANY CONSIDERATION RECEIVED BY A CUSTOM HOME BUILDER IN
CONNECTION WITH A CUSTOM HOME CONTRACT SHALL BE HELD IN TRUST FOR
THE BENEFIT OF THE BUYER. PAYMENTS MADE TO SUBCONTRACTORS OR
SUPPLIERS IN CONNECTION WITH THE CUSTOM HOME CONTRACT SHALL BE
CONSISTENT WITH THE TRUST.

10-503.

EXCEPT WITH THE EXPRESS WRITTEN APPROVAL OF THE BUYER NOT TO
PAY, IN THE EVENT A SUBCONTRACTOR OR SUPPLIER FAILS, IN THE
OPINION OF THE CUSTOM HOME BUILDER, TO PERFORM IN ACCORDANCE WITH
THE CONTRACT BETWEEN THE SUBCONTRACTOR OR THE SUPPLIER AND THE
CUSTOM HOME BUILDER, THE FAILURE OF A CUSTOM HOME BUILDER TO PAY
OR CAUSE TO BE PAID THE LAWFUL CLAIMS OF ANY PERSON FURNISHING
LABOR OR MATERIAL, INCLUDING FUEL, WITHIN A REASONABLE PERIOD
AFTER THE RECEIPT FROM THE BUYER OF CONSIDERATION PAID TO SATISFY
THE CLAIMS, SHALL CREATE A REBUTTABLE PRESUMPTION THAT THE
CONSIDERATION RECEIVED BY THE CUSTOM HOME BUILDER HAS BEEN USED
OR APPROPRIATED IN VIOLATION OF THE TRUST ESTABLISHED BY THIS
SUBTITLE.

10-504.

(A) (1) EXCEPT AS PROVIDED UNDER PARAGRAPH (4) OF THIS
SUBSECTION, A CUSTOM HOME BUILDER WHO RECEIVES CONSIDERATION FROM
A BUYER IN CONNECTION WITH THE PERFORMANCE OF A CUSTOM HOME
CONTRACT SHALL PLACE THE CONSIDERATION INTO AN ESCROW ACCOUNT TO
THE EXTENT THAT THE CONSIDERATION IS A PAYMENT IN ADVANCE OF THE
COMPLETION OF THE LABOR OR THE RECEIPT OF THE MATERIALS FOR WHICH
THE CONSIDERATION IS PAID.

(2) THE ESCROW ACCOUNT UNDER PARAGRAPH (1) OF THIS
SUBSECTION SHALL BE SEPARATE AND APART FROM THE REGULAR FUNDS OF
THE BUILDER IN ORDER TO ASSURE THAT THE ADVANCE PAYMENT IN THE
ESCROW ACCOUNT CAN BE RETURNED TO THE BUYER IF THE BUYER BECOMES
ENTITLED TO THE RETURN OF THE ADVANCE PAYMENT. HOWEVER, A
BUILDER MAY PLACE ADVANCE PAYMENTS RECEIVED IN CONNECTION WITH
MORE THAN ONE HOME INTO A SINGLE ESCROW ACCOUNT.

(3) IF THE ADVANCE PAYMENT UNDER PARAGRAPH (1) OF
THIS SUBSECTION IS MADE IN THE FORM OF A CHECK OR DRAFT, A CUSTOM
HOME BUILDER MAY ACCEPT THE ADVANCE PAYMENT ONLY IN THE NAME OF
THE ESCROW ACCOUNT.

(4) IF CONSIDERATION RECEIVED UNDER THE CONTRACT IN
ADVANCE OF THE COMPLETION OF THE LABOR OR THE RECEIPT OF
MATERIALS FOR WHICH THE CONSIDERATION IS PAID DOES NOT TOTAL IN
EXCESS OF 5 PERCENT OF THE CONTRACT PRICE, THAT CONSIDERATION
NEED NOT BE PLACED IN AN ESCROW ACCOUNT UNDER PARAGRAPH (1) OF
THIS SUBSECTION.