Mich. Admin. Code R. 125.1403 - Consumer deposits; providing consumer with executed purchase agreement; recording amount of consumer deposit; refunds; notice to consumer of intent to cancel purchase agreement; accepting deposits and agreements in name of retailer; escrow accounts; alternative to escrow account; notice of refund on purchase agreement

Rule 403.

(1) Before receiving a consumer deposit, a retailer shall give the consumer an executed purchase agreement.

(2) Unless the retailer has a consumer deposit bond or cash or security deposits under subrule (9) of this rule, a consumer deposit shall be placed in an escrow account and remain there until the closing. After the closing, the retailer may transfer the deposit to a general account.

(3) A retailer shall record the exact amount of the consumer deposit on each request for financing that is sent to a lending institution.

(4) A retailer shall refund to a consumer the total amount of a consumer deposit on the purchase of a home not more than 15 banking days after a request for financing has been rejected by the lending institution or if the consumer cancels the purchase agreement before the binding date under subrule (13) of this rule. The consumer shall notify the retailer, in writing, of his or her intent to cancel the purchase agreement. The notification shall be delivered to the retailer by certified mail postmarked before the close of the business day on the binding date to be eligible for return of the consumer deposit. A retailer has no obligation to refund the consumer deposit if the consumer cancels the purchase agreement of a new or pre-owned home after the binding date. As used in this subrule, "binding date" means either 7 days after the date that a purchaser of a home receives a legible copy of the executed purchase agreement or the time at which the purchase agreement is executed if an application for certificate of manufactured home ownership is executed within 7 days.

(5) An employee who accepts consumer deposits and purchase agreements in the name of a retailer is authorized by the retailer to accept the deposits.

(6) As a condition of licensing, a retailer shall establish an escrow account, post a consumer deposit bond, or deposit cash or other securities in compliance with the provisions of the act for the protection of consumer deposits received by the retailer.

(7) If a retailer establishes an escrow account, the retailer shall place all consumer cash deposits or similar negotiable instruments of the consumer's deposit in the escrow account by the end of the second banking day following receipt. Escrow accounts shall be maintained as checking accounts.

(8) A retailer may maintain an escrow account at each location where it maintains records. A retailer may maintain not more than $500.00 of its own funds in each deposit escrow account to cover bank service charges and to avoid the account being closed or overdrawn if there are no other funds in the account. The funds shall be accounted for in a bookkeeping system as prescribed in these rules.

(9) In place of an escrow account, a retailer may maintain, for each location, a consumer deposit bond or cash or security deposits in an amount equal to the highest monthly receipts of consumer cash deposits and cash value of other security recorded over the previous 3 years. If the highest monthly receipts formula is used to determine the amount of the bond or deposit, then the amount of the bond or deposit shall be adjusted to reflect the previous 3 years' experience before a license is renewed. If at any time the consumer deposits received exceed the amount of the bond or deposit established under the formula, then the retailer shall immediately increase the amount of the bond or deposit or escrow the excess amount.

(10) If a retailer posts a bond or deposits cash or other securities, then the retailer who files an initial application shall maintain the bond, cash, or other securities at a minimum of $10,000.00 per location until sufficient data is available to comply with the formula. If the retailer has more than 1 location, then the required bonds or deposits may be combined into 1 bond or deposit.

(11) All bonds shall be made payable to the "State of Michigan" on a form prescribed by the department and shall accompany an application for a retailer's license. All cash or security deposits shall be deposited with the State of Michigan upon application for a retailer's license. If the application is for a renewal license only, and if a copy of the bond is on file and the bond is continuous or if the cash or securities are on deposit, then this subrule shall not apply.

(12) If a retailer establishes an escrow account, then the retailer shall file, with the department, on a form prescribed by the department, an affidavit attesting to the fact that account has been established. The affidavit shall be filed as an enclosure to the retailer license application.

(13) The front of each purchase agreement shall contain the following statement in not less than 8-point, boldfaced, all caps type:

"Seven days after the purchaser receives a legible copy of the executed purchase agreement, or if any time within the 7 days an application for a certificate of manufactured home ownership is fully executed, the sale is final and the retailer is not obligated to refund the consumer deposit if the purchaser subsequently cancels the agreement. If the purchaser elects to cancel the purchase agreement within the 7 day limit and an application for a certificate of manufactured home ownership has not been fully executed, the purchaser shall notify the retailer in writing by certified mail postmarked before the end of the seventh day to be eligible for full refund of the consumer deposit."

Notes

Mich. Admin. Code R. 125.1403

1979 AC; 1998 AACS; 2003 AACS; 2008 AACS