to a delay. If an amendment to the application for approval of advertising is Pule 114. In reviewing any advertising submitted by an applicant, the department shall determine whether it makes a full and fair disclosure or is false and misleading within the intent and meaning of the act and these rules, by examining the form, language, and content of the advertising and supporting data and any other available information to ascertain whether the express and implied representations therein are true and make a full and fair disclosure. If it appears that the representations are not true and do not make a full and fair disclosure as to all subdivided lands to which the filing relates, the department will enter an order of rejection or take such other action as it Considers necessary. Rule 117. When advertising approved by the department is disapproved in another state or jurisdiction, the advertising may be channed to meet the requirements of that state or jurisdiction without prior approval by the department if: (a) The department is immediately notified of the change. within 10 days. hanged is filed with the department (c) A copy of correspondence from the other state or jurisdiction requiring the change is filed with the department within 10 days. (d) The changed advertising is used only in the state or jurisdiction where the change was required. PART 6. MEANS TO ASSURE RECEIPT OF CONTRACTUAL INTERESTS R 338.3321. Subordination of blanket encumbrance liens. Rule 121. A blanket encumbrance shall evidence subordination of its lien to the rights of persons purchasing from the developer and that the developer is able to secure releases from the blanket encumbrance with respect to the property. The provisions shall be acceptable to the department. For purposes of this rule, subordination of the lien is satisfied by a release clause which by its terms unconditionally provides for the release of contiguous and non-contiguous separate lots, units, or parcels being offered to purchasers, so that the purchaser or lessen of a lot, unit, or parcel shall obtain legal title or other interest contracted for, free and clear of the blanket encumbrance upon compliance with terms and conditions of the purchase or lease from the developer. R 338.3324. Trust and escrow accounts. Rule 124. If the encumbering instrument does not contain adequate release clauses, the lien, mortgage, or other encumbrance shall be considered objectionable unless adequate reserves are maintained in a trust or escrow account. In determining adequacy of the account, the department will be guided by the facts and circumstances of each individual case, but the account shall comply with the following: (a) Funds shall be kept and maintained in an account separate and apart from the owner's personal funds. (b) The account shall be established in a bank or trust company doing business in this state, or another state where the account is required to be maintained there by the laws of that state and approved by the department. (c) Monthly statements shall be furnished to the department for a new account for the first 6 months, and in the department's discretion, quarterly or semi-annually thereafter. (d) The trust or escrow agreement shall state that its purpose is to protect the purchaser or prospective purchaser in case of default on a lien, mortgage, or other encumbrance, and shall authorize the department to inspect the records of the trustee relating thereto, and that upon order of the department or a court, the trustee shall release and pay over the funds to the department or a purchaser, or the holder of the blanket encumbrance. (e) The department, by its director, shall execute an acknowledgrent on the face of each agreement. This acknowledgment indicates approval of the form and content of the agreement, but shall not be construed to make the department a party thereto. Rule 127. An instrument evidencing sale or disposition of an interest in a subdivision shall be executed in a recordable form in accordance with the laws of the state where the land is located. An applicant has the burden of an affirmative showing of this compliance. PART 7. MEANS TO ASSURE COMPLETION OF IMPROVEMENTS R 338.3331. Improvements for public use, convenience or necessity. Rule 131. A subdivision or a part thereof on which construction of a promised improvement for public use, convenience, or necessity has not been completed, shall not be registered for disposition. However, an incompleted improvement does not constitute an objection if completion of the improvement is assured by substantial completion, an irrevocable bank letter of credit, bond, or similar undertaking posted with a public authority and acceptable to the department, or by adequate reserves established and maintained in a trust or escrow account. In determining adequacy of the account, the department will be guided by the facts and circumstances of each individual case, but the account shall comply with the following: (a) Funds shall be kept and maintained in an account separate and apart from the owner's personal funds. (b) The account shall be established in a bank or trust company doing business in this state, or another state where the account is required to be maintained there by the laws of that state and approved by the department. (c) Monthly statements shall be furnished to the department for a new account for the first 6 months and in the department's discretion, quarterly or semi-annually thereafter. (d) The trust or escrow agreement shall state that its purpose is to protect the purchaser or prospective purchaser in case the owner fails to complete construction of promised improvements or to satisfy any obligations or liens encumbering the purchaser's title by reason of the construction, and shall authorize the department to inspect the records of the trustee relating thereto. (e) The department, by its director, shall execute an acknowledgment on the face of each agreement. This acknowledgment indicates approval of the form and content of the agreement, but shall not be construed to make the department a party thereto. R 338.3332. Improvements not for public convenience, use or necessity. Rule 132. A subdivision or a part thereof on which construction of a promised improvement not for public use, convenience or necessity has not been completed, shall not be registered for disposition to the public. However, the incompleted improvement shall not constitute an objection if completion is assured by: (a) An adequate plan of development, including financial resources committed to carry out the plan as provided in rule 135, which plan is subject to the department's continuing review and approval. (b) In case of failure of a developer to establish an adequate plan or to adhere to the plan once established, the department may require establishment of a trust or escrow account. R 338.3335. Financial security. Rule 135. (1) The department may accept surety bonds, escrow accounts, irrevocable bank letters of credit, or any other financial security which it considers adequate in assuring a plan of development has adequate safeguards and assurances. In determining the security required, the department shall examine the status of improvements, the over-all cost of improvements, the terms of purchasers' contracts, the financial condition of the subdivider, and such other data as it considers necessary. The department shall consider whatever financial security has been posted with other governmental authorities in making its determination. (2) A surety bond will not be approved by the department unless it is on the form provided by the department. |