(a) All funds and any negotiable instruments and purchase money contracts received before closing from or on behalf of purchasers or prospective purchasers in connection with the purchase or reservation of time share interests must be placed in an escrow account. However, the developer or a sales agent may hold, until the expiration of the seven-day-cancellation period provided by § 514E-8 or any longer purchaser cancellation period provided in the sales contract, a negotiable instrument, or purchase money contract made by a purchaser:

contract signature

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Terms Used In Hawaii Revised Statutes 514E-16

  • Association: means the time share owners association. See Hawaii Revised Statutes 514E-1
  • Contract: A legal written agreement that becomes binding when signed.
  • Corporation: A legal entity owned by the holders of shares of stock that have been issued, and that can own, receive, and transfer property, and carry on business in its own name.
  • Developer: means any person that creates a time sharing plan or is in the business of selling time share units. See Hawaii Revised Statutes 514E-1
  • Director: means the director of commerce and consumer affairs. See Hawaii Revised Statutes 514E-1
  • Escrow: Money given to a third party to be held for payment until certain conditions are met.
  • Jurisdiction: (1) The legal authority of a court to hear and decide a case. Concurrent jurisdiction exists when two courts have simultaneous responsibility for the same case. (2) The geographic area over which the court has authority to decide cases.
  • Lien: A claim against real or personal property in satisfaction of a debt.
  • Negotiable instrument: means any check, draft, bill of exchange, certificate of deposit, note, and any other document which is an "instrument" within the meaning of article 3 of chapter 490, including instruments subject to said article pursuant to section 490:3-805. See Hawaii Revised Statutes 514E-1
  • Purchase money contract: means any note, negotiable instrument, agreement of sale, installment sales contract, or other contract which evidences or embodies a debt arising from a purchase money loan made to a purchaser by the developer or a creditor (i) who is affiliated with the developer by common control, contract, or business arrangement, or (ii) to whom the developer referred the purchaser. See Hawaii Revised Statutes 514E-1
  • Purchaser: means any person who has contracted to acquire a time share interest. See Hawaii Revised Statutes 514E-1
  • Sales agent: means a person who sells or offers to sell for compensation a time share interest in a time share plan, except a person who acquired a time share interest for the person's own occupancy and later offers it for resale. See Hawaii Revised Statutes 514E-1
  • Trustee: A person or institution holding and administering property in trust.
(1) For which subsequent holders cannot claim holder in due course status within the meaning of article 3 of chapter 490; or
(2) Where the payee is:

(A) The escrow agent; or
(B) The trustee of a lien payment trust.
(b) The escrow agent must be a bank, savings and loan association, or a trust company authorized to do business in the State under an escrow arrangement or a corporation licensed as an escrow depository under chapter 449. However, in connection with sales made out of the State for the use of time share units located in the State, the escrow agent may be located in and the purchasers’ funds, negotiable instruments, and purchase money contracts may be impounded in the jurisdiction where the sale is made, if the law of such jurisdiction requires it. In such event, the out-of-state escrow agent shall be subject to the approval of the director.
(c) The establishment of such an escrow account shall be evidenced by a written escrow agreement between the developer and the in-state or out-of-state escrow agent. The escrow agreement must provide for the handling of purchaser’s funds, negotiable instruments, and purchase money contracts as required by this chapter and must contain any provisions required by rules adopted by the director pursuant to chapter 91.

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