Nevada Revised Statutes 598.855 – Trust account required for payments on contracts
1. Before the organization receives any money from any buyer pursuant to a contract for membership in the organization, it shall establish a trust account for payments on contracts at a financial institution that is federally insured or insured by a private insurer approved pursuant to NRS 672.755. Each payment from a buyer for his or her contract for membership, except for $50 of the first payment, must be deposited in the trust account.
Terms Used In Nevada Revised Statutes 598.855
- Contract: A legal written agreement that becomes binding when signed.
- Trust account: A general term that covers all types of accounts in a trust department, such as estates, guardianships, and agencies. Source: OCC
- Trustee: A person or institution holding and administering property in trust.
- Unit: means the Consumer Affairs Unit of the Department of Business and Industry. See Nevada Revised Statutes 598.0901
2. Except as otherwise provided in subsection 3, during each quarter of the term of a buyer’s contract or each 6 months, whichever period is shorter, the trustee shall withdraw one-quarter of the buyer’s payments under the contract from the trust account and pay the amount to the organization.
3. If an affiliate organization obtains the express consent of its parent and the parent posts the security required by subsection 4, the affiliate organization may:
(a) Authorize the parent to serve as the trustee pursuant to NRS 598.865 for the trust accounts required by this section and NRS 598.860; and
(b) Authorize the trustee to make the following withdrawals from the trust account required by this section:
(1) During the first quarter of the term of a buyer’s contract or the first 6 months, whichever period is shorter, the trustee shall withdraw not more than one-half of the buyer’s payments under the contract from the trust account and pay the amount to the affiliate organization; and
(2) During the second quarter of the term of the buyer’s contract or the second 6 months, whichever period is shorter, the trustee shall withdraw the remaining balance of the buyer’s payments under the contract from the trust account and pay the amount to the affiliate organization.
4. Before a trustee may withdraw money from a trust account pursuant to subsection 3, the parent must post security in the amount of $250,000 with the Consumer Affairs Unit pursuant to NRS 598.853. The security posted by the parent:
(a) Provides coverage for all of the parent’s affiliate organizations that are authorized to act pursuant to subsection 3;
(b) Must be conditioned on compliance by such an affiliate organization with the provisions of NRS 598.840 to 598.930, inclusive, the terms of the buyer’s contract for membership in the affiliate organization and the terms of any contract with the buyer for the purchase of goods or services; and
(c) May be used to pay a claim against such an affiliate organization only if the security posted by the affiliate organization pursuant to NRS 598.853 has been exhausted.
5. If the organization sells, transfers or assigns the contract with the buyer to a third party, and the third party gives reasonable consideration for the contract, the organization shall deposit the consideration in the trust account. If the third party does not give reasonable consideration for the contract, the organization shall deposit all payments on the contract from the buyer in the organization’s trust account for payments on the contract.