[HISTORY: Adopted by the Town Board of the Town of Clarkstown: Art. I, 10-9-1990 as L.L. No. 6-1990. Amendments noted where applicable.]
Article I Deposits on Construction of New Homes
[Adopted 10-9-1990 as L.L. No. 6-1990]
The Town Board of the Town of Clarkstown, being aware of the exposure to loss, because of a builder's financial failure, of contract deposits placed with a builder for the purchase of a new one- or two-family residence or residential condominium in the Town of Clarkstown, and further realizing that it is the desire on the part of all responsible persons in the building and construction industry in the Town of Clarkstown to preserve their reputations from the adverse effect of possible losses of home buyer deposits as above described, hereby determines that the enactment of this Article, pursuant to the general powers granted by § 10 of the Municipal Home Rule Law and the specific authority of Article 37, § 779, of the General Business Law, will contribute to the public welfare and safety and to the orderly development of the Town of Clarkstown and will reinforce public confidence in the financially responsible builders and contractors in the Town of Clarkstown.
When used in this Article, the following terms, unless the context requires otherwise, shall have the following meanings:
- Occurs where title to the home is not transferred to the vendee because of the failure of the vendor to substantially perform those provisions of the agreement between the vendor and the vendee wherein the vendor undertook to build or construct a home for the vendee or where the vendor becomes insolvent.
- Communication of an actual notice to the vendor of requests made therein.
- Any moneys given as down payment by the vendee to the vendor as required by the vendor prior to the commencement of the work to be performed pursuant to an agreement between the vendor and the vendee wherein the vendor undertook to build or construct a home for the vendee.
- A new one- or two-family dwelling intended to be used primarily as a residence.
- The Town of Clarkstown.
- Any individual or individuals who have contracted with a vendor for construction of a home on land not owned at the time of such agreement by such individual or individuals.
- Any person, firm, corporation or association engaged in the business of erecting or constructing homes.
When a vendor undertakes to build or construct a home for a vendee within the Town of Clarkstown, and such vendee is required to pay a deposit to such vendor, the vendor shall post with the Town Attorney a bond or letter of credit in the amount of such deposit or deposits. Such bond or letter of credit shall be posted, within five (5) business days after receipt of said deposit or deposits, by the vendor and shall secure the payment of said deposit to the vendee upon the vendor's default. Such bond or letter of credit shall be in such form as required by the Town Attorney.
In lieu of posting a bond or letter of credit as provided in this Article, the vendor shall place the deposit or deposits paid to him or her by the vendee in an interest-bearing escrow account with a bank, as defined in the Banking Law, within five (5) business days after receipt of such deposit or deposits. Such deposit or deposits, together with interest accumulated thereon, shall remain the property of the vendee, except as otherwise provided herein. Verification of the escrow account must be submitted by the bank to the Town Attorney within five (5) business days after receipt by the bank of such deposit or deposits.
Upon transfer of title of the home to the vendee, the bond or letter of credit posted pursuant to this Article shall be released, and any funds held in escrow pursuant to the provisions of this Article, together with interest accumulated thereon, shall become the property of the vendor, unless otherwise agreed between the vendor and vendee.
Upon default by the vendor, the vendee may demand return of his deposit or deposits from the vendor. If the vendor has placed the deposit or deposits in an escrow account pursuant to the provisions of this Article, he or she shall physically transfer the account to the vendee or pay the balance of said account to the vendee within fourteen (14) business days after the day on which the demand was made. If the vendor has posted a bond or letter of credit pursuant to the provisions of this Article, the vendee may initiate action for payment thereon if his or her deposit or deposits have not been paid to such vendee by the vendor within fourteen (14) business days after the day in which said demand was made.
Failure of the vendor to comply with any of the provisions of this Article is a misappropriation of funds, and action may be brought by the vendee against the vendor for the return of any moneys advanced. In addition, such vendor shall be liable for criminal action pursuant to the provisions of Subsection B of this section and be subject to the provisions of Subsection C of this section.
Failure of the vendor to comply with any of the provisions of this Article shall be deemed a misdemeanor.
Failure of the vendor to comply with any of the provisions of this Article shall result in the revocation of any building permit issued for the construction of a new home pursuant to a contract between the vendor and vendee.
Nothing in this Article shall impair, limit or reduce the statutory, common-law or contractual duties or liability of any vendor in the construction of a home, nor shall these provisions apply to any local law or ordinance which requires the posting of public improvement bonds.
Any agreement entered into by a vendee which waives, limits or disclaims the rights or obligations set forth in this Article shall be void as contrary to public policy.
This Article is intended to prevent loss of contract deposits on new homes being built in the Town of Clarkstown. It shall not be construed to make the town or any agency or department of the town a party to a contract of sale of real property nor an arbiter or guarantor of the terms of such a contract.
This Article shall apply in that portion of the Town of Clarkstown outside the limits of any incorporated village.