[HISTORY: Adopted by the Board of Trustees of the Village of Lake Grove 11-16-1978 as Ch. 57 of the 1978 Code. Amendments noted where applicable.]
Building construction — See Ch. 65.
This chapter is enacted to provide prospective homeowners with security against loss of their deposits through the contractor's default. Any contractor who agrees to build a home and accepts a deposit from the future owner must either place the deposit in an escrow account or post bond in the amount of the deposit.
When used in this chapter, the following terms, unless the context requires otherwise, shall have the following meanings:
- Occurs where title to a 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 vendee wherein 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 request 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 vendee wherein vendor undertakes to build or construct a home for the vendee.
- A new one-family dwelling intended to be used primarily as a residence.
- 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 and such vendee is required to pay a deposit to such vendor, the vendor shall post with the Treasurer of the Village of Lake Grove wherein such home is to be erected or constructed a bond in the amount of such deposit or deposits. Such bond shall be posted within five business days after receipt by the vendor of said deposit or deposits and shall secure the payment of said deposit to the vendee upon the vendor's default. Such bond shall be in such form as required by the village.
In lieu of posting a bond as provided in this chapter, the vendor shall place the deposit or deposits paid to him by the vendee in an interest-bearing escrow account with a bank as defined in the Banking Law within five 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.
Upon transfer of title of the home to the vendee, the bond posted pursuant to this chapter shall be released, and any funds held in escrow pursuant to the provisions of this chapter, 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 chapter, he shall physically transfer the account to the vendee or pay the balance of said account to the vendee within 14 business days after the day on which the demand was made. If the vendor has posted a bond pursuant to the provisions of this chapter, the vendee may initiate action for payment thereon if his deposit or deposits have not been paid to such vendee by the vendor within 14 business days after the day on which said demand was made.
Failure of the vendor to comply with any of the provisions of this chapter 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.
Nothing in this chapter 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.