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(a) A subdivision or a part of a subdivision on which construction of a promised improvement for public use, convenience or necessity has not been completed may not be registered for disposition. However, an incomplete improvement does not constitute an objection if the future 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 must comply with the following:
(1) funds shall be kept and maintained in an account separate and apart from the developer's personal funds;
(2) 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;
(3) statements shall be furnished to the department on a semiannual basis;
(4) the trust or escrow agreement shall state that its purpose is to protect the 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 to the agreement;
(5) the developer shall request the department to approve its escrow agreements and the developer must then indicate on the face of each agreement whether or not the department has, in fact, approved it.
(b) A subdivision or a part of a subdivision on which the construction of a promised improvement not for public use, convenience, or necessity has not been completed may not be registered for disposition to the public. However, the incompleted improvement may not constitute an objection if completion is assured by
(1) an adequate plan of development, including financial resources committed to carry out the plan of development, and which plan is subject to the department's continuing review and approval;
(2) in case of failure of a developer to establish an adequate plan or to adhere to the plan once established, the department will in its discretion require the establishment of a trust or escrow account under terms established by the department to assure completion of the promised improvement.
History: Eff. 4/3/76, Register 58
Authority: AS 34.55.014 (2)
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Last modified 7/05/2006