It shall be unlawful for the developer to make a sale of lots or parcels within a development which is subject to a blanket encumbrance which does not contain, within its terms or by supplementary agreement, a provision which shall unconditionally provide that the purchaser of a lot or parcel encumbered thereby can obtain the legal title, or other interest contracted for, free and clear of the lien of such blanket encumbrance upon compliance with the terms and conditions of the purchase agreement, unless the developer shall elect and comply with one of the following alternative conditions:

     (1) The developer shall deposit earnest moneys and all subsequent payments on the obligation in a neutral escrow depository, or real estate trust account regulated under *RCW 18.85.310, until such time as all payments on the obligation have been made and clear title is delivered, or any of the following occurs:

     (a) A proper release is obtained from such blanket encumbrance;

     (b) Either the developer or the purchaser defaults under the sales contract and there is a forfeiture of the interest of the purchaser or there is a determination as to the disposition of such moneys, as the case may be; or

     (c) The developer orders a return of such moneys to such purchaser.

     (2) The title to the development is held in trust under an agreement of trust until the proper release of such blanket encumbrance is obtained.

     (3) The purchaser shall receive title insurance from a licensed title insurance company against such blanket encumbrance.

[1992 c 191 § 7; 1973 1st ex.s. c 12 § 18.]

NOTES:

     *Reviser's note: RCW 18.85.310 was recodified as RCW 18.85.285 pursuant to 2008 c 23 § 49, effective July 1, 2010.