Sec 32-2183.04. Surety bond requirement; form; cancellation; effective date; certificate of deposit

A. In addition to any other fees assessed under this chapter, any subdivider prior to the sale or lease of any existing unimproved lots or parcels and any subdivider who is subsequently required to give notice under section 32-2181 or 32-2195 or who petitions for exemption under section 32-2181.01 may be required to post a surety bond with the commissioner if any of the following applies:

1. The subdivider has been found in violation of any subdivision laws of this state or of any other state or any of the rules of the state real estate department.

2. The subdivider has been found in violation of the interstate land sales full disclosure act or any of the rules and regulations of the office of interstate land sales registration.

3. The subdivider has been found by a court of competent jurisdiction to be guilty of fraud or misrepresentation in the sale of subdivided lands and the finding or determination has become a final adjudication.

4. The subdivider has been found by an administrative agency to be guilty of fraud or misrepresentation in the sale of subdivided lands and from the decision there is no appeal.

B. The bond required by subsection A of this section shall be in a form acceptable to the commissioner and shall be executed by the subdivider as principal with a corporation duly authorized to transact surety business in this state. Evidence of a surety bond shall be submitted to the commissioner in accordance with rules adopted by the commissioner. The bond shall be in favor of the state and shall be subject to claims by any person who is injured by the fraud or misrepresentation of a subdivider in the purchase or lease of a lot or parcel. One bond shall be required for each subdivision or each common plan of subdivided lands subject to the requirements of article 7 of this chapter. The principal sum of the bond shall be in an amount the commissioner deems necessary to protect purchasers when the volume of business of the subdivider and other relevant factors are taken into consideration.

C. The surety bond shall continue in effect until two years after all sales within the subdivision or common plan have been completed. No suit may be maintained on the bond after the expiration of two years following the subdivider's sale or lease of a lot or parcel to the person maintaining the action.

D. Upon receipt by the commissioner of notice to cancel a bond by any surety, the commissioner shall immediately notify the subdivider on the bond of the effective date of cancellation of the bond and the subdivider shall furnish a like bond within thirty days after mailing of notice by the commissioner or the subdivider's right to sell or lease lots or parcels in any subdivision shall be suspended. Notice to the subdivider shall be by certified mail in a sealed envelope with postage fully prepaid, addressed to the subdivider's latest address of record in the commissioner's office. The subdivider's right to sell or lease lots or parcels shall be suspended by operation of law on the date the bond is canceled, unless a replacement bond is filed with the commissioner.

E. In lieu of posting a bond as set forth in this section, the subdivider may post a certificate of deposit with the commissioner in accordance with the provisions of subsections A, B and C of this section.