
From the U.S. Code Online via GPO Access
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[Laws in effect as of January 23, 2000]
[Document not affected by Public Laws enacted between
  January 23, 2000 and December 4, 2001]
[CITE: 38USC3706]

 
                      TITLE 38--VETERANS' BENEFITS
 
               PART III--READJUSTMENT AND RELATED BENEFITS
 
              CHAPTER 37--HOUSING AND SMALL BUSINESS LOANS
 
                          SUBCHAPTER I--GENERAL
 
Sec. 3706. Escrow of deposits and downpayments

    (a) Any deposit or downpayment made by an eligible veteran in 
connection with the purchase of proposed or newly constructed and 
previously unoccupied residential property in a project on which the 
Secretary has issued a Certificate of Reasonable Value, which purchase 
is to be financed with a loan guaranteed, insured, or made under the 
provisions of this chapter, shall be deposited forthwith by the seller, 
or the agent of the seller, receiving such deposit or payment, in a 
trust account to safeguard such deposit or payment from the claims of 
creditors of the seller. The failure of the seller or the seller's agent 
to create such trust account and to maintain it until the deposit or 
payment has been disbursed for the benefit of the veteran purchaser at 
settlement or, if the transaction does not materialize, is otherwise 
disposed of in accordance with the terms of the contract, may constitute 
an unfair marketing practice within the meaning of section 3704(b) of 
this title.
    (b) If an eligible veteran contracts for the construction of a 
property in a project on which the Secretary has issued a Certificate of 
Reasonable Value and such construction is to be financed with the 
assistance of a construction loan to be guaranteed, insured, or made 
under the provisions of this chapter, it may be considered an unfair 
marketing practice under section 3704(b) of this title if any deposit or 
downpayment of the veteran is not maintained in a special trust account 
by the recipient until it is either (1) applied on behalf of the veteran 
to the cost of the land or to the cost of construction or (2), if the 
transaction does not materialize, is otherwise disposed of in accordance 
with the terms of the contract.

(Added Pub. L. 86-665, Sec. 6(a), July 14, 1960, 74 Stat. 532, 
Sec. 1806; amended Pub. L. 94-324, Sec. 7(10), June 30, 1976, 90 Stat. 
721; Pub. L. 101-237, title III, Sec. 313(b)(1), Dec. 18, 1989, 103 
Stat. 2077; renumbered Sec. 3706 and amended Pub. L. 102-83, Sec. 5(a), 
(c)(1), Aug. 6, 1991, 105 Stat. 406; Pub. L. 103-446, title XII, 
Sec. 1201(e)(13), Nov. 2, 1994, 108 Stat. 4685.)


                               Amendments

    1994--Pub. L. 103-446, which directed the substitution of ``of this 
title'' for ``of this chapter'' the second and third places appearing, 
was executed by making the substitution the second and fourth places 
appearing to reflect the probable intent of Congress.
    1991--Pub. L. 102-83, Sec. 5(a), renumbered section 1806 of this 
title as this section.
    Pub. L. 102-83, Sec. 5(c)(1), substituted ``3704(b)'' for 
``1804(b)'' in subsecs. (a) and (b).
    1989--Pub. L. 101-237 substituted ``Secretary'' for 
``Administrator'' wherever appearing.
    1976--Subsec. (a). Pub. L. 94-324 substituted ``the seller's'' for 
``his''.


                    Effective Date of 1976 Amendment

    Amendment by Pub. L. 94-324 effective June 30, 1976, see section 
9(a) of Pub. L. 94-324, set out as a note under section 3701 of this 
title.
