If it only says "within seven days" it can be open to interpretation.

A lot is going to depend on how your accountant chooses to interpret those living spaces.  

"All moneys paid to the landlord by the tenant as a deposit as security for performance of the tenant's obligations in a lease or rental agreement shall promptly be deposited by the landlord in a trust account, maintained by the landlord for the purpose of holding such security deposits for tenants of the landlord---- You are just a little off base with your interpretation due to the bold wordings of the law.

In your case, there is room for interpretation.

What matters is how a judge or the CFPB will interpret your agreement if the buyer ends up leaving before they own the house and decide to sell the house to recover the equitable interest which you have conveyed or to sue you to recover the equitable interest if you block the sale.

Marie P. is probably thinking about the property strictly as an investment....while I am interpreting as a retail purchase of something you may want to live in.  

My interpretation is that people going into bankruptcy in 2004-2005 (run up to 2005 peak) were right back in the housing market 7 years later (in 2011-2012) like a kid in a candy shop -- ready to buy and speculate on everything they could again.

Based upon your subsequent sentences, you quoted "$100k" as the refi amount so I assume that by "term" you really meant "paid down 1/3 of the original principal" - although the following concept doesn't change regardless of the interpretation. 

I interpret it as something the town is using as a legal tool to hold owners accountable, if something does go wrong.

You've confirmed what I'd interpreted in my research.