AB 905: Time-shares: public report: real property inspection.
- Session Year: 2015-2016
- House: Assembly
- Latest Version Date: 2015-07-14
Existing law, the Vacation Ownership and Time-share Act of 2004, requires a developer, defined as a person who creates a time-share plan or is in the business of selling time-share interests, to prepare, for issuance by the Real Estate Commissioner, a public report that discloses certain facts concerning the developer and time-share plan and to provide a copy of the public report in writing to each purchaser of a time-share interest in a time-share plan at the time of purchase. Existing law requires a developer who offers a purchaser the opportunity to subscribe or become a member of an exchange program to provide the purchaser with specified disclosures in writing. Existing law makes a violation of the public report disclosure requirement a public offense.
This bill would require the developer to provide the purchaser with the public report or other disclosures in writing or in a digital format at the discretion of the purchaser. By changing the definition of a crime, this bill would impose a state-mandated local program.
Existing law provides that it is the duty of a real estate broker or salesperson to a prospective purchaser of residential real property comprising one to 4 inclusive, residential dwelling units or a manufactured home, to make a reasonably competent and diligent visual inspection of, and disclosure regarding, the property, as specified, except for transfers that are required to be preceded by the furnishing of a copy of a specified public report and to transfers that can be made without a specified public report, unless the property has been previously occupied.
This bill would also create an exception for a transfer that is required to be preceded by the furnishing of a copy of the public report required pursuant to the above-described act, unless the property has been previously occupied.
The California Constitution requires the state to reimburse local agencies and school districts for certain costs mandated by the state. Statutory provisions establish procedures for making that reimbursement.
This bill would provide that no reimbursement is required by this act for a specified reason.
Existing law, the Vacation Ownership and Time-share Act of 2004, requires a developer, defined as a person who creates a time-share plan or is in the business of selling time-share interests, to prepare, for issuance by the Real Estate Commissioner, a public report that discloses certain facts concerning the developer and time-share plan and to provide a copy of the public report in writing to each purchaser of a time-share interest in a time-share plan at the time of purchase. Existing law requires a developer who offers a purchaser the opportunity to subscribe or become a member of an exchange program to provide the purchaser with specified disclosures in writing. Existing law makes a violation of the public report disclosure requirement a public offense.
This bill would require the developer to provide the purchaser with the public report or other disclosures in writing or in a digital format at the discretion of the purchaser. By changing the definition of a crime, this bill would impose a state-mandated local program.
Existing law provides that it is the duty of a real estate broker or salesperson to a prospective purchaser of residential real property comprising one to 4 inclusive, residential dwelling units or a manufactured home, to make a reasonably competent and diligent visual inspection of, and disclosure regarding, the property, as specified, except for transfers that are required to be preceded by the furnishing of a copy of a specified public report and to transfers that can be made without a specified public report, unless the property has been previously occupied.
This bill would also create an exception for a transfer that is required to be preceded by the furnishing of a copy of the public report required pursuant to the above-described act, unless the property has been previously occupied.
The California Constitution requires the state to reimburse local agencies and school districts for certain costs mandated by the state. Statutory provisions establish procedures for making that reimbursement.
This bill would provide that no reimbursement is required by this act for a specified reason.
Existing law, the Vacation Ownership and Time-share Act of 2004, requires a developer, defined as a person who creates a time-share plan or is in the business of selling time-share interests, to prepare, for issuance by the Real Estate Commissioner, a public report that discloses certain facts concerning the developer and time-share plan and to provide a copy of the public report in writing to each purchaser of a time-share interest in a time-share plan at the time of purchase. Existing law requires a developer who offers a purchaser the opportunity to subscribe or become a member of an exchange program to provide the purchaser with specified disclosures in writing. Existing law makes a violation of the public report disclosure requirement a public offense.
This bill would require the developer to provide the purchaser with the public report or other disclosures in writing or in a digital format at the discretion of the purchaser. By changing the definition of a crime, this bill would impose a state-mandated local program.
Existing law provides that it is the duty of a real estate broker or salesperson to a prospective purchaser of residential real property comprising one to 4 inclusive, residential dwelling units or a manufactured home, to make a reasonably competent and diligent visual inspection of, and disclosure regarding, the property, as specified, except for transfers that are required to be preceded by the furnishing of a copy of a specified public report and to transfers that can be made without a specified public report, unless the property has been previously occupied.
This bill would also create an exception for a transfer that is required to be preceded by the furnishing of a copy of the public report required pursuant to the above-described act, unless the property has been previously occupied.
The California Constitution requires the state to reimburse local agencies and school districts for certain costs mandated by the state. Statutory provisions establish procedures for making that reimbursement.
This bill would provide that no reimbursement is required by this act for a specified reason.
(a)An exchange program is not a part of a time-share plan offering and, except as provided in this section and Section 11238, shall not be subject to either this chapter or the regulations of the commissioner adopted pursuant to this chapter.
(b)If a developer offers a purchaser the opportunity to subscribe to or to become a member of an exchange program, the developer shall provide to the purchaser in writing or in a digital format at the discretion of the purchaser all of the information set forth in paragraphs (1) to (17), inclusive. If the exchange company is offering directly to the purchaser the opportunity to subscribe to or become a member of an exchange company, the exchange company shall provide to the purchaser in writing all of the information set forth in paragraphs (1) to (17), inclusive. In either case, the written information shall be provided prior to or concurrently with the execution of any contract or subscription for membership in the exchange program.
(1)The name and address of the exchange company.
(2)The names of all officers, directors, and shareholders of the exchange company.
(3)Whether the exchange company or any of its officers or directors have any legal or beneficial interest in any developer or managing entity for any time-share plan participating in the exchange program and, if so, the identity of the time-share plan and the nature of the interest.
(4)A copy of the form of the contract between the purchaser and the exchange company, along with a statement that the purchasers contract with the exchange company is a contract separate and distinct from the purchasers contract with the seller of time-share interests.
(5)Whether the purchasers participation in the exchange program is dependent upon the continued affiliation of the applicable time-share plan with the exchange program.
(6)Whether the purchasers participation in the exchange program is voluntary.
(7)A fair and accurate description of the terms and conditions of the purchasers contractual relationship with the exchange program and the procedure by which changes thereto may be made.
(8)A fair and accurate description of the procedures necessary to qualify for and effectuate exchanges.
(9)A fair and accurate description of all limitations, restrictions, and priorities employed in the operation of the exchange program, including, but not limited to, limitations on exchanges based on seasonality, accommodation size, or levels of occupancy, expressed in conspicuous type. If those limitations, restrictions, or priorities are not uniformly applied by the exchange company, the information shall include a clear description of the manner in which they are applied.
(10)Whether exchanges are arranged on a space available basis and whether any guarantees of fulfillment of specific requests for exchanges are made by the exchange company.
(11)Whether and under what circumstances an owner, in dealing with the exchange program, may lose the right to use and occupy an accommodation of the time-share plan during a reserved use period with respect to any properly applied for exchange without being provided with substitute accommodations by the exchange program.
(12)The fees or range of fees for participation by owners in the exchange program, a statement of whether any such fees may be altered by the exchange company and the circumstances under which alterations may be made.
(13)The name and address of the site of each accommodation included within a time-share plan participating in the exchange program.
(14)The number of accommodations in each time-share plan that are available for occupancy and that qualify for participation in the exchange program, expressed within the following numerical groups: 15; 610; 1120; 2150; and 51 and over.
(15)The number of currently enrolled owners for each time-share plan participating in the exchange program, expressed within the following numerical groups: 1100; 101249; 250499; 500999; and 1,000 and over; and a statement of the criteria used to determine those owners who are currently enrolled with the exchange program.
(16)The disposition made by the exchange company of use periods deposited with the exchange program by owners enrolled in the exchange program and not used by the exchange company in effecting exchanges.
(17)The following information for the preceding calendar year, which shall be independently audited by a certified public accountant in accordance with the standards of the Accounting Standards Board of the American Institute of Certified Public Accountants and reported annually no later than August 1 of each year:
(A)The number of owners currently enrolled in the exchange program.
(B)The number of time-share plans that have current affiliation agreements with the exchange program.
(C)The percentage of confirmed exchanges, which is the number of exchanges confirmed by the exchange program divided by the number of exchanges properly applied for, together with a complete and accurate statement of the criteria used to determine whether an exchange request was properly applied for.
(D)The number of use periods for which the exchange program has an outstanding obligation to provide an exchange to an owner who relinquished a use period during a particular year in exchange for a use period in any future year.
(E)The number of exchanges confirmed by the exchange program during the year.
(F)A statement in conspicuous type to the effect that the percentage described in subparagraph (C) is a summary of the exchange requests entered with the exchange program in the period reported and that the percentage does not indicate the probabilities of an owners being confirmed to any specific choice or range of choices.
(c)All written, visual, and electronic communications relating to an exchange company or an exchange program shall be filed with the commissioner upon its request.
(d)The failure of an exchange company to observe the requirements of this section, and the use of any unfair or deceptive act or practice in connection with the operation of an exchange program, is a violation of this chapter.
(e)An exchange company may elect to deny exchange privileges to any owner whose use of the accommodations of the owners time-share plan is denied, and no exchange program or exchange company shall be liable to any of its members or any third parties on account of any such denial of exchange privileges.
SEC. 2.Section 11234 of the Business and Professions Code is amended to read:11234.A developer shall prepare, for issuance by the commissioner, a public report that shall fully and accurately disclose those facts concerning the time-share developer and time-share plan that are required by this chapter or by regulation. The developer shall provide the public report to each purchaser of a time-share interest in a time-share plan at the time of purchase. The public report shall be in writing or in a digital format at the discretion of the purchaser and dated and shall require the purchaser to certify in writing the receipt thereof. The public report for a single site time-share plan is subject to the requirements of subdivision (a). The public report for a specific time-share interest multisite time-share plan is subject to the requirements of both subdivisions (a) and (b). The public report for a nonspecific time-share interest multisite time-share plan is subject to the requirements of subdivision (c). For time-share plans located outside of the state, a public report that has been authorized for use by the situs state regulatory agency and that contains disclosures as determined by the commissioner upon review to be substantially equivalent to or greater than the information required to be disclosed pursuant to this section may be used by the developer to meet the requirements of this section. A developer may, upon approval by the commissioner, submit a public report that combines, in a manner prescribed by the commissioner, the information required to be disclosed by the applicable subdivisions of this section and the information required to be disclosed in a public report issued by a regulatory agency in one or more other states.
(a)Public reports for a single site and those component sites of a specific time-share interest multisite time-share plan that are offered in this state shall include the following:
(1)The name and address of the developer and the type of time-share plan being offered and the name and address of the time-share project.
(2)A description of the existing or proposed accommodations, including the type and number of time-share interests in the accommodations, and if the accommodations are proposed or not yet complete or fully functional, an estimated date of completion.
(3)The number of accommodations and time-share interests, expressed in periods of seven-day use availability or other time increments applicable to the time-share plan, committed to the multisite time-share plan, and available for use by purchasers and a representation about the percentage of useable time authorized for sale, and if that percentage is 100 percent, then a statement describing how adequate periods of time for maintenance and repair will be provided.
(4)A description of any existing or proposed amenities of the time-share plan and, if the amenities are proposed or not yet complete or fully functional, the estimated date of completion.
(5)The extent to which financial arrangements have been made for the completion of any incomplete, promised improvements.
(6)A description of the duration, phases, and operation of the time-share plan.
(7)The name and principal address of the managing entity and a description of the procedures, if any, for altering the powers and responsibilities of the managing entity and for removing or replacing it.
(8)The current annual budget as required by Section 11240, along with the projected assessments and a description of the method for calculating and apportioning the assessments among purchasers, all of which shall be attached as an exhibit to the public report.
(9)Any initial or special fee due from the purchaser at closing together with a description of the purpose and the method of calculating the fee.
(10)A description of any financing offered by or available through the developer.
(11)A description of any liens, defects, or encumbrances on or affecting the title to the time-share interests.
(12)A description of any bankruptcies, pending civil or criminal suits, adjudications, or disciplinary actions of which the developer has knowledge, that would have a material effect on the developers ability to perform its obligations.
(13)Any current or expected fees or charges to be paid by time-share purchasers for the use of any amenities related to the time-share plan.
(14)A description and amount of insurance coverage provided for the protection of the purchaser.
(15)The extent to which a time-share interest may become subject to a tax lien or other lien arising out of claims against purchasers of different time-share interests.
(16)A statement disclosing any right of first refusal or other restraint on the transfer of all or any portion of a time-share interest.
(17)A statement disclosing that a deposit made in connection with the purchase of a time-share interest shall be held by an escrow agent until expiration of any right to cancel the contract and that a deposit shall be returned to the purchaser if he or she elects to exercise his or her right of cancellation. Alternatively, if the commissioner has accepted from the developer a surety bond, irrevocable letter of credit, or other financial assurance, each of which shall be enforceable by the association, in lieu of placing deposits in an escrow account: (A) a statement disclosing that the developer has provided a surety bond, irrevocable letter of credit, or other financial assurance in an amount equal to or in excess of the funds that would otherwise be placed in an escrow account, (B) a description of the type of financial assurance that has been obtained, (C) a statement that if the purchaser elects to exercise his or her right of cancellation as provided in the contract, the developer shall return the deposit, and (D) a description of the person or entity to whom the purchaser should apply for payment.
(18)A statement that the assessments collected from the purchasers will be kept in a segregated account separate from the assessments collected from the purchasers of other time-share plans managed by the same managing entity, along with a statement identifying the location of the account and a disclosure of the rights of owners to inspect the records pertaining to their accounts.
(19)If the time-share plan provides purchasers with the opportunity to participate in an exchange program, a description of the name and address of the exchange company and the method by which a purchaser accesses the exchange program.
(20)Any other information that the developer, with the approval of the commissioner, desires to include in the public report.
(21)Any other information reasonably requested by the commissioner.
(b)Public reports for specific time-share interest multisite time-share plans shall include the following additional disclosures:
(1)A description of each component site, including the name and address of each component site.
(2)The number of accommodations and time-share interests, expressed in periods of seven-day use availability or other time increments applicable to each component site of the time-share plan, committed to the multisite time-share plan and available for use by purchasers and a representation about the percentage of useable time authorized for sale, and if that percentage is 100 percent, then a statement describing how adequate periods of time for maintenance and repair will be provided.
(3)Each type of accommodation in terms of the number of bedrooms, bathrooms, and sleeping capacity, and a statement of whether or not the accommodation contains a full kitchen. For purposes of this description, a full kitchen means a kitchen having a minimum of a dishwasher, range, sink, oven, and refrigerator.
(4)A description of amenities available for use by the purchaser at each component site.
(5)A description of the reservation system, which shall include the following:
(A)The entity responsible for operating the reservation system, its relationship to the developer, and the duration of any agreement for operation of the reservation system.
(B)A summary of the rules and regulations governing access to and use of the reservation system.
(C)The existence of and an explanation regarding any priority reservation features that affect a purchasers ability to make reservations for the use of a given accommodation on a first-come-first-served basis.
(6)The name and principal address of the managing entity for the multisite time-share plan and a description of the procedures, if any, for altering the powers and responsibilities of the managing entity and for removing or replacing it.
(7)A description of any right to make any additions, substitutions, or deletions of accommodations, amenities, or component sites, and a description of the basis upon which accommodations, amenities, or component sites may be added to, substituted in, or deleted from the multisite time-share plan.
(8)A description of the purchasers liability for any fees associated with the multisite time-share plan.
(9)The location of each component site of the multisite time-share plan, the historical occupancy of each component site for the prior 12-month period, if the component site was part of the multisite time-share plan during the 12-month time period, as well as any periodic adjustment or amendment to the reservation system that may be needed in order to respond to actual purchaser use patterns and changes in purchaser use demand for the accommodations existing at that time within the multisite time-share plan.
(10)Any other information that the developer, with the approval of the commissioner, desires to include in the time-share disclosure statement.
(c)Public reports for nonspecific time-share interest multisite time-share plans shall include the following:
(1)The name and address of the developer.
(2)A description of the type of interest and usage rights the purchaser will receive.
(3)A description of the duration and operation of the time-share plan.
(4)A description of the type of insurance coverage provided for each component site.
(5)An explanation of who holds title to the accommodations of each component site.
(6)A description of each component site, including the name and address of each component site.
(7)The number of accommodations and time-share interests, expressed in periods of seven-day use availability or other time increments applicable to the multisite time-share plan for each component site committed to the multisite time-share plan and available for use by purchasers and a representation about the percentage of useable time authorized for sale, and if that percentage is 100 percent, then a statement describing how adequate periods of time for maintenance and repair will be provided.
(8)Each type of accommodation in terms of the number of bedrooms, bathrooms, and sleeping capacity, and a statement of whether or not the accommodation contains a full kitchen. For purposes of this description, a full kitchen means a kitchen having a minimum of a dishwasher, range, sink, oven, and refrigerator.
(9)A description of amenities available for use by the purchaser at each component site.
(10)A description of any incomplete amenities at any of the component sites along with a statement as to any assurance for completion and the estimated date the amenities will be available.
(11)The location of each component site of the multisite time-share plan, the historical occupancy of each component site for the prior 12-month period, if the component site was part of the multisite time-share plan during such 12-month time period, as well as any periodic adjustment or amendment to the reservation system that may be needed in order to respond to actual purchaser use patterns and changes in purchaser use demand for the accommodations existing at that time within the multisite time-share plan.
(12)A description of any right to make any additions, substitutions, or deletions of accommodations, amenities, or component sites, and a description of the basis upon which accommodations, amenities, or component sites may be added to, substituted in, or deleted from the multisite time-share plan.
(13)A description of the reservation system that shall include all of the following:
(A)The entity responsible for operating the reservation system, its relationship to the developer, and the duration of any agreement for operation of the reservation system.
(B)A summary of the rules and regulations governing access to and use of the reservation system.
(C)The existence of and an explanation regarding any priority reservation features that affect a purchasers ability to make reservations for the use of a given accommodation on a first-come-first-served basis.
(14)A description of any liens, defects, or encumbrances that materially affect the purchasers use rights.
(15)The name and principal address of the managing entity for the multisite time-share plan and a description of the procedures, if any, for altering the powers and responsibilities of the managing entity and for removing or replacing it, and a description of the relationship between a multisite time-share plan managing entity and the managing entity of the component sites of a multisite time-share plan, if different from the multisite time-share plan managing entity.
(16)The current annual budget as provided in Section 11240, along with the projected assessments and a description of the method for calculating and apportioning the assessments among purchasers, all of which shall be attached as an exhibit to the public report.
(17)Any current fees or charges to be paid by time-share purchasers for the use of any amenities related to the time-share plan and a statement that the fees or charges are subject to change.
(18)Any initial or special fee due from the purchaser at closing, together with a description of the purpose and method of calculating the fee.
(19)A description of any financing offered by or available through the developer.
(20)A description of any bankruptcies, pending civil or criminal suits, adjudications, or disciplinary actions of which the developer has knowledge, which would have a material effect on the developers ability to perform its obligations.
(21)A statement disclosing any right of first refusal or other restraint on the transfer of all or any portion of a time-share interest.
(22)A statement disclosing that a deposit made in connection with the purchase of a time-share interest shall be held by an escrow agent until expiration of any right to cancel the contract and that a deposit shall be returned to the purchaser if he or she elects to exercise his or her right of cancellation. Alternatively, if the commissioner has accepted from the developer a surety bond, irrevocable letter of credit, or other financial assurance in lieu of placing deposits in an escrow account: (A) a statement disclosing that the developer has provided a surety bond, irrevocable letter of credit, or other financial assurance in an amount equal to or in excess of the funds that would otherwise be placed in an escrow account, (B) a description of the type of financial assurance that has been arranged, (C) a statement that if the purchaser elects to exercise his or her right of cancellation as provided in the contract, the developer shall return the deposit, and (D) a description of the person or entity to whom the purchaser should apply for payment.
(23)If the time-share plan provides purchasers with the opportunity to participate in an exchange program, a description of the name and address of the exchange company and the method by which a purchaser accesses the exchange program.
(24)Any other information that the developer, with the approval of the commissioner, desires to include in the time-share disclosure statement.
(d)The commissioner may establish by regulation provisions regarding the delivery of the public report and other required information through alternative media forms.
(e)The commissioner may, upon finding that the subject matter is otherwise adequately covered or the information is unnecessary or inapplicable, waive any requirement set forth in this section.
SEC. 3.Section 2079.6 of the Civil Code is amended to read:2079.6.This article does not apply to transfers which are required to be preceded by the furnishing, to a prospective transferee, of a copy of a public report pursuant to Section 11018.1 or Section 11234 of the Business and Professions Code and transfers that can be made without a public report pursuant to Section 11010.4 of the Business and Professions Code, unless the property has been previously occupied.
SEC. 4.No reimbursement is required by this act pursuant to Section 6 of Article XIIIB of the California Constitution because the only costs that may be incurred by a local agency or school district will be incurred because this act creates a new crime or infraction, eliminates a crime or infraction, or changes the penalty for a crime or infraction, within the meaning of Section 17556 of the Government Code, or changes the definition of a crime within the meaning of Section 6 of Article XIIIB of the California Constitution.
(a)An exchange program is not a part of a time-share plan offering and, except as provided in this section and Section 11238, shall not be subject to either this chapter or the regulations of the commissioner adopted pursuant to this chapter.
(b)If a developer offers a purchaser the opportunity to subscribe to or to become a member of an exchange program, the developer shall provide to the purchaser in writing or in a digital format at the discretion of the purchaser all of the information set forth in paragraphs (1) to (17), inclusive. If the exchange company is offering directly to the purchaser the opportunity to subscribe to or become a member of an exchange company, the exchange company shall provide to the purchaser in writing all of the information set forth in paragraphs (1) to (17), inclusive. In either case, the written information shall be provided prior to or concurrently with the execution of any contract or subscription for membership in the exchange program.
(1)The name and address of the exchange company.
(2)The names of all officers, directors, and shareholders of the exchange company.
(3)Whether the exchange company or any of its officers or directors have any legal or beneficial interest in any developer or managing entity for any time-share plan participating in the exchange program and, if so, the identity of the time-share plan and the nature of the interest.
(4)A copy of the form of the contract between the purchaser and the exchange company, along with a statement that the purchasers contract with the exchange company is a contract separate and distinct from the purchasers contract with the seller of time-share interests.
(5)Whether the purchasers participation in the exchange program is dependent upon the continued affiliation of the applicable time-share plan with the exchange program.
(6)Whether the purchasers participation in the exchange program is voluntary.
(7)A fair and accurate description of the terms and conditions of the purchasers contractual relationship with the exchange program and the procedure by which changes thereto may be made.
(8)A fair and accurate description of the procedures necessary to qualify for and effectuate exchanges.
(9)A fair and accurate description of all limitations, restrictions, and priorities employed in the operation of the exchange program, including, but not limited to, limitations on exchanges based on seasonality, accommodation size, or levels of occupancy, expressed in conspicuous type. If those limitations, restrictions, or priorities are not uniformly applied by the exchange company, the information shall include a clear description of the manner in which they are applied.
(10)Whether exchanges are arranged on a space available basis and whether any guarantees of fulfillment of specific requests for exchanges are made by the exchange company.
(11)Whether and under what circumstances an owner, in dealing with the exchange program, may lose the right to use and occupy an accommodation of the time-share plan during a reserved use period with respect to any properly applied for exchange without being provided with substitute accommodations by the exchange program.
(12)The fees or range of fees for participation by owners in the exchange program, a statement of whether any such fees may be altered by the exchange company and the circumstances under which alterations may be made.
(13)The name and address of the site of each accommodation included within a time-share plan participating in the exchange program.
(14)The number of accommodations in each time-share plan that are available for occupancy and that qualify for participation in the exchange program, expressed within the following numerical groups: 15; 610; 1120; 2150; and 51 and over.
(15)The number of currently enrolled owners for each time-share plan participating in the exchange program, expressed within the following numerical groups: 1100; 101249; 250499; 500999; and 1,000 and over; and a statement of the criteria used to determine those owners who are currently enrolled with the exchange program.
(16)The disposition made by the exchange company of use periods deposited with the exchange program by owners enrolled in the exchange program and not used by the exchange company in effecting exchanges.
(17)The following information for the preceding calendar year, which shall be independently audited by a certified public accountant in accordance with the standards of the Accounting Standards Board of the American Institute of Certified Public Accountants and reported annually no later than August 1 of each year:
(A)The number of owners currently enrolled in the exchange program.
(B)The number of time-share plans that have current affiliation agreements with the exchange program.
(C)The percentage of confirmed exchanges, which is the number of exchanges confirmed by the exchange program divided by the number of exchanges properly applied for, together with a complete and accurate statement of the criteria used to determine whether an exchange request was properly applied for.
(D)The number of use periods for which the exchange program has an outstanding obligation to provide an exchange to an owner who relinquished a use period during a particular year in exchange for a use period in any future year.
(E)The number of exchanges confirmed by the exchange program during the year.
(F)A statement in conspicuous type to the effect that the percentage described in subparagraph (C) is a summary of the exchange requests entered with the exchange program in the period reported and that the percentage does not indicate the probabilities of an owners being confirmed to any specific choice or range of choices.
(c)All written, visual, and electronic communications relating to an exchange company or an exchange program shall be filed with the commissioner upon its request.
(d)The failure of an exchange company to observe the requirements of this section, and the use of any unfair or deceptive act or practice in connection with the operation of an exchange program, is a violation of this chapter.
(e)An exchange company may elect to deny exchange privileges to any owner whose use of the accommodations of the owners time-share plan is denied, and no exchange program or exchange company shall be liable to any of its members or any third parties on account of any such denial of exchange privileges.
SEC. 2.Section 11234 of the Business and Professions Code is amended to read:11234.A developer shall prepare, for issuance by the commissioner, a public report that shall fully and accurately disclose those facts concerning the time-share developer and time-share plan that are required by this chapter or by regulation. The developer shall provide the public report to each purchaser of a time-share interest in a time-share plan at the time of purchase. The public report shall be in writing or in a digital format at the discretion of the purchaser and dated and shall require the purchaser to certify in writing the receipt thereof. The public report for a single site time-share plan is subject to the requirements of subdivision (a). The public report for a specific time-share interest multisite time-share plan is subject to the requirements of both subdivisions (a) and (b). The public report for a nonspecific time-share interest multisite time-share plan is subject to the requirements of subdivision (c). For time-share plans located outside of the state, a public report that has been authorized for use by the situs state regulatory agency and that contains disclosures as determined by the commissioner upon review to be substantially equivalent to or greater than the information required to be disclosed pursuant to this section may be used by the developer to meet the requirements of this section. A developer may, upon approval by the commissioner, submit a public report that combines, in a manner prescribed by the commissioner, the information required to be disclosed by the applicable subdivisions of this section and the information required to be disclosed in a public report issued by a regulatory agency in one or more other states.
(a)Public reports for a single site and those component sites of a specific time-share interest multisite time-share plan that are offered in this state shall include the following:
(1)The name and address of the developer and the type of time-share plan being offered and the name and address of the time-share project.
(2)A description of the existing or proposed accommodations, including the type and number of time-share interests in the accommodations, and if the accommodations are proposed or not yet complete or fully functional, an estimated date of completion.
(3)The number of accommodations and time-share interests, expressed in periods of seven-day use availability or other time increments applicable to the time-share plan, committed to the multisite time-share plan, and available for use by purchasers and a representation about the percentage of useable time authorized for sale, and if that percentage is 100 percent, then a statement describing how adequate periods of time for maintenance and repair will be provided.
(4)A description of any existing or proposed amenities of the time-share plan and, if the amenities are proposed or not yet complete or fully functional, the estimated date of completion.
(5)The extent to which financial arrangements have been made for the completion of any incomplete, promised improvements.
(6)A description of the duration, phases, and operation of the time-share plan.
(7)The name and principal address of the managing entity and a description of the procedures, if any, for altering the powers and responsibilities of the managing entity and for removing or replacing it.
(8)The current annual budget as required by Section 11240, along with the projected assessments and a description of the method for calculating and apportioning the assessments among purchasers, all of which shall be attached as an exhibit to the public report.
(9)Any initial or special fee due from the purchaser at closing together with a description of the purpose and the method of calculating the fee.
(10)A description of any financing offered by or available through the developer.
(11)A description of any liens, defects, or encumbrances on or affecting the title to the time-share interests.
(12)A description of any bankruptcies, pending civil or criminal suits, adjudications, or disciplinary actions of which the developer has knowledge, that would have a material effect on the developers ability to perform its obligations.
(13)Any current or expected fees or charges to be paid by time-share purchasers for the use of any amenities related to the time-share plan.
(14)A description and amount of insurance coverage provided for the protection of the purchaser.
(15)The extent to which a time-share interest may become subject to a tax lien or other lien arising out of claims against purchasers of different time-share interests.
(16)A statement disclosing any right of first refusal or other restraint on the transfer of all or any portion of a time-share interest.
(17)A statement disclosing that a deposit made in connection with the purchase of a time-share interest shall be held by an escrow agent until expiration of any right to cancel the contract and that a deposit shall be returned to the purchaser if he or she elects to exercise his or her right of cancellation. Alternatively, if the commissioner has accepted from the developer a surety bond, irrevocable letter of credit, or other financial assurance, each of which shall be enforceable by the association, in lieu of placing deposits in an escrow account: (A) a statement disclosing that the developer has provided a surety bond, irrevocable letter of credit, or other financial assurance in an amount equal to or in excess of the funds that would otherwise be placed in an escrow account, (B) a description of the type of financial assurance that has been obtained, (C) a statement that if the purchaser elects to exercise his or her right of cancellation as provided in the contract, the developer shall return the deposit, and (D) a description of the person or entity to whom the purchaser should apply for payment.
(18)A statement that the assessments collected from the purchasers will be kept in a segregated account separate from the assessments collected from the purchasers of other time-share plans managed by the same managing entity, along with a statement identifying the location of the account and a disclosure of the rights of owners to inspect the records pertaining to their accounts.
(19)If the time-share plan provides purchasers with the opportunity to participate in an exchange program, a description of the name and address of the exchange company and the method by which a purchaser accesses the exchange program.
(20)Any other information that the developer, with the approval of the commissioner, desires to include in the public report.
(21)Any other information reasonably requested by the commissioner.
(b)Public reports for specific time-share interest multisite time-share plans shall include the following additional disclosures:
(1)A description of each component site, including the name and address of each component site.
(2)The number of accommodations and time-share interests, expressed in periods of seven-day use availability or other time increments applicable to each component site of the time-share plan, committed to the multisite time-share plan and available for use by purchasers and a representation about the percentage of useable time authorized for sale, and if that percentage is 100 percent, then a statement describing how adequate periods of time for maintenance and repair will be provided.
(3)Each type of accommodation in terms of the number of bedrooms, bathrooms, and sleeping capacity, and a statement of whether or not the accommodation contains a full kitchen. For purposes of this description, a full kitchen means a kitchen having a minimum of a dishwasher, range, sink, oven, and refrigerator.
(4)A description of amenities available for use by the purchaser at each component site.
(5)A description of the reservation system, which shall include the following:
(A)The entity responsible for operating the reservation system, its relationship to the developer, and the duration of any agreement for operation of the reservation system.
(B)A summary of the rules and regulations governing access to and use of the reservation system.
(C)The existence of and an explanation regarding any priority reservation features that affect a purchasers ability to make reservations for the use of a given accommodation on a first-come-first-served basis.
(6)The name and principal address of the managing entity for the multisite time-share plan and a description of the procedures, if any, for altering the powers and responsibilities of the managing entity and for removing or replacing it.
(7)A description of any right to make any additions, substitutions, or deletions of accommodations, amenities, or component sites, and a description of the basis upon which accommodations, amenities, or component sites may be added to, substituted in, or deleted from the multisite time-share plan.
(8)A description of the purchasers liability for any fees associated with the multisite time-share plan.
(9)The location of each component site of the multisite time-share plan, the historical occupancy of each component site for the prior 12-month period, if the component site was part of the multisite time-share plan during the 12-month time period, as well as any periodic adjustment or amendment to the reservation system that may be needed in order to respond to actual purchaser use patterns and changes in purchaser use demand for the accommodations existing at that time within the multisite time-share plan.
(10)Any other information that the developer, with the approval of the commissioner, desires to include in the time-share disclosure statement.
(c)Public reports for nonspecific time-share interest multisite time-share plans shall include the following:
(1)The name and address of the developer.
(2)A description of the type of interest and usage rights the purchaser will receive.
(3)A description of the duration and operation of the time-share plan.
(4)A description of the type of insurance coverage provided for each component site.
(5)An explanation of who holds title to the accommodations of each component site.
(6)A description of each component site, including the name and address of each component site.
(7)The number of accommodations and time-share interests, expressed in periods of seven-day use availability or other time increments applicable to the multisite time-share plan for each component site committed to the multisite time-share plan and available for use by purchasers and a representation about the percentage of useable time authorized for sale, and if that percentage is 100 percent, then a statement describing how adequate periods of time for maintenance and repair will be provided.
(8)Each type of accommodation in terms of the number of bedrooms, bathrooms, and sleeping capacity, and a statement of whether or not the accommodation contains a full kitchen. For purposes of this description, a full kitchen means a kitchen having a minimum of a dishwasher, range, sink, oven, and refrigerator.
(9)A description of amenities available for use by the purchaser at each component site.
(10)A description of any incomplete amenities at any of the component sites along with a statement as to any assurance for completion and the estimated date the amenities will be available.
(11)The location of each component site of the multisite time-share plan, the historical occupancy of each component site for the prior 12-month period, if the component site was part of the multisite time-share plan during such 12-month time period, as well as any periodic adjustment or amendment to the reservation system that may be needed in order to respond to actual purchaser use patterns and changes in purchaser use demand for the accommodations existing at that time within the multisite time-share plan.
(12)A description of any right to make any additions, substitutions, or deletions of accommodations, amenities, or component sites, and a description of the basis upon which accommodations, amenities, or component sites may be added to, substituted in, or deleted from the multisite time-share plan.
(13)A description of the reservation system that shall include all of the following:
(A)The entity responsible for operating the reservation system, its relationship to the developer, and the duration of any agreement for operation of the reservation system.
(B)A summary of the rules and regulations governing access to and use of the reservation system.
(C)The existence of and an explanation regarding any priority reservation features that affect a purchasers ability to make reservations for the use of a given accommodation on a first-come-first-served basis.
(14)A description of any liens, defects, or encumbrances that materially affect the purchasers use rights.
(15)The name and principal address of the managing entity for the multisite time-share plan and a description of the procedures, if any, for altering the powers and responsibilities of the managing entity and for removing or replacing it, and a description of the relationship between a multisite time-share plan managing entity and the managing entity of the component sites of a multisite time-share plan, if different from the multisite time-share plan managing entity.
(16)The current annual budget as provided in Section 11240, along with the projected assessments and a description of the method for calculating and apportioning the assessments among purchasers, all of which shall be attached as an exhibit to the public report.
(17)Any current fees or charges to be paid by time-share purchasers for the use of any amenities related to the time-share plan and a statement that the fees or charges are subject to change.
(18)Any initial or special fee due from the purchaser at closing, together with a description of the purpose and method of calculating the fee.
(19)A description of any financing offered by or available through the developer.
(20)A description of any bankruptcies, pending civil or criminal suits, adjudications, or disciplinary actions of which the developer has knowledge, which would have a material effect on the developers ability to perform its obligations.
(21)A statement disclosing any right of first refusal or other restraint on the transfer of all or any portion of a time-share interest.
(22)A statement disclosing that a deposit made in connection with the purchase of a time-share interest shall be held by an escrow agent until expiration of any right to cancel the contract and that a deposit shall be returned to the purchaser if he or she elects to exercise his or her right of cancellation. Alternatively, if the commissioner has accepted from the developer a surety bond, irrevocable letter of credit, or other financial assurance in lieu of placing deposits in an escrow account: (A) a statement disclosing that the developer has provided a surety bond, irrevocable letter of credit, or other financial assurance in an amount equal to or in excess of the funds that would otherwise be placed in an escrow account, (B) a description of the type of financial assurance that has been arranged, (C) a statement that if the purchaser elects to exercise his or her right of cancellation as provided in the contract, the developer shall return the deposit, and (D) a description of the person or entity to whom the purchaser should apply for payment.
(23)If the time-share plan provides purchasers with the opportunity to participate in an exchange program, a description of the name and address of the exchange company and the method by which a purchaser accesses the exchange program.
(24)Any other information that the developer, with the approval of the commissioner, desires to include in the time-share disclosure statement.
(d)The commissioner may establish by regulation provisions regarding the delivery of the public report and other required information through alternative media forms.
(e)The commissioner may, upon finding that the subject matter is otherwise adequately covered or the information is unnecessary or inapplicable, waive any requirement set forth in this section.
SEC. 3.Section 2079.6 of the Civil Code is amended to read:2079.6.This article does not apply to transfers which are required to be preceded by the furnishing, to a prospective transferee, of a copy of a public report pursuant to Section 11018.1 or Section 11234 of the Business and Professions Code and transfers that can be made without a public report pursuant to Section 11010.4 of the Business and Professions Code, unless the property has been previously occupied.
SEC. 4.No reimbursement is required by this act pursuant to Section 6 of Article XIIIB of the California Constitution because the only costs that may be incurred by a local agency or school district will be incurred because this act creates a new crime or infraction, eliminates a crime or infraction, or changes the penalty for a crime or infraction, within the meaning of Section 17556 of the Government Code, or changes the definition of a crime within the meaning of Section 6 of Article XIIIB of the California Constitution.
(a)An exchange program is not a part of a time-share plan offering and, except as provided in this section and Section 11238, shall not be subject to either this chapter or the regulations of the commissioner adopted pursuant to this chapter.
(b)If a developer offers a purchaser the opportunity to subscribe to or to become a member of an exchange program, the developer shall provide to the purchaser in writing or in a digital format at the discretion of the purchaser all of the information set forth in paragraphs (1) to (17), inclusive. If the exchange company is offering directly to the purchaser the opportunity to subscribe to or become a member of an exchange company, the exchange company shall provide to the purchaser in writing all of the information set forth in paragraphs (1) to (17), inclusive. In either case, the written information shall be provided prior to or concurrently with the execution of any contract or subscription for membership in the exchange program.
(1)The name and address of the exchange company.
(2)The names of all officers, directors, and shareholders of the exchange company.
(3)Whether the exchange company or any of its officers or directors have any legal or beneficial interest in any developer or managing entity for any time-share plan participating in the exchange program and, if so, the identity of the time-share plan and the nature of the interest.
(4)A copy of the form of the contract between the purchaser and the exchange company, along with a statement that the purchasers contract with the exchange company is a contract separate and distinct from the purchasers contract with the seller of time-share interests.
(5)Whether the purchasers participation in the exchange program is dependent upon the continued affiliation of the applicable time-share plan with the exchange program.
(6)Whether the purchasers participation in the exchange program is voluntary.
(7)A fair and accurate description of the terms and conditions of the purchasers contractual relationship with the exchange program and the procedure by which changes thereto may be made.
(8)A fair and accurate description of the procedures necessary to qualify for and effectuate exchanges.
(9)A fair and accurate description of all limitations, restrictions, and priorities employed in the operation of the exchange program, including, but not limited to, limitations on exchanges based on seasonality, accommodation size, or levels of occupancy, expressed in conspicuous type. If those limitations, restrictions, or priorities are not uniformly applied by the exchange company, the information shall include a clear description of the manner in which they are applied.
(10)Whether exchanges are arranged on a space available basis and whether any guarantees of fulfillment of specific requests for exchanges are made by the exchange company.
(11)Whether and under what circumstances an owner, in dealing with the exchange program, may lose the right to use and occupy an accommodation of the time-share plan during a reserved use period with respect to any properly applied for exchange without being provided with substitute accommodations by the exchange program.
(12)The fees or range of fees for participation by owners in the exchange program, a statement of whether any such fees may be altered by the exchange company and the circumstances under which alterations may be made.
(13)The name and address of the site of each accommodation included within a time-share plan participating in the exchange program.
(14)The number of accommodations in each time-share plan that are available for occupancy and that qualify for participation in the exchange program, expressed within the following numerical groups: 15; 610; 1120; 2150; and 51 and over.
(15)The number of currently enrolled owners for each time-share plan participating in the exchange program, expressed within the following numerical groups: 1100; 101249; 250499; 500999; and 1,000 and over; and a statement of the criteria used to determine those owners who are currently enrolled with the exchange program.
(16)The disposition made by the exchange company of use periods deposited with the exchange program by owners enrolled in the exchange program and not used by the exchange company in effecting exchanges.
(17)The following information for the preceding calendar year, which shall be independently audited by a certified public accountant in accordance with the standards of the Accounting Standards Board of the American Institute of Certified Public Accountants and reported annually no later than August 1 of each year:
(A)The number of owners currently enrolled in the exchange program.
(B)The number of time-share plans that have current affiliation agreements with the exchange program.
(C)The percentage of confirmed exchanges, which is the number of exchanges confirmed by the exchange program divided by the number of exchanges properly applied for, together with a complete and accurate statement of the criteria used to determine whether an exchange request was properly applied for.
(D)The number of use periods for which the exchange program has an outstanding obligation to provide an exchange to an owner who relinquished a use period during a particular year in exchange for a use period in any future year.
(E)The number of exchanges confirmed by the exchange program during the year.
(F)A statement in conspicuous type to the effect that the percentage described in subparagraph (C) is a summary of the exchange requests entered with the exchange program in the period reported and that the percentage does not indicate the probabilities of an owners being confirmed to any specific choice or range of choices.
(c)All written, visual, and electronic communications relating to an exchange company or an exchange program shall be filed with the commissioner upon its request.
(d)The failure of an exchange company to observe the requirements of this section, and the use of any unfair or deceptive act or practice in connection with the operation of an exchange program, is a violation of this chapter.
(e)An exchange company may elect to deny exchange privileges to any owner whose use of the accommodations of the owners time-share plan is denied, and no exchange program or exchange company shall be liable to any of its members or any third parties on account of any such denial of exchange privileges.
SEC. 2.Section 11234 of the Business and Professions Code is amended to read:11234.A developer shall prepare, for issuance by the commissioner, a public report that shall fully and accurately disclose those facts concerning the time-share developer and time-share plan that are required by this chapter or by regulation. The developer shall provide the public report to each purchaser of a time-share interest in a time-share plan at the time of purchase. The public report shall be in writing or in a digital format at the discretion of the purchaser and dated and shall require the purchaser to certify in writing the receipt thereof. The public report for a single site time-share plan is subject to the requirements of subdivision (a). The public report for a specific time-share interest multisite time-share plan is subject to the requirements of both subdivisions (a) and (b). The public report for a nonspecific time-share interest multisite time-share plan is subject to the requirements of subdivision (c). For time-share plans located outside of the state, a public report that has been authorized for use by the situs state regulatory agency and that contains disclosures as determined by the commissioner upon review to be substantially equivalent to or greater than the information required to be disclosed pursuant to this section may be used by the developer to meet the requirements of this section. A developer may, upon approval by the commissioner, submit a public report that combines, in a manner prescribed by the commissioner, the information required to be disclosed by the applicable subdivisions of this section and the information required to be disclosed in a public report issued by a regulatory agency in one or more other states.
(a)Public reports for a single site and those component sites of a specific time-share interest multisite time-share plan that are offered in this state shall include the following:
(1)The name and address of the developer and the type of time-share plan being offered and the name and address of the time-share project.
(2)A description of the existing or proposed accommodations, including the type and number of time-share interests in the accommodations, and if the accommodations are proposed or not yet complete or fully functional, an estimated date of completion.
(3)The number of accommodations and time-share interests, expressed in periods of seven-day use availability or other time increments applicable to the time-share plan, committed to the multisite time-share plan, and available for use by purchasers and a representation about the percentage of useable time authorized for sale, and if that percentage is 100 percent, then a statement describing how adequate periods of time for maintenance and repair will be provided.
(4)A description of any existing or proposed amenities of the time-share plan and, if the amenities are proposed or not yet complete or fully functional, the estimated date of completion.
(5)The extent to which financial arrangements have been made for the completion of any incomplete, promised improvements.
(6)A description of the duration, phases, and operation of the time-share plan.
(7)The name and principal address of the managing entity and a description of the procedures, if any, for altering the powers and responsibilities of the managing entity and for removing or replacing it.
(8)The current annual budget as required by Section 11240, along with the projected assessments and a description of the method for calculating and apportioning the assessments among purchasers, all of which shall be attached as an exhibit to the public report.
(9)Any initial or special fee due from the purchaser at closing together with a description of the purpose and the method of calculating the fee.
(10)A description of any financing offered by or available through the developer.
(11)A description of any liens, defects, or encumbrances on or affecting the title to the time-share interests.
(12)A description of any bankruptcies, pending civil or criminal suits, adjudications, or disciplinary actions of which the developer has knowledge, that would have a material effect on the developers ability to perform its obligations.
(13)Any current or expected fees or charges to be paid by time-share purchasers for the use of any amenities related to the time-share plan.
(14)A description and amount of insurance coverage provided for the protection of the purchaser.
(15)The extent to which a time-share interest may become subject to a tax lien or other lien arising out of claims against purchasers of different time-share interests.
(16)A statement disclosing any right of first refusal or other restraint on the transfer of all or any portion of a time-share interest.
(17)A statement disclosing that a deposit made in connection with the purchase of a time-share interest shall be held by an escrow agent until expiration of any right to cancel the contract and that a deposit shall be returned to the purchaser if he or she elects to exercise his or her right of cancellation. Alternatively, if the commissioner has accepted from the developer a surety bond, irrevocable letter of credit, or other financial assurance, each of which shall be enforceable by the association, in lieu of placing deposits in an escrow account: (A) a statement disclosing that the developer has provided a surety bond, irrevocable letter of credit, or other financial assurance in an amount equal to or in excess of the funds that would otherwise be placed in an escrow account, (B) a description of the type of financial assurance that has been obtained, (C) a statement that if the purchaser elects to exercise his or her right of cancellation as provided in the contract, the developer shall return the deposit, and (D) a description of the person or entity to whom the purchaser should apply for payment.
(18)A statement that the assessments collected from the purchasers will be kept in a segregated account separate from the assessments collected from the purchasers of other time-share plans managed by the same managing entity, along with a statement identifying the location of the account and a disclosure of the rights of owners to inspect the records pertaining to their accounts.
(19)If the time-share plan provides purchasers with the opportunity to participate in an exchange program, a description of the name and address of the exchange company and the method by which a purchaser accesses the exchange program.
(20)Any other information that the developer, with the approval of the commissioner, desires to include in the public report.
(21)Any other information reasonably requested by the commissioner.
(b)Public reports for specific time-share interest multisite time-share plans shall include the following additional disclosures:
(1)A description of each component site, including the name and address of each component site.
(2)The number of accommodations and time-share interests, expressed in periods of seven-day use availability or other time increments applicable to each component site of the time-share plan, committed to the multisite time-share plan and available for use by purchasers and a representation about the percentage of useable time authorized for sale, and if that percentage is 100 percent, then a statement describing how adequate periods of time for maintenance and repair will be provided.
(3)Each type of accommodation in terms of the number of bedrooms, bathrooms, and sleeping capacity, and a statement of whether or not the accommodation contains a full kitchen. For purposes of this description, a full kitchen means a kitchen having a minimum of a dishwasher, range, sink, oven, and refrigerator.
(4)A description of amenities available for use by the purchaser at each component site.
(5)A description of the reservation system, which shall include the following:
(A)The entity responsible for operating the reservation system, its relationship to the developer, and the duration of any agreement for operation of the reservation system.
(B)A summary of the rules and regulations governing access to and use of the reservation system.
(C)The existence of and an explanation regarding any priority reservation features that affect a purchasers ability to make reservations for the use of a given accommodation on a first-come-first-served basis.
(6)The name and principal address of the managing entity for the multisite time-share plan and a description of the procedures, if any, for altering the powers and responsibilities of the managing entity and for removing or replacing it.
(7)A description of any right to make any additions, substitutions, or deletions of accommodations, amenities, or component sites, and a description of the basis upon which accommodations, amenities, or component sites may be added to, substituted in, or deleted from the multisite time-share plan.
(8)A description of the purchasers liability for any fees associated with the multisite time-share plan.
(9)The location of each component site of the multisite time-share plan, the historical occupancy of each component site for the prior 12-month period, if the component site was part of the multisite time-share plan during the 12-month time period, as well as any periodic adjustment or amendment to the reservation system that may be needed in order to respond to actual purchaser use patterns and changes in purchaser use demand for the accommodations existing at that time within the multisite time-share plan.
(10)Any other information that the developer, with the approval of the commissioner, desires to include in the time-share disclosure statement.
(c)Public reports for nonspecific time-share interest multisite time-share plans shall include the following:
(1)The name and address of the developer.
(2)A description of the type of interest and usage rights the purchaser will receive.
(3)A description of the duration and operation of the time-share plan.
(4)A description of the type of insurance coverage provided for each component site.
(5)An explanation of who holds title to the accommodations of each component site.
(6)A description of each component site, including the name and address of each component site.
(7)The number of accommodations and time-share interests, expressed in periods of seven-day use availability or other time increments applicable to the multisite time-share plan for each component site committed to the multisite time-share plan and available for use by purchasers and a representation about the percentage of useable time authorized for sale, and if that percentage is 100 percent, then a statement describing how adequate periods of time for maintenance and repair will be provided.
(8)Each type of accommodation in terms of the number of bedrooms, bathrooms, and sleeping capacity, and a statement of whether or not the accommodation contains a full kitchen. For purposes of this description, a full kitchen means a kitchen having a minimum of a dishwasher, range, sink, oven, and refrigerator.
(9)A description of amenities available for use by the purchaser at each component site.
(10)A description of any incomplete amenities at any of the component sites along with a statement as to any assurance for completion and the estimated date the amenities will be available.
(11)The location of each component site of the multisite time-share plan, the historical occupancy of each component site for the prior 12-month period, if the component site was part of the multisite time-share plan during such 12-month time period, as well as any periodic adjustment or amendment to the reservation system that may be needed in order to respond to actual purchaser use patterns and changes in purchaser use demand for the accommodations existing at that time within the multisite time-share plan.
(12)A description of any right to make any additions, substitutions, or deletions of accommodations, amenities, or component sites, and a description of the basis upon which accommodations, amenities, or component sites may be added to, substituted in, or deleted from the multisite time-share plan.
(13)A description of the reservation system that shall include all of the following:
(A)The entity responsible for operating the reservation system, its relationship to the developer, and the duration of any agreement for operation of the reservation system.
(B)A summary of the rules and regulations governing access to and use of the reservation system.
(C)The existence of and an explanation regarding any priority reservation features that affect a purchasers ability to make reservations for the use of a given accommodation on a first-come-first-served basis.
(14)A description of any liens, defects, or encumbrances that materially affect the purchasers use rights.
(15)The name and principal address of the managing entity for the multisite time-share plan and a description of the procedures, if any, for altering the powers and responsibilities of the managing entity and for removing or replacing it, and a description of the relationship between a multisite time-share plan managing entity and the managing entity of the component sites of a multisite time-share plan, if different from the multisite time-share plan managing entity.
(16)The current annual budget as provided in Section 11240, along with the projected assessments and a description of the method for calculating and apportioning the assessments among purchasers, all of which shall be attached as an exhibit to the public report.
(17)Any current fees or charges to be paid by time-share purchasers for the use of any amenities related to the time-share plan and a statement that the fees or charges are subject to change.
(18)Any initial or special fee due from the purchaser at closing, together with a description of the purpose and method of calculating the fee.
(19)A description of any financing offered by or available through the developer.
(20)A description of any bankruptcies, pending civil or criminal suits, adjudications, or disciplinary actions of which the developer has knowledge, which would have a material effect on the developers ability to perform its obligations.
(21)A statement disclosing any right of first refusal or other restraint on the transfer of all or any portion of a time-share interest.
(22)A statement disclosing that a deposit made in connection with the purchase of a time-share interest shall be held by an escrow agent until expiration of any right to cancel the contract and that a deposit shall be returned to the purchaser if he or she elects to exercise his or her right of cancellation. Alternatively, if the commissioner has accepted from the developer a surety bond, irrevocable letter of credit, or other financial assurance in lieu of placing deposits in an escrow account: (A) a statement disclosing that the developer has provided a surety bond, irrevocable letter of credit, or other financial assurance in an amount equal to or in excess of the funds that would otherwise be placed in an escrow account, (B) a description of the type of financial assurance that has been arranged, (C) a statement that if the purchaser elects to exercise his or her right of cancellation as provided in the contract, the developer shall return the deposit, and (D) a description of the person or entity to whom the purchaser should apply for payment.
(23)If the time-share plan provides purchasers with the opportunity to participate in an exchange program, a description of the name and address of the exchange company and the method by which a purchaser accesses the exchange program.
(24)Any other information that the developer, with the approval of the commissioner, desires to include in the time-share disclosure statement.
(d)The commissioner may establish by regulation provisions regarding the delivery of the public report and other required information through alternative media forms.
(e)The commissioner may, upon finding that the subject matter is otherwise adequately covered or the information is unnecessary or inapplicable, waive any requirement set forth in this section.
SEC. 3.Section 2079.6 of the Civil Code is amended to read:2079.6.This article does not apply to transfers which are required to be preceded by the furnishing, to a prospective transferee, of a copy of a public report pursuant to Section 11018.1 or Section 11234 of the Business and Professions Code and transfers which that can be made without a public report pursuant to Section 11010.4 of the Business and Professions Code, unless the property has been previously occupied.
SEC. 4.No reimbursement is required by this act pursuant to Section 6 of Article XIIIB of the California Constitution because the only costs that may be incurred by a local agency or school district will be incurred because this act creates a new crime or infraction, eliminates a crime or infraction, or changes the penalty for a crime or infraction, within the meaning of Section 17556 of the Government Code, or changes the definition of a crime within the meaning of Section 6 of Article XIIIB of the California Constitution.
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Date
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Status
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|---|---|
| May 14, 2015 | Referred to Com. on JUD. |
| Jul 14, 2015 | Chaptered by Secretary of State - Chapter 88, Statutes of 2015. |
| Jul 14, 2015 | Approved by the Governor. |
| Jul 2, 2015 | Enrolled and presented to the Governor at 1 p.m. |
| Jun 25, 2015 | Read third time. Passed. Ordered to the Assembly. (Ayes 37. Noes 0. Page 1620.). |
| Jun 25, 2015 | Read third time. Passed. Ordered to the Assembly. |
| Jun 25, 2015 | In Assembly. Ordered to Engrossing and Enrolling. |
| Jun 23, 2015 | Read second time. Ordered to Consent Calendar. |
| Jun 22, 2015 | From committee: Be placed on second reading file pursuant to Senate Rule 28.8 and ordered to consent calendar. |
| Jun 10, 2015 | From committee: Do pass and re-refer to Com. on APPR. with recommendation: To Consent Calendar. (Ayes 7. Noes 0.) (June 9). Re-referred to Com. on APPR. |
| Feb 26, 2015 | Read first time. To print. |
| Apr 30, 2015 | Read third time. Passed. Ordered to the Senate. (Ayes 77. Noes 0. Page 1225.) |
| Apr 30, 2015 | Read third time. Passed. Ordered to the Senate. |
| Apr 30, 2015 | In Senate. Read first time. To Com. on RLS. for assignment. |
| Apr 23, 2015 | Read second time. Ordered to Consent Calendar. |
| Apr 22, 2015 | From committee: Do pass. To Consent Calendar. (Ayes 17. Noes 0.) (April 22). |
| Apr 14, 2015 | From committee: Do pass and re-refer to Com. on APPR. with recommendation: To Consent Calendar. (Ayes 14. Noes 0.) (April 14). Re-referred to Com. on APPR. |
| Mar 16, 2015 | Referred to Com. on B. & P. |
| Feb 27, 2015 | From printer. May be heard in committee March 29. |
|
Date
|
Description
|
Location
|
Votes
|
|
|---|---|---|---|---|
| Jun 25, 2015 | Consent Calendar 2nd AB905 Beth Gaines | Senate Floor |
Passed |
|
| Jun 9, 2015 | Do pass, but first be re-referred to the Committee on [Appropriations] with the recommendation: To Consent Calendar | Senate Standing Committee on Judiciary |
Passed |
|
| Apr 30, 2015 | AB 905 GAINES Consent Calendar Second Day Regular Session | Assembly Floor |
Passed |
|
| Apr 22, 2015 | Do pass. To Consent Calendar. | Assembly Standing Committee on Appropriations |
Passed |
|
| Apr 14, 2015 | Do pass and be re-referred to the Committee on [Appropriations] with recommendation: To Consent Calendar | Assembly Standing Committee on Business and Professions |
Passed |
This list shows positions taken on this bill by organizations on the date displayed, which is linked to the original source.
Positions by individuals are not included.
AB 905
Page 6
|
Office of Senate Floor Analyses (916) 651-1520 Fax: (916) 327-4478 |
CONSENT
Bill No: AB 905
Introduced: 2/26/15
SENATE JUDICIARY COMMITTEE: 7-0, 6/9/15
AYES: Jackson, Moorlach, Anderson, Hertzberg, Leno, Monning, Wieckowski
SENATE APPROPRIATIONS COMMITTEE: Senate Rule 28.8
ASSEMBLY FLOOR: 77-0, 4/30/15 (Consent) - See last page for vote
SUBJECT: Time-shares: public report: real property inspection
SOURCE: American Resort Development Association
Resort Owner’s Coalition
DIGEST: This bill modifies the Vacation Ownership and Time-share Act of 2004 to authorize required copies of public reports pertaining to time-share interests and required copies of disclosures pertaining to exchange programs to be provided in a digital format at the discretion of the purchaser. This bill also exempts licensed real estate brokers or salespersons from the duty to conduct a reasonably competent and diligent visual inspection of a time-share property and to disclose all facts materially affecting the value or desirability of the property to a prospective purchaser when the property has not been previously occupied, and, as a condition of transfer, the prospective purchaser would receive a copy of the public report.
Existing law:
Regulates, in the Vacation Ownership and Time-share Act of 2004, the creation and sale of time-share interests in a time-share plan, and the creation and operation of exchange programs that facilitate the voluntary exchange of time-share interests. (Bus. & Prof. Code Sec. 11210 et seq.)
Provides that any person who, to any individual located in the state, sells, offers to sell, or attempts to solicit prospective purchasers to purchase a time-share interest, or any person who creates a time-share plan with an accommodation in the state, shall register the time-share plan with the Commissioner of Real Estate, unless the time-share plan is otherwise exempt. (Bus. & Prof. Code Sec. 11226 (a).)
Provides that, when registering a time-share plan, the developer of a time-share plan shall provide the Commissioner with, among other things, a public report that complies with the requirements of the Vacation Ownership and Time-share Act of 2004. (Bus. & Prof. Code Sec. 11226 (c).)
Provides that a developer shall prepare, for issuance by the Commissioner, a public report that shall fully and accurately disclose those facts concerning the time-share developer and time-share plan that are required by the Vacation Ownership and Time-share Act of 2004 or by regulation. (Bus. & Prof. Code Sec. 11234.)
Provides that the developer shall provide the public report to each purchaser of a time-share interest in a time-share plan at the time of purchase. Existing law specifies the public report shall be in writing and dated and shall require the purchaser to certify in writing the receipt thereof. Existing law also specifies the information required to be contained within a public report. (Bus. & Prof. Code Sec. 11234.)
Provides that public reports for a single site and those component sites of a specific time-share interest multisite time-share plan that are offered in this state shall include specified information. (Bus. & Prof. Code Sec. 11234.)
Establishes additional disclosures for public reports for specific time-share interest multisite time-share plans and for nonspecific time-share interest multisite time-share plans. (Bus. & Prof. Code Sec. 11234.)
Provides that if a developer offers a purchaser the opportunity to subscribe to or to become a member of an exchange program, or if an exchange company offers directly to the purchaser the opportunity to subscribe to or become a member of an exchange company, the developer or exchange company shall provide to the purchaser in writing specified information prior to or concurrently with the execution of a contract or subscription for membership in the exchange program. (Bus. & Prof. Code Sec. 11216.)
Provides that it is the duty of a real estate broker or salesperson to a prospective purchaser of residential real property, as defined, to conduct a reasonably competent and diligent visual inspection of the property offered for sale and to disclose to that prospective purchaser all facts materially affecting the value or desirability of the property that an investigation would reveal, and to make other specified disclosures about the property and transaction, if that broker has a written contract with the seller to find or obtain a buyer or is a broker who acts in cooperation with that broker to find and obtain a buyer. (Civ. Code Sec. 2079 et seq.)
Specifies that the duty of a real estate broker or salesperson to conduct a reasonably competent and diligent visual inspection of a property does not apply to transfers which are required to be preceded by the furnishing, to a prospective transferee, of a copy of a public report pursuant to Section 11018.1 of the Business and Professions Code and transfers which can be made without a public report pursuant to Section 11010.4 of the Business and Professions Code, unless the property has been previously occupied. (Civ. Code Sec. 2079.6.)
This bill:
Authorizes a developer to provide a public report required by the Vacation Ownership and Time-share Act of 2004, as well as any disclosures pertaining to an exchange program, to a purchaser in writing or in a digital format at the discretion of the purchaser.
Provides that the duty of a real estate broker or salesperson to conduct a reasonably competent and diligent visual inspection of a property and to provide specified disclosures about the property and transaction does not apply to transfers which are required to be preceded by the furnishing, to a prospective transferee, of a copy of a public report pursuant to Section 11234 of the Business and Professions Code pertaining to time-share plans, unless the property has been previously occupied.
Background
Time-shares, or vacation ownerships, are terms that generally describe a system where owners occupy a property for short periods of time each year while on vacation. This contrasts with more traditional common interest developments, like condominiums and residential subdivisions, which are usually occupied year-round. The regulation of timeshares began in earnest in 1981 when the industry was widely perceived as being prone to high-pressure sales tactics and rampant consumer fraud (an era now half-jokingly referred to as the “crime-share” days). Stringent state regulations for time-shares were built into the Subdivided Lands Law that regulated common interest developments. Although time-share regulations and references are now found throughout state law, they are now principally found in the Vacation Ownership and Time-share Act of 2004. (Bus. & Prof. Code Sec. 11210 et seq.)
Under current law, time-shares are regulated by the Bureau of Real Estate (BRE), which has a broad responsibility to ensure that purchasers of regulated time-shares, both in-state and out-of-state, receive everything that they bargained for when purchasing their interest in a time-share plan. Time-share interests regulated by BRE fall into two basic categories, based on whether participation in the time-share results in the conveyance of an interest in real property. The first category of regulated time-share interests includes those where a right of occupancy in a time-share property is coupled with a conveyance of an estate in real property, which is typically transferred to the purchaser by grant deed. The second involves time-share interests based on purchase agreements between sellers and buyers that do not involve the conveyance of an interest in real property. These purchase agreements take many different forms, such as granting membership in a corporation along with a time-limited license for exclusive use of a particular property.
BRE’s oversight of time-share interests is provided primarily through the creation of a “public report,” which must be issued to each purchaser before the sale of an interest in a time-share plan. The purpose of a public report is “to prevent fraud and misrepresentation in the marketing of parcels of land by requiring disclosure of the financial risks and benefits of a transaction to proposed purchasers and lessees.” (California Coastal Com. v. Quanta Investment Corp. (1980) 113 Cal.App.3d 579, 589.) The Vacation Ownership and Time-share Act of 2004 requires the creation of this public report, which encompasses most of the major elements of a time-share purchase (property description, amenities, real estate disclosures, costs and escrow, maintenance fees and assessments, management and local governance, rescission, liability, and a host of other matters). BRE oversees developer compliance with regulations governing the creation of time-shares, as well those related to advertising and sales of time-share interests, but the California Attorney General bears the ultimate responsibility to ensure the law is enforced.
The Vacation Ownership and Time-share Act of 2004 also governs the creation and sale of interests in “exchange programs,” which are contractual arrangements that facilitate voluntary exchange of time-share interests, such as allowing the owner of a time-share interest to trade use of time owned in one time-share plan for use of time at another property. The Act requires those who offer purchasers the opportunity to subscribe to or become a member of an exchange program to provide specified disclosures about the exchange program, including disclosures about the program’s membership and governance.
This bill, sponsored by the American Resort Development Association, authorizes developers and sellers of time-share interests to provide time-share public reports and disclosures pertaining to exchange programs in a digital format at the discretion of the purchaser. This bill also relieves licensed real estate brokers and salespersons of the duty to conduct a reasonably competent and diligent visual inspection of a previously unoccupied time-share interest offered for sale, and to disclose to a prospective purchaser all facts materially affecting the value or desirability of the property that an investigation would reveal, when the transfer of the time-share interest would require the seller to provide a public report.
Comments
The author states:
Under existing law, purchasers of timeshares must be provided an extensive public report on the development. Existing law also mandates that purchasers of timeshare exchange program[s] be given detailed information regarding the program . . . In this modern and increasingly paperless world, many consumers would prefer not to get these sometimes bulky disclosures in paper form. AB 905 allows the disclosures to be made electronically – at the discretion of the purchaser. It also replaces language that was inadvertently left out of previous timeshare legislation. In 2004, a rewrite of the timeshare law (AB 2252 – Montanez) deleted the mandated timeshare report from [Business and Professions Code] Section 11018.1 and placed an expanded report requirement in [a] new section -- [Business and Professions Code] Section 11234. However, Civil Code Section 2079.6 was never amended to reflect that change.
Related/Prior Legislation
AB 634 (Calderon, 2015) amends the Vacation Ownership and Time-share Act of 2004 to prohibit a time-share owner’s association from publishing its list of owners or providing a copy of the list to any time-share interest owner or to any third party, or from using or selling the list for commercial purposes, except to accomplish legitimate association business, as defined. The bill is pending in the Senate Judiciary Committee.
AB 2252 (Montanez, Chapter 697, Statutes of 2004) consolidated and revised the body of time-share vacation property law, streamlined the regulatory approval process of time-share plans, and added new consumer protections and disclosures to create the Vacation Ownership and Time-share Act of 2004.
FISCAL EFFECT: Appropriation: No Fiscal Com.: Yes Local: Yes
American Resort Development Association (co-source)
Resort Owner’s Coalition (co-source)
ASSEMBLY FLOOR: 77-0, 4/30/15
AYES: Achadjian, Alejo, Travis Allen, Baker, Bigelow, Bloom, Bonilla, Bonta, Brough, Brown, Burke, Calderon, Chang, Chau, Chiu, Chu, Cooley, Cooper, Dababneh, Dahle, Daly, Dodd, Eggman, Frazier, Beth Gaines, Gallagher, Cristina Garcia, Eduardo Garcia, Gatto, Gipson, Gonzalez, Gordon, Gray, Grove, Hadley, Harper, Roger Hernández, Holden, Irwin, Jones, Jones-Sawyer, Kim, Lackey, Levine, Linder, Lopez, Low, Maienschein, Mathis, Mayes, McCarty, Medina, Melendez, Mullin, Nazarian, Obernolte, O'Donnell, Olsen, Patterson, Perea, Quirk, Rendon, Ridley-Thomas, Rodriguez, Salas, Santiago, Steinorth, Mark Stone, Thurmond, Ting, Wagner, Waldron, Weber, Wilk, Williams, Wood, Atkins
NO VOTE RECORDED: Campos, Chávez, Gomez
Prepared by: Tobias Halvarson / JUD. / (916) 651-4113
6/24/15 17:20:54
**** END ****
AB 905 (Beth Gaines)
Page 10 of 10
Senator Hannah-Beth Jackson, Chair
2015-2016 Regular Session
AB 905 (Beth Gaines)
Version: February 26, 2015
Hearing Date: June 9, 2015
Fiscal: Yes
Urgency: No
TH
SUBJECT
Time-shares: Public Report: Real Property Inspection
DESCRIPTION
The Vacation Ownership and Time-share Act of 2004 requires a person who creates a time-share plan or who is in the business of selling time-share interests, to prepare, for issuance by the Real Estate Commissioner, a public report that discloses certain facts concerning the time-share. Existing law requires those who create or sell time-shares to provide a copy of the public report in writing to each purchaser of a time-share interest in a time-share plan at the time of purchase. The Act also requires those who offer a purchaser the opportunity to subscribe to, or become a member of, an exchange program, which is a method, arrangement, or procedure for the voluntary exchange of time-share interests or other property interests, to provide the purchaser with specified disclosures in writing.
This bill would modify the Act to provide that required copies of public reports pertaining to time-share interests and required copies of disclosures pertaining to exchange programs may be provided in a digital format at the discretion of the purchaser. This bill would also exempt licensed real estate brokers or salespersons from the duty to conduct a reasonably competent and diligent visual inspection of a time-share property and to disclose all facts materially affecting the value or desirability of the property to a prospective purchaser when, as a condition of transfer, the prospective purchaser would receive a copy of the public report, provided the property has not been previously occupied.
BACKGROUND
Time-shares, or vacation ownerships, are terms that generally describe a system where owners occupy a property for short periods of time each year while on vacation. This contrasts with more traditional common interest developments, like condominiums and residential subdivisions, which are usually occupied year-round. The regulation of timeshares began in earnest in 1981 when the industry was widely perceived as being prone to high-pressure sales tactics and rampant consumer fraud (an era now half-jokingly referred to as the “crime-share” days). Stringent state regulations for time-shares were built into the Subdivided Lands Law that regulated common interest developments. Although time-share regulations and references are now found throughout state law, they are now principally found in the Vacation Ownership and Time-share Act of 2004. (Bus. & Prof. Code Sec. 11210 et seq.)
Under current law, time-shares are regulated by the Bureau of Real Estate (BRE), which has a broad responsibility to ensure that purchasers of regulated time-shares, both in-state and out-of-state, receive everything that they bargained for when purchasing their interest in a time-share plan. Time-share interests regulated by BRE fall into two basic categories, based on whether participation in the time share results in the conveyance of an interest in real property. The first category of regulated time-share interests includes those where a right of occupancy in a time-share property is coupled with a conveyance of an estate in real property, which is typically transferred to the purchaser by grant deed. The second involves time-share interests based on purchase agreements between sellers and buyers that do not involve the conveyance of an interest in real property. These purchase agreements take many different forms, such as granting membership in a corporation along with a time-limited license for exclusive use of a particular property.
BRE’s oversight of time-share interests is provided primarily through the creation of a “public report,” which must be issued to each purchaser before the sale of an interest in a time-share plan. The purpose of a public report is “to prevent fraud and misrepresentation in the marketing of parcels of land by requiring disclosure of the financial risks and benefits of a transaction to proposed purchasers and lessees.” (California Coastal Com. v. Quanta Investment Corp. (1980) 113 Cal.App.3d 579, 589.) The Vacation Ownership and Time-share Act of 2004 requires the creation of this public report, which encompasses most of the major elements of a time-share purchase (property description, amenities, real estate disclosures, costs and escrow, maintenance fees and assessments, management and local governance, rescission, liability, and a host of other matters). BRE oversees developer compliance with regulations governing the creation of time-shares, as well those related to advertising and sales of time-share interests, but the California Attorney General bears the ultimate responsibility to ensure the law is enforced.
The Vacation Ownership and Time-share Act of 2004 also governs the creation and sale of interests in “exchange programs,” which are contractual arrangements that facilitate voluntary exchange of time-share interests, such as allowing the owner of a time-share interest to trade use of time owned in one time-share plan for use of time at another property. The act requires those who offer purchasers the opportunity to subscribe to or become a member of an exchange program to provide specified disclosures about the exchange program, including disclosures about the program’s membership and governance.
This bill, sponsored by the American Resort Development Association, would authorize developers and sellers of time-share interests to provide time-share public reports and disclosures pertaining to exchange programs in a digital format at the discretion of the purchaser. This bill would also relieve licensed real estate brokers and salespersons of the duty to conduct a reasonably competent and diligent visual inspection of a previously unoccupied time-share interest offered for sale, and to disclose to a prospective purchaser all facts materially affecting the value or desirability of the property that an investigation would reveal, when the transfer of the time-share interest would require the seller to provide a public report.
CHANGES TO EXISTING LAW
Existing law, the Vacation Ownership and Time-share Act of 2004, regulates the creation and sale of time-share interests in a time-share plan, and the creation and operation of exchange programs that facilitate the voluntary exchange of time-share interests. (Bus. & Prof. Code Sec. 11210 et seq.)
Existing law provides that any person who, to any individual located in the state, sells, offers to sell, or attempts to solicit prospective purchasers to purchase a time-share interest, or any person who creates a time-share plan with an accommodation in the state, shall register the time-share plan with the Commissioner of Real Estate, unless the time-share plan is otherwise exempt. (Bus. & Prof. Code Sec. 11226 (a).)
Existing law provides that, when registering a time-share plan, the developer of a time-share plan shall provide the Commissioner with, among other things, a public report that complies with the requirements of the Vacation Ownership and Time-share Act of 2004. (Bus. & Prof. Code Sec. 11226 (c).)
Existing law provides that a developer shall prepare, for issuance by the Commissioner, a public report that shall fully and accurately disclose those facts concerning the time-share developer and time-share plan that are required by the Vacation Ownership and Time-share Act of 2004 or by regulation. (Bus. & Prof. Code Sec. 11234.)
Existing law provides that the developer shall provide the public report to each purchaser of a time-share interest in a time-share plan at the time of purchase. Existing law specifies the public report shall be in writing and dated and shall require the purchaser to certify in writing the receipt thereof. Existing law also specifies the information required to be contained within a public report. (Bus. & Prof. Code Sec. 11234.)
Existing law provides that public reports for a single site and those component sites of a specific time-share interest multisite time-share plan that are offered in this state shall include the following:
the name and address of the developer and the type of time-share plan being offered and the name and address of the time-share project;
a description of the existing or proposed accommodations, including the type and number of time-share interests in the accommodations, and if the accommodations are proposed or not yet complete or fully functional, an estimated date of completion;
the number of accommodations and time-share interests, expressed in periods of seven-day use availability or other time increments applicable to the time-share plan, committed to the multisite time-share plan, and available for use by purchasers and a representation about the percentage of useable time authorized for sale, and if that percentage is 100 percent, then a statement describing how adequate periods of time for maintenance and repair will be provided;
a description of any existing or proposed amenities of the time-share plan and, if the amenities are proposed or not yet complete or fully functional, the estimated date of completion;
the extent to which financial arrangements have been made for the completion of any incomplete, promised improvements;
a description of the duration, phases, and operation of the time-share plan;
the name and principal address of the managing entity and a description of the procedures, if any, for altering the powers and responsibilities of the managing entity and for removing or replacing it;
the current annual budget, along with the projected assessments and a description of the method for calculating and apportioning the assessments among purchasers, all of which shall be attached as an exhibit to the public report;
any initial or special fee due from the purchaser at closing together with a description of the purpose and the method of calculating the fee;
a description of any financing offered by or available through the developer;
a description of any liens, defects, or encumbrances on or affecting the title to the time-share interests;
a description of any bankruptcies, pending civil or criminal suits, adjudications, or disciplinary actions of which the developer has knowledge, that would have a material effect on the developer’s ability to perform its obligations;
any current or expected fees or charges to be paid by time-share purchasers for the use of any amenities related to the time-share plan;
a description and amount of insurance coverage provided for the protection of the purchaser;
the extent to which a time-share interest may become subject to a tax lien or other lien arising out of claims against purchasers of different time-share interests;
a statement disclosing any right of first refusal or other restraint on the transfer of all or any portion of a time-share interest;
a statement disclosing that a deposit made in connection with the purchase of a time-share interest shall be held by an escrow agent until expiration of any right to cancel the contract and that a deposit shall be returned to the purchaser if he or she elects to exercise his or her right of cancellation, as specified;
a statement that the assessments collected from the purchasers will be kept in a segregated account separate from the assessments collected from the purchasers of other time-share plans managed by the same managing entity, along with a statement identifying the location of the account and a disclosure of the rights of owners to inspect the records pertaining to their accounts;
if the time-share plan provides purchasers with the opportunity to participate in an exchange program, a description of the name and address of the exchange company and the method by which a purchaser accesses the exchange program;
any other information that the developer, with the approval of the commissioner, desires to include in the public report; and
any other information reasonably requested by the commissioner. (Bus. & Prof. Code Sec. 11234.)
Existing law establishes additional disclosures for public reports for specific time-share interest multisite time-share plans and for nonspecific time-share interest multisite time-share plans. (Bus. & Prof. Code Sec. 11234.)
Existing law provides that if a developer offers a purchaser the opportunity to subscribe to or to become a member of an exchange program, or if an exchange company offers directly to the purchaser the opportunity to subscribe to or become a member of an exchange company, the developer or exchange company shall provide to the purchaser in writing all of the following information prior to or concurrently with the execution of a contract or subscription for membership in the exchange program:
the name and address of the exchange company;
the names of all officers, directors, and shareholders of the exchange company;
whether the exchange company or any of its officers or directors have any legal or beneficial interest in any developer or managing entity for any time-share plan participating in the exchange program and, if so, the identity of the time-share plan and the nature of the interest;
a copy of the form of the contract between the purchaser and the exchange company, along with a statement that the purchaser’s contract with the exchange company is a contract separate and distinct from the purchaser’s contract with the seller of time-share interests;
whether the purchaser’s participation in the exchange program is dependent upon the continued affiliation of the applicable time-share plan with the exchange program;
whether the purchaser’s participation in the exchange program is voluntary;
a fair and accurate description of the terms and conditions of the purchaser’s contractual relationship with the exchange program and the procedure by which changes thereto may be made;
a fair and accurate description of the procedures necessary to qualify for and effectuate exchanges;
a fair and accurate description of all limitations, restrictions, and priorities employed in the operation of the exchange program, including, but not limited to, limitations on exchanges based on seasonality, accommodation size, or levels of occupancy, expressed in conspicuous type. If those limitations, restrictions, or priorities are not uniformly applied by the exchange company, the information shall include a clear description of the manner in which they are applied;
whether exchanges are arranged on a space available basis and whether any guarantees of fulfillment of specific requests for exchanges are made by the exchange company;
whether and under what circumstances an owner, in dealing with the exchange program, may lose the right to use and occupy an accommodation of the time-share plan during a reserved use period with respect to any properly applied for exchange without being provided with substitute accommodations by the exchange program;
the fees or range of fees for participation by owners in the exchange program, a statement of whether any such fees may be altered by the exchange company and the circumstances under which alterations may be made;
the name and address of the site of each accommodation included within a time-share plan participating in the exchange program;
the number of accommodations in each time-share plan that are available for occupancy and that qualify for participation in the exchange program, expressed within the following numerical groups: 1–5; 6–10; 11–20; 21–50; and 51 and over;
the number of currently enrolled owners for each time-share plan participating in the exchange program, expressed within the following numerical groups: 1–100; 101–249; 250–499; 500–999; and 1,000 and over; and a statement of the criteria used to determine those owners who are currently enrolled with the exchange program;
the disposition made by the exchange company of use periods deposited with the exchange program by owners enrolled in the exchange program and not used by the exchange company in effecting exchanges; and
the following information for the preceding calendar year, which shall be independently audited by a certified public accountant in accordance with the standards of the Accounting Standards Board of the American Institute of Certified Public Accountants and reported annually no later than August 1 of each year:
the number of owners currently enrolled in the exchange program;
the number of time-share plans that have current affiliation agreements with the exchange program;
the percentage of confirmed exchanges, which is the number of exchanges confirmed by the exchange program divided by the number of exchanges properly applied for, together with a complete and accurate statement of the criteria used to determine whether an exchange request was properly applied for;
a statement in conspicuous type to the effect that the percentage described above is a summary of the exchange requests entered with the exchange program in the period reported and that the percentage does not indicate the probabilities of an owner’s being confirmed to any specific choice or range of choices;
the number of use periods for which the exchange program has an outstanding obligation to provide an exchange to an owner who relinquished a use period during a particular year in exchange for a use period in any future year; and
the number of exchanges confirmed by the exchange program during the year. (Bus. & Prof. Code Sec. 11216.)
This bill would authorize a developer to provide a public report required by the Vacation Ownership and Time-share Act of 2004, as well as any disclosures pertaining to an exchange program, to a purchaser in writing or in a digital format at the discretion of the purchaser.
Existing law provides that it is the duty of a real estate broker or salesperson to a prospective purchaser of residential real property, as defined, to conduct a reasonably competent and diligent visual inspection of the property offered for sale and to disclose to that prospective purchaser all facts materially affecting the value or desirability of the property that an investigation would reveal, and to make other specified disclosures about the property and transaction, if that broker has a written contract with the seller to find or obtain a buyer or is a broker who acts in cooperation with that broker to find and obtain a buyer. (Civ. Code Sec. 2079 et seq.)
Existing law specifies that the duty of a real estate broker or salesperson to conduct a reasonably competent and diligent visual inspection of a property does not apply to transfers which are required to be preceded by the furnishing, to a prospective transferee, of a copy of a public report pursuant to Section 11018.1 of the Business and Professions Code and transfers which can be made without a public report pursuant to Section 11010.4 of the Business and Professions Code, unless the property has been previously occupied. (Civ. Code Sec. 2079.6.)
This bill would additionally provide that the duty of a real estate broker or salesperson to conduct a reasonably competent and diligent visual inspection of a property and to provide specified disclosures about the property and transaction does not apply to transfers which are required to be preceded by the furnishing, to a prospective transferee, of a copy of a public report pursuant to Section 11234 of the Business and Professions Code pertaining to time-share plans, unless the property has been previously occupied.
COMMENT
Stated need for the bill
The author states:
Under existing law, purchasers of timeshares must be provided an extensive public report on the development. Existing law also mandates that purchasers of timeshare exchange program[s] be given detailed information regarding the program . . . In this modern and increasingly paperless world, many consumers would prefer not to get these sometimes bulky disclosures in paper form. AB 905 allows the disclosures to be made electronically – at the discretion of the purchaser. It also replaces language that was inadvertently left out of previous timeshare legislation. In 2004, a rewrite of the timeshare law (AB 2252 – Montanez) deleted the mandated timeshare report from [Business and Professions Code] Section 11018.1 and placed an expanded report requirement in [a] new section -- [Business and Professions Code] Section 11234. However, Civil Code Section 2079.6 was never amended to reflect that change.
Providing Disclosures Electronically
This bill would explicitly authorize developers and sellers of time-share interests to provide copies of a time-share’s public report and required disclosures about time-share exchange programs to prospective purchasers electronically at the purchaser’s discretion. The ability to receive public reports and other statements disclosing the terms and conditions of a time-share purchase electronically at the purchaser’s option would seem to give consumers greater control over how they receive these rather lengthy disclosures. Some consumers may be more likely to read the disclosures if they are presented in electronic format, whereas others might find them easier to ignore. However, since this bill would leave it to the consumer to decide what format to receive these materials in, the bill is unlikely to undermine existing disclosure requirements and may arguably improve the disclosure process. Staff notes that the Legislature has previously authorized consumers to receive certain real estate disclosures and notices electronically, including under the Davis-Stirling Common Interest Development Act, which allows homeowners to receive documents from a homeowners association by electronic delivery if the recipient has consented, in writing, to that method of delivery. (Civ. Code Sec. 4040.) This bill would expand to time-share interests the existing practice of providing certain real estate disclosures electronically.
Eliminating Duty to Inspect and Disclose
This bill would also exempt licensed real estate brokers or salespersons from the duty to conduct a reasonably competent and diligent visual inspection of a time-share property and to disclose all facts materially affecting the value or desirability of the property to a prospective purchaser when, as a condition of transfer, the prospective purchaser would receive a copy of the public report, provided the property has not been previously occupied. Normally, a licensed real estate professional is duty-bound to properly inspect and advise their client of the conditions of a property the client is considering purchasing. This inspection is typically done alongside other specialized inspections, such as of a roof or a plumbing system, during the final phases of a real estate transaction. It is intended to help ensure that the purchaser of real property understands what he or she is purchasing.
However, relieving licensed real estate brokers or salespersons from the duty to conduct visual inspections of time-share properties that have not been previously occupied and are the subject of public reports would remove an arguably unnecessary obligation currently imposed on licensees. Having not been previously occupied, these properties are less likely to have characteristics affecting the value or desirability of the property that would be revealed during a visual inspection. For these types of properties, a public report is likely to be more objective, more comprehensive, and a better source for evaluating the value or desirability of a property than a visual inspection conducted by a licensee.
Support: None Known
Opposition: None Known
HISTORY
Source: American Resort Development Association; Resort Owner’s Coalition
Related Pending Legislation: AB 634 (Calderon, 2015) would amend the Vacation Ownership and Time-share Act of 2004 to prohibit a time-share owner’s association from publishing its list of owners or providing a copy of the list to any time-share interest owner or to any third party, or from using or selling the list for commercial purposes, except to accomplish legitimate association business, as defined. This bill is pending in the Senate Judiciary Committee.
Prior Legislation: AB 2252 (Montanez, Ch. 697, Stats. 2004) consolidated and revised the body of time-share vacation property law, streamlined the regulatory approval process of time-share plans, and added new consumer protections and disclosures to create the Vacation Ownership and Time-share Act of 2004.
Prior Vote:
Assembly Floor (Ayes 77, Noes 0)
Assembly Appropriations Committee (Ayes 17, Noes 0)
Assembly Business and Professions Committee (Ayes 14, Noes 0)
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AB 905
Page 2
Date of Hearing: April 22, 2015
ASSEMBLY COMMITTEE ON APPROPRIATIONS
Jimmy Gomez, Chair
AB 905
(Beth Gaines) – As Introduced February 26, 2015
Policy Committee: |
Business and Professions |
Vote: |
14 - 0 |
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Urgency: No State Mandated Local Program: Yes Reimbursable: No
SUMMARY: This bill authorizes a time-share developer, who creates a time-share plan or is in the business of selling time-share interests, to provide to a purchaser a mandated public report or other disclosures in a digital format at the discretion of the purchase. The bill also corrects a drafting oversight from previous legislation regarding inspection and disclosure requirement exemptions.
FISCAL EFFECT:
Costs are minor and absorbable within existing California Bureau of Real Estate (CalBRE) resources.
COMMENTS:
Purpose. According to the author, "California law requires a number of disclosures to protect Californians who purchase timeshares. However, in this modern and increasingly paperless world, many consumers would prefer not to get these sometimes bulky disclosures in paper form. [This bill] allows the disclosures to be made electronically – at the discretion of the purchaser."
Background. CalBRE, in addition to administering and enforcing laws governing the sale of subdivided lots and common interest developments, also administers and enforces laws governing the sale of time-share interests. Time-share interests in a time-share project, also known as a time-share plan, sold in California, whether the plan is located in California or outside the state, are subject to regulation under The Vacation Ownership and Time-share Act of 2004 (time-share Act).
The time-share Act requires a Time-share Plan Conditional or Final Public Report be issued and a copy given to each purchaser prior to the execution of a sales contract for a sale of a time-share. A copy of this report must also be given to any member of the public who requests one. The Time-share Final Plan Public Report is issued only after the developers comply with the provisions of all the applicable laws and regulations. Existing law mandates that the developer prepare the public report, and that the public report include the specific disclosures as required by that statute.
According to the author, a number of states allow electronic
disclosure of timeshare documents including: Arizona, Arkansas,
Florida, Illinois, Louisiana, Nevada, New York, and Virginia. This
bill proposes to allow the report to be offered in writing (as in
existing law) or in a digital format at the discretion of the
purchaser.
Prior Legislation. AB 2252 (Montanez), Chapter 697, Statutes of 2004, enacted the "Vacation Ownership and Time-share Act of 2004," consolidated and revised the entire body of time-share vacation property regulation, streamlined the regulatory approval process, and added new consumer protections.
Analysis Prepared by: Jennifer Swenson / APPR. / (916) 319-2081
AB 905
Page 4
Date of Hearing: April 14, 2015
ASSEMBLY COMMITTEE ON BUSINESS AND PROFESSIONS
Susan Bonilla, Chair
AB 905
(Beth Gaines) – As Introduced February 26, 2015
SUBJECT: Time-shares: public report: real property inspection.
SUMMARY: Authorizes a time-share developer, who creates a time-share plan or is in the business of selling time-share interests, to provide to a purchaser a mandated public report or other disclosures in a digital format, and provides that certain inspection and disclosure requirements do not apply to property transfers that are already required to meet mandated reporting requirements.
EXISTING LAW
Existing law, the Vacation Ownership and Time-share Act of 2004 (Act), requires a time-share developer, defined as a person who creates a time-share plan or is in the business of selling time-share interests, to prepare, for issuance by the Real Estate Commissioner (Commissioner), a public report that discloses certain facts concerning the developer and time-share plan, and to provide a copy of the public report in writing to each purchaser of a time-share interest in a time-share plan at the time of purchase. (Business and Professions Code (BPC) Section 11234)
Defines a “public report” as a preliminary public report, conditional public report, final public report, or other such disclosure document authorized for use in connection with the offering of time-share interests pursuant to the Act. (BPC Section 11212(r))
Requires the public report to disclose certain things, depending on whether the time-share is single site or component site of a specific time-share interest multisite time-share plan; a specific time-share interest multisite time-share plan; or a nonspecific time-share interest multisite time-share plan. (BPC Section 11234)
Requires a single site or component site of a specific time-share interest to disclose, among other things:
A description of any existing or proposed amenities of the time-share plan and, if the amenities are proposed or not yet complete or fully functional, the estimated date of completion;
The extent to which financial arrangements have been made for the completion of any incomplete, promised improvements;
A description of the duration, phases, and operation of the time-share plan;
The name and principal address of the managing entity and a description of the procedures, if any, for altering the powers and responsibilities of the managing entity and for removing or replacing it;
The current annual budget as required by Section 11240, along with the projected assessments and a description of the method for calculating and apportioning the assessments among purchasers, all of which shall be attached as an exhibit to the public report;
Any initial or special fee due from the purchaser at closing together with a description of the purpose and the method of calculating the fee;
A description of any financing offered by or available through the developer;
A description of any liens, defects, or encumbrances on or affecting the title to the time-share interests; and,
A description of any bankruptcies, pending civil or criminal suits, adjudications, or disciplinary actions of which the developer has knowledge, that would have a material effect on the developer’s ability to perform its obligations. (BPC Section 11234(a))
Requires a developer who offers a purchaser the opportunity to subscribe or become a member of an exchange program, defined as any method, arrangement, or procedure for the voluntary exchange of time-share interests or other property interests, to provide the purchaser with specified disclosures in writing, and makes a violation of the public report disclosure requirement a public offense. (BPC Section 11216)
Requires a developer, in registering a time-share plan, to provide the Commissioner a public report that complies with the requirements of Section 11234, or for a time-share plan located outside of the state, a public report that has been authorized for use by the state regulatory agency and that contains disclosures as determined by the commissioner upon review to be substantially equivalent to or greater than the information required to be disclosed pursuant to Section 11234. (BPC Section 11226(c))
Specifies that real estate licensees from certain inspection and disclosure requirements, as specified, do not apply to property transfers that are already required to meet mandated reporting requirements relating to BPC Section 11018.1. (Civil Code Section 2079.6)
THIS BILL
Authorizes a time-share developer, who creates time-share plan or is in the business of selling time-share interests, to provide to a purchaser, at his or her discretion, a mandated public report or other disclosures in a digital format.
Provides that certain inspection and disclosure requirements do not apply to property transfers that are already required to meet mandated reporting requirements, including public reports for specified time-share plans under the Act.
FISCAL EFFECT: Unknown. This bill is keyed fiscal by the Legislative Counsel.
COMMENTS
Purpose. This bill is sponsored by the American Resort Development Association (ARDA) and the ARDA Resort Owners Coalition (ARDA-ROC). According to the author, "California law requires a number of disclosures to protect Californians who purchase timeshares. However, in this modern and increasingly paperless world, many consumers would prefer not to get these sometimes bulky disclosures in paper form. [This bill] allows the disclosures to be made electronically – at the discretion of the purchaser."
Background. The Vacation Ownership and Time-share Act of 2004 (time-share Act of 2004) charges the Commissioner with the responsibility of assuring that purchasers of time-shares interests receive everything for which they bargained. A Time-share Plan Conditional or Final Public Report must be issued and a copy given to each purchaser prior to the execution of a sales contract for a sale of a time-share. A copy of this report must also be given to any member of the public who requests one. The Time-share Final Plan Public Report is issued only after the developers comply with the provisions of all the applicable laws and regulations. BPC Section 11234 mandates that the developer prepare the public report, and that the public report include the specific disclosures as required by that statute. The California Bureau of Real Estate (CalBRE) does not prepare time-share public reports.
According to CalBRE, in addition to administering and enforcing laws governing the sale of subdivided lots and common interest developments, including condominiums and planned developments, it also administers and enforces laws governing the sale of time-share interests. Time-share interests in a time-share project, also known as a time-share plan, sold in California, whether the plan is located in California or outside the state, is subject to regulation under the time-share Act of 2004. Before a time-share developer can market or sell time-share interests in a time-share plan, the developer must obtain a public report issued by the CalBRE which discloses many important aspects of the time-share offering. This report must be presented to prospective purchasers before buying, so that they have an opportunity to read it before making a purchase decision.
Under existing law, purchasers of timeshares must be provided with this report in writing. According to the author, a number of states allow electronic disclosure of timeshare documents including: Arizona, Arkansas, Florida, Illinois, Louisiana, Nevada, New Work, and Virginia. This bill proposes to allow the report to be offered in writing (as in existing law) or in a digital format at the discretion of the purchaser.
This bill also replaces disclosure exemption language that was inadvertently eliminated in a previous timeshare bill. Under Civil Code Section 2079.6, real estate licensees are exempt from specified disclosure requirements if the purchaser has been given a copy of a public report mandated by BPC Section 11018.1. In 2004, AB 2252 (Montanez), Chapter 697, Statutes of 2004, deleted the mandated timeshare report from BPC Section 11018.1 and placed an expanded report requirement in a new section – BPC Section 11234. However, Civil Code Section 2079.6 was never amended to reflect that change. This bill proposes to simply insert reference to the section of the code that refers to the required timeshare report.
According to the author, both of these changes are in response to requests by consumers who prefer not to get lengthy paper documents.
Related Prior Legislation. AB 2252 (Montanez), Chapter 697, Statutes of 2004, enacted the "Vacation Ownership and Time-share Act of 2004," consolidated and revised the entire body of time-share vacation property regulation, and streamlines the regulatory approval process and adding new consumer protections.
ARGUMENTS IN SUPPORT
According to the
ARDA and the ARDA-ROC, "[This bill] will allow
mandated reports to be given in electronic form and replace
disclosure exemption language that was inadvertently eliminated in a
previous timeshare bill….Under existing law, purchases of
timeshares and timeshare exchanges must be provided an extensive
public report on the development. Member timeshare owners have told
ARDA-ROC that they would prefer to get these documents
electronically….[This bill] proposes to allow the report to be
offered in writing (as in existing law) 'or in a digital format at
the discretion of the purchaser'.…Under Civil Code Section 2079.6,
the disclosure requirements of that section are exempted if the
purchaser has been given a copy of a public report [This bill also]
proposes to simply insert reference to the section of the code that
refers to the required timeshare report."
ARGUMENTS
IN OPPOSITION
None on file.
REGISTERED SUPPORT / OPPOSITION:
Support
American Resort Development Association (ARDA) (co-sponsor)
ARDA Resort Owners Coalition (co-sponsor)
Opposition
None on file.
Analysis Prepared by: Eunie Linden / B. & P. / (916) 319-3301
Bill Author
Bill Co-Author(s):