Texas 2009 - 81st Regular

Texas Senate Bill SB1036 Compare Versions

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1	1	81R5480 UM-F
2	2	By: Harris S.B. No. 1036
3	3
4	4
5	5	A BILL TO BE ENTITLED
6	6	AN ACT
7	7	relating to amendments to the Texas Timeshare Act.
8	8	BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
9	9	SECTION 1. Section 221.022(c), Property Code, is amended to
10	10	read as follows:
11	11	(c) The commission may accept an abbreviated registration
12	12	application from a developer of a timeshare plan for any [if all]
13	13	accommodations in the plan [are] located outside this state. The
14	14	developer must file written notice of the intent to register under
15	15	this section not later than the 15th day before the date the
16	16	abbreviated application is submitted.
17	17	SECTION 2. Sections 221.032(b) and (d), Property Code, are
18	18	amended to read as follows:
19	19	(b) The timeshare disclosure statement for a single-site
20	20	timeshare plan or a multisite timeshare plan that includes a
21	21	specific timeshare interest must include:
22	22	(1) the type of timeshare plan offered and the name and
23	23	address of:
24	24	(A) the developer; and
25	25	(B) the single site or specific site offered for
26	26	the multisite timeshare plan;
27	27	(2) a description of the duration and operation of the
28	28	timeshare plan;
29	29	(3) a description of the existing or proposed
30	30	accommodations, including the type and number of timeshare
31	31	interests in the accommodations expressed in periods of seven-day
32	32	use availability or other time increment applicable to the
33	33	timeshare plan. The description of each type of accommodation
34	34	included in the timeshare plan shall be categorized by the number of
35	35	bedrooms, the number of bathrooms, and sleeping capacity, and shall
36	36	include a statement indicating whether the accommodation contains a
37	37	full kitchen, which means a kitchen that has a minimum of a
38	38	dishwasher, range, sink, oven, and refrigerator. If the
39	39	accommodations are proposed or incomplete, a schedule for
40	40	commencement, completion, and availability of the accommodations
41	41	shall be provided;
42	42	(4) a description of any existing or proposed
43	43	amenities of the timeshare plan and, if the amenities are proposed
44	44	or incomplete, a schedule for commencement, completion, and
45	45	availability of the amenities;
46	46	(5) the extent to which financial arrangements have
47	47	been provided for the completion of all promised accommodations and
48	48	amenities that are committed to be built;
49	49	(6) a description of the method and timing for
50	50	performing maintenance of the accommodations;
51	51	(7) a statement indicating that, on an annual basis,
52	52	the sum of the nights that purchasers are entitled to use the
53	53	accommodations does not exceed the number of nights the
54	54	accommodations are available for use by the purchasers;
55	55	(8) a description of the method by which purchasers'
56	56	use of the accommodations is scheduled;
57	57	(9) a statement that an association exists or is
58	58	expected to be created or that such an association does not exist
59	59	and is not expected to be created and, if such an association exists
60	60	or is reasonably contemplated, a description of its powers and
61	61	responsibilities;
62	62	(10) relating to the single-site timeshare plan or the
63	63	specific timeshare interest of a multisite timeshare plan, copies
64	64	of the following documents, if applicable, including any amendments
65	65	to the documents, unless separately provided to the purchaser
66	66	simultaneously with the timeshare disclosure statement:
67	67	(A) the declaration;
68	68	(B) the association articles of incorporation;
69	69	(C) the association bylaws;
70	70	(D) the association rules; and
71	71	(E) any lease or contract, excluding the purchase
72	72	contract and other loan documents required to be signed by the
73	73	purchaser at closing;
74	74	(11) the name and principal address of the managing
75	75	entity and a description of the procedures, if any, for altering the
76	76	powers and responsibilities of the managing entity and for removing
77	77	or replacing it;
78	78	(12) the current annual budget, if available, or the
79	79	projected annual budget for the timeshare plan or timeshare
80	80	properties managed by the same managing entity if assessments are
81	81	deposited in a common account. The budget must include:
82	82	(A) a statement of the amount reserved or
83	83	budgeted for repairs, replacements, and refurbishment;
84	84	(B) the projected common expense liability, if
85	85	any, by category of expenditure for the timeshare plan or timeshare
86	86	properties managed by the same managing entity; and
87	87	(C) [the name and address of the person who
88	88	prepared the operating budget; and
89	89	[(D)] the assumptions on which the operating
90	90	budget is based;
91	91	(13) the projected assessments and a description of
92	92	the method for calculating and apportioning those assessments among
93	93	purchasers;
94	94	(14) any initial fee or special fee due from the
95	95	purchaser at closing, together with a description of the purpose
96	96	and method of calculating the fee;
97	97	(15) a description of any lien, defect, or encumbrance
98	98	on or affecting title to the timeshare interest and, if applicable,
99	99	a copy of each written warranty provided by the developer;
100	100	(16) a description of any bankruptcy that is pending
101	101	or that has occurred within the past five years, pending civil or
102	102	criminal suit, adjudication, or disciplinary actions material to
103	103	the timeshare plan of which the developer has knowledge;
104	104	(17) a description of any financing offered by or
105	105	available through the developer;
106	106	(18) any current or anticipated fees or charges to be
107	107	paid by timeshare purchasers for the use of any accommodations or
108	108	amenities related to the timeshare plan, and a statement that the
109	109	fees or charges are subject to change;
110	110	(19) a description and amount of insurance coverage
111	111	provided for the protection of the purchaser;
112	112	(20) the extent to which a timeshare interest may
113	113	become subject to a tax lien or other lien arising out of claims
114	114	against purchasers of different timeshare interests;
115	115	(21) a description of those matters required by
116	116	Section 221.041;
117	117	(22) a statement disclosing any right of first refusal
118	118	or other restraint on the transfer of all or any portion of a
119	119	timeshare interest;
120	120	(23) a statement disclosing that any deposit made in
121	121	connection with the purchase of a timeshare interest must be held by
122	122	an escrow agent until expiration of any right to cancel the contract
123	123	and that any deposit must be returned to the purchaser if the
124	124	purchaser elects to exercise the right of cancellation; or, if the
125	125	commission accepts from the developer a surety bond, irrevocable
126	126	letter of credit, or other form of financial assurance instead of an
127	127	escrow deposit, a statement disclosing that the developer has
128	128	provided a surety bond, irrevocable letter of credit, or other form
129	129	of financial assurance in an amount equal to or in excess of the
130	130	funds that would otherwise be held by an escrow agent and that the
131	131	deposit must be returned if the purchaser elects to exercise the
132	132	right of cancellation;
133	133	(24) if applicable, a statement that the assessments
134	134	collected from the purchasers may be placed in a common account with
135	135	the assessments collected from the purchasers of other timeshare
136	136	properties managed by the same managing entity;
137	137	(25) if the timeshare plan provides purchasers with
138	138	the opportunity to participate in an exchange program, a
139	139	description of the name and address of the exchange company and the
140	140	method by which a purchaser accesses the exchange program; and
141	141	(26) any other information the commission determines
142	142	is necessary to protect prospective purchasers or to implement the
143	143	purpose of this chapter.
144	144	(d) A developer who offers a nonspecific timeshare interest
145	145	in a multisite timeshare plan must disclose the following
146	146	information in written, graphic, or tabular form:
147	147	(1) the name and address of the developer;
148	148	(2) a description of the type of interest and the usage
149	149	rights the purchaser will receive;
150	150	(3) a description of the duration and operation of the
151	151	timeshare plan;
152	152	(4) a description of the type of insurance coverage
153	153	provided for each component site;
154	154	(5) an explanation of who holds title to the
155	155	accommodations of each component site;
156	156	(6) a description of each component site, including
157	157	the name and address of each component site;
158	158	(7) a description of the existing or proposed
159	159	accommodations, expressed in periods of seven-day use availability
160	160	or any other time increment applicable to the timeshare plan. The
161	161	description of each type of accommodation included in the timeshare
162	162	plan shall be categorized by the number of bedrooms, the number of
163	163	bathrooms, and sleeping capacity, and shall include a statement
164	164	indicating whether the accommodation contains a full kitchen, which
165	165	means a kitchen that has a minimum of a dishwasher, range, sink,
166	166	oven, and refrigerator. If the accommodations are proposed or
167	167	incomplete, a schedule for commencement, completion, and
168	168	availability of the accommodations shall be provided;
169	169	(8) a statement that an association exists or is
170	170	expected to be created or that such an association does not exist
171	171	and is not expected to be created and, if such an association exists
172	172	or is reasonably contemplated, a description of its powers and
173	173	responsibilities;
174	174	(9) if applicable, copies of the following documents
175	175	applicable to the multisite timeshare plan, including any
176	176	amendments to the documents, unless separately provided to the
177	177	purchaser simultaneously with the timeshare disclosure statement:
178	178	(A) the declaration;
179	179	(B) the association articles of incorporation;
180	180	(C) the association bylaws;
181	181	(D) the association rules; and
182	182	(E) any lease or contract, excluding the purchase
183	183	contract and other loan documents required to be signed by the
184	184	purchaser at closing;
185	185	(10) a description of the method and timing for
186	186	performing maintenance of the accommodations;
187	187	(11) a statement indicating that, on an annual basis,
188	188	the sum of the nights that purchasers are entitled to use the
189	189	accommodations does not exceed the number of nights the
190	190	accommodations are available for use by the purchasers;
191	191	(12) a description of each type of accommodation
192	192	included in the timeshare plan, categorized by the number of
193	193	bedrooms, the number of bathrooms, and sleeping capacity, and a
194	194	statement indicating whether the accommodation contains a full
195	195	kitchen, which means a kitchen that has a minimum of a dishwasher,
196	196	range, sink, oven, and refrigerator;
197	197	(13) a description of amenities available for use by
198	198	the purchaser at each component site;
199	199	(14) the location of each component site of the
200	200	multisite timeshare plan, the historical occupancy of each
201	201	component site for the prior 12-month period, if the component site
202	202	was part of the multisite timeshare plan during such 12-month time
203	203	period, as well as any periodic adjustment or amendment to the
204	204	reservation system that may be needed in order to respond to actual
205	205	purchaser use patterns and changes in purchaser use demand for the
206	206	accommodations existing at the time within the multisite timeshare
207	207	plan;
208	208	(15) a description of the right to make any additions,
209	209	substitutions, or deletions of accommodations, amenities, or
210	210	component sites, and a description of the basis upon which
211	211	accommodations, amenities, or component sites may be added to,
212	212	substituted in, or deleted from the multisite timeshare plan;
213	213	(16) a description of the reservation system that
214	214	shall include all of the following:
215	215	(A) the entity responsible for operating the
216	216	reservation system, its relationship to the developer, and the
217	217	duration of any agreement for operation of the reservation system;
218	218	(B) a summary of the rules governing access to
219	219	and use of the reservation system; and
220	220	(C) the existence of and an explanation regarding
221	221	any priority reservation features that affect a purchaser's ability
222	222	to make reservations for the use of a given accommodation on a
223	223	first-come, first-served basis;
224	224	(17) the name and principal address of the managing
225	225	entity for the multisite timeshare plan and a description of the
226	226	procedures, if any, for altering the powers and responsibilities of
227	227	the managing entity and for removing or replacing it, and a
228	228	description of the relationship between the multisite timeshare
229	229	plan managing entity and the managing entity of the component sites
230	230	of the multisite timeshare plan, if different from the multisite
231	231	timeshare plan managing entity;
232	232	(18) the current annual budget of the multisite
233	233	timeshare plan, if available, or the projected annual budget for
234	234	the multisite timeshare plan, which must include:
235	235	(A) a statement of the amount reserved or
236	236	budgeted for repairs, replacements, and refurbishment;
237	237	(B) the projected common expense liability, if
238	238	any, by category of expenditure for the multisite timeshare plan;
239	239	and
240	240	(C) [the name and address of the person who
241	241	prepared the operating budget; and
242	242	[(D)] the assumptions on which the operating
243	243	budget is based;
244	244	(19) the projected assessments and a description of
245	245	the method for calculating and apportioning those assessments among
246	246	purchasers of the multisite timeshare plan;
247	247	(20) if applicable, a statement that the assessments
248	248	collected from the purchasers may be placed in a common account with
249	249	the assessments collected from the purchasers of other timeshare
250	250	properties managed by the same managing entity;
251	251	(21) any current fees or charges to be paid by
252	252	timeshare purchasers for the use of any amenities related to the
253	253	timeshare plan and a statement that the fees or charges are subject
254	254	to change;
255	255	(22) any initial or special fee due from the purchaser
256	256	at closing, together with a description of the purpose of and method
257	257	of calculating the fee;
258	258	(23) a description of the purchaser's liability for
259	259	any fees associated with the multisite timeshare plan;
260	260	(24) a description of any lien, defect, or encumbrance
261	261	on or affecting title to the timeshare interest and, if applicable,
262	262	a copy of each written warranty provided by the developer;
263	263	(25) the extent to which a timeshare interest may
264	264	become subject to a tax lien or other lien arising out of claims
265	265	against purchasers of different timeshare interests;
266	266	(26) a description of those matters required by
267	267	Section 221.041;
268	268	(27) a description of any financing offered by or
269	269	available through the developer;
270	270	(28) a description of any bankruptcy that is pending
271	271	or that has occurred within the past five years, pending civil or
272	272	criminal suits, adjudications, or disciplinary actions material to
273	273	the timeshare plan of which the developer has knowledge;
274	274	(29) a statement disclosing any right of first refusal
275	275	or other restraint on the transfer of all or a portion of a
276	276	timeshare interest;
277	277	(30) a statement disclosing that any deposit made in
278	278	connection with the purchase of a timeshare interest must be held by
279	279	an escrow agent until expiration of any right to cancel the contract
280	280	and that any deposit must be returned to the purchaser if the
281	281	purchaser elects to exercise the right of cancellation; or, if the
282	282	commission accepts from the developer a surety bond, irrevocable
283	283	letter of credit, or other form of financial assurance instead of an
284	284	escrow deposit, a statement disclosing that the developer has
285	285	provided a surety bond, irrevocable letter of credit, or other form
286	286	of financial assurance in an amount equal to or in excess of the
287	287	funds that would otherwise be held by an escrow agent and that the
288	288	deposit must be returned if the purchaser elects to exercise the
289	289	right of cancellation;
290	290	(31) if the timeshare plan provides purchasers with
291	291	the opportunity to participate in an exchange program, a
292	292	description of the name and address of the exchange company and the
293	293	method by which a purchaser accesses the exchange program; and
294	294	(32) any other information the commission determines
295	295	is necessary to protect prospective purchasers or to implement the
296	296	purpose of this chapter.
297	297	SECTION 3. Subchapter D, Chapter 221, Property Code, is
298	298	amended by adding Section 221.037 to read as follows:
299	299	Sec. 221.037. ALTERNATIVE TERMINOLOGY OR NAME. (a) In
300	300	providing the disclosures required by this chapter, the use of the
301	301	terms "vacation ownership interest" or "vacation ownership plan" to
302	302	refer to the timeshare interest or plan offered by the developer, or
303	303	the use of other terms that are substantially similar and that are
304	304	regularly used by the developer to denote a timeshare interest or
305	305	plan, is sufficient and complies with the requirements of this
306	306	chapter.
307	307	(b) In providing the full name of a developer or a marketing
308	308	company as required by this chapter, the disclosure of an assumed
309	309	name of the developer or the marketing company, if the entity has
310	310	complied with the requirements of the applicable assumed business
311	311	names statutes or other laws regarding the use of the assumed name,
312	312	is sufficient and complies with this chapter.
313	313	SECTION 4. Section 221.043(c), Property Code, is amended to
314	314	read as follows:
315	315	(c) The purchase contract must also include the following:
316	316	(1) the name and address of the developer and the
317	317	address of the timeshare property or the address of any available
318	318	timeshare interest being offered;
319	319	(2) an agreement describing the cancellation policy
320	320	prescribed by Section 221.041;
321	321	(3) the name of the person or persons primarily
322	322	involved in the sales presentation on behalf of the developer;
323	323	(4) a statement disclosing the amount of the periodic
324	324	assessments currently assessed against or collected from the
325	325	purchasers of the timeshare interest, immediately followed by a
326	326	statement providing that collected assessments will be used by the
327	327	managing entity to pay for expenditures, charges, reserves, or
328	328	liabilities relating to the operation of the timeshare plan or
329	329	timeshare properties managed by the managing entity;
330	330	(5) [a statement disclosing that the timeshare common
331	331	properties are not mortgaged, unless the mortgage contains a
332	332	nondisturbance clause which fully protects the use and enjoyment
333	333	rights of each timeshare owner in the event of foreclosure;
334	334	[(6) in the event such timeshare interests are sold
335	335	under a lease, right to use, or membership agreement where free and
336	336	clear title to the accommodation is not passed to the purchaser,
337	337	then the purchase contract must contain a statement that the
338	338	timeshare is free and clear; or if subject to a mortgage, the
339	339	mortgage must contain a nondisturbance clause which fully protects
340	340	the use and enjoyment rights of each timeshare owner in the event of
341	341	foreclosure;
342	342	[(7)] the date the purchaser signs the contract; and
343	343	(6) [(8)] the following statement:
344	344	"AS A TIMESHARE OWNER, YOU HAVE A RIGHT TO REQUEST A WRITTEN
345	345	ANNUAL TIMESHARE FEE AND EXPENSE STATEMENT. THIS STATEMENT IS
346	346	PREPARED ANNUALLY BY THE MANAGING ENTITY AND WILL BE AVAILABLE NOT
347	347	LATER THAN FIVE MONTHS AFTER (INSERT THE DATE OF THE LAST DAY OF THE
348	348	FISCAL YEAR). YOU MAY REQUEST THE STATEMENT BY WRITING TO (INSERT
349	349	NAME AND ADDRESS OF THE MANAGING ENTITY)."
350	350	SECTION 5. Section 221.062, Property Code, is amended by
351	351	adding Subsection (h) to read as follows:
352	352	(h) Excluding any encumbrance placed against the
353	353	purchaser's timeshare interest that secures the purchaser's payment
354	354	of purchase money financing for the purchase, the developer is not
355	355	entitled to the release of any funds escrowed with respect to each
356	356	timeshare interest until the developer has provided the commission
357	357	with satisfactory evidence that:
358	358	(1) the timeshare interest and any other property or
359	359	rights to property appurtenant to the timeshare interest, including
360	360	any amenities represented to the purchaser as being part of the
361	361	timeshare plan, are free and clear of any of the claims of the
362	362	developer, any owner of the underlying fee, a mortgagee, judgment
363	363	creditor, or other lienor, or any other person having an interest in
364	364	or lien or encumbrance against the timeshare interest or
365	365	appurtenant property or property rights;
366	366	(2) the developer, any owner of the underlying fee, a
367	367	mortgagee, judgment creditor, or other lienor, or any other person
368	368	having an interest in or lien or encumbrance against the timeshare
369	369	interest or appurtenant property or property rights, including any
370	370	amenities represented to the purchaser as being part of the
371	371	timeshare plan, has recorded a subordination and notice to
372	372	creditors document in the jurisdiction in which the timeshare
373	373	interest is located that expressly and effectively provides that
374	374	the interest holder's right, lien, or encumbrance does not
375	375	adversely affect and is subordinate to the rights of the owners of
376	376	the timeshare interests in the timeshare plan, regardless of the
377	377	date of purchase, on and after the effective date of the
378	378	subordination document;
379	379	(3) the developer, any owner of the underlying fee, a
380	380	mortgagee, judgment creditor, or other lienor, or any other person
381	381	having an interest in or lien or encumbrance against the timeshare
382	382	interest or appurtenant property or property rights, including any
383	383	amenities represented to the purchaser as being part of the
384	384	timeshare plan, has transferred the subject accommodations or
385	385	amenities or all use rights therein to a nonprofit organization or
386	386	an owners' association to be held for the use and benefit of the
387	387	purchasers of the timeshare plan, which entity shall act as a
388	388	fiduciary to the purchasers, provided that the developer has
389	389	transferred control of that entity to the purchasers or does not
390	390	exercise its voting rights in that entity with respect to the
391	391	subject accommodations or amenities and, prior to the transfer, any
392	392	lien or other encumbrance against the accommodation or facility is
393	393	subject to a subordination and notice to creditors instrument
394	394	pursuant to this subsection; or
395	395	(4) alternative arrangements have been made that are
396	396	adequate to protect the rights of the purchasers of the timeshare
397	397	interests and are approved by the commission.
398	398	SECTION 6. This Act applies to timeshare plans created on or
399	399	after January 15, 2010, and to any developer who offers or disposes
400	400	of an interest in a timeshare plan and a managing entity that
401	401	manages a timeshare property under Chapter 221, Property Code, as
402	402	amended by this Act, on or after that date.
403	403	SECTION 7. This Act takes effect September 1, 2009.