AN ACT TO MAKE CHANGES TO THE NORTH CAROLINA TIMESHARE ACT AND TO ELIMINATE BOND REQUIREMENTS FOR CERTIFICATION OF REAL ESTATE EDUCATION PROVIDERS.
Senate committee substitute to the 1st edition makes the following changes.
Further revises Article 4 of GS Chapter 93A, now cited as the North Carolina Timeshare Act. Makes technical corrections and changes throughout. Makes substantive changes as follows.
Regarding the scope of the Article, makes a technical change to consistently refer to a "managing entity" in the exemption set forth from the Article's provisions for the offering or sale by a managing entity up to a certain limit of timeshares in a timeshare program in a given year. Changes the definition of managing entity to mean any developer, timeshare owners' association, or third-party management firm that has the duties, responsibilities, and obligations of managing a timeshare project or timeshare program (was, any person who has such duties, responsibilities, and obligations, including a timeshare owners' association or a management firm). Now defines resale advertising service as the provisions of any good or service relating to advertising or promoting the resale or rental of a consumer resale timeshare (previously, also included a promise of assistance in connection with the same). No longer specified the means of communication used in offering resale brokerage or resale advertising services to consumer timeshare resellers in the definition of resale service provider. Replaces the proposed definition for timeshare estate, now defining the term to mean the right to occupy a timeshare unit coupled with ownership of any of the following real property interests: (1) a freehold estate or an estate for years with a future interest in property, (2) an ownership interest in a condominium unit, or (3) a direct or indirect beneficial interest in a trust, provided that the timeshare instrument contains a provision declaring that such interests are real property interests, and the trust does not contain any timeshares created in personal property (previously, defined as only an arrangement under which the owner acquired a right to occupy a timeshare unit together with ownership of a real property interest). Makes clarifying changes to the proposed definition of timeshare project. Now defines timeshare transfer services as any service offered or provided in this State, or offered or provided anywhere (was, any good or service offered in the State or provided to a consumer timeshare reseller resident in the State, or offered anywhere) in connection with a timeshare program containing timeshare units or a timeshare property located in this State, that provides assistance in the resale, transfer, relinquishment, or other disposition of a consumer timeshare reseller's timeshare. Replaces the definition of the proposed term timeshare use, now defining the term as the right to occupy a timeshare unit that is not coupled with ownership of a real property interest (was, an arrangement under which the owner received a right to occupy a timeshare unit but did not receive ownership of a real property interest).
Eliminates the proposed language in GS 93A-42, establishing that a timeshare estate includes a right to use a timeshare unit coupled with a freehold estate or an estate for years with a future interest in property, an ownership interest in a condo unit, or a direct or indirect beneficial interest in a trust if the timeshare instrument contains a provision declaring that such interests are real property interests and provided that the trust does not contain any timeshares created in personal property. Requires closing on the sale of a timeshare estate and recording a timeshare instrument within 180 days following the execution of the contract of sale by the purchaser, so long as all payments made by the purchaser are placed by the developer with an independent escrow agent in accordance with GS 93A-45 [was, upon the expiration of the escrow period pursuant to GS 93A-45(c)]. Bars developers from selling or closing a sale of any timeshare that would cause the total number of timeshares available for use (was, for use or sold) in the timeshare program to exceed the one-to-one use night to use right ratio.
Makes clarifying changes to the required content of a public offering statement, as required by new language in GS 93A-44. No longer explicitly includes providing the terms and conditions governing an owner's reservation, use, and occupancy of the timeshare units (maintains requiring a description of the method by which the owner can reserve, use, or occupy the units as previously specified). Now includes in the required summary of the rules governing access to and use of the reservation system, a description of the priorities applied in the operation of the timeshare program in addition to the limitations and restrictions of the program. More specifically requires the summary to include the transaction fees or other charges related to making, deferring, or cancelling reservations. Specifies that the required statement relating to the managing entity's right to reasonably reserve, deposit, or rent the timeshare period or timeshare units for the purpose of facilitating the use or future use of the accommodations or other benefits made available through the timeshare program by the owners applies only if the operator of the reservation system is going to exercise the right granted to it by GS 93A-63(d) (was, if the operator has the right to reserve, deposit, or rent timeshare periods or timeshare units as described). Regarding a developer's intention to guarantee the level of assessments for the timeshare program and disclose that the developer may be excused from the payment of the developer's share of the assessments which would have been assessed against developer-owned timeshares during the guarantee period, no longer specifies that, during the guarantee period, the developer must guarantee to each owner that the assessments imposed upon the owners will not increase over a stated dollar amount as set forth in the adopted, good-faith budget and that the developer is obligated to pay all common expenses incurred during the guarantee period in excess of the total revenues of the timeshare program. Specifies that provision of the signed documents described in new subsection (d) are to be provided to the purchaser contemporaneously with the execution of the contract. Eliminates the new subsection which permitted a purchaser to elect to execute the contract of sale and any other document required to be executed by the purchaser by the developer by electronic means and to elect to receive delivery of the public offering statement and any documents required to be delivered to the purchaser by electronic means, so long as the developer gives the purchaser the option of executing or receiving the documents in paper format or by electronic means. Adds a new subsection prohibiting the developer from making any representations other than those contained in the contract of sale and the public offering statement. Makes conforming changes. Makes organizational changes.
Makes clarifying changes to the proposed new language in GS 93A-45 regarding a purchaser's right to cancel the contract of sale. Deems notice of cancellation given when transmitted (was, when transmitted from the place of origin) if delivered electronically. Now conditions the owner's right to void the transfer and receive from the developer all funds paid for the timeshare together with an amount equal to 10% of the sales price (up to $3,000) upon the contract of sale not including the cancellation notice as required by GS 93A-44(a)(12) (was, upon the developer's failure to provide an owner to whom a timeshare is transferred with the cancellation notice). Eliminates the proposed provision which deemed a receipt signed by the owner stating that the owner has received the required notice as prima facie evidence of delivery of the statement. Codifies proposed subsection (e) of GS 93A-58, making developers and escrow agents who fail to comply with the requirements relating to an escrow account a Class E felony, as new subsection (i) of GS 93A-45.
Maintains the current $1 fee for duplicate certificates of registration of a timeshare program under GS 93A-52 (was, increased to $5).
Further amends GS 93A-57, requiring a developer to record a release of all liens or encumbrances affecting the timeshare being acquired by the purchaser prior to any closing, to consistently refer to a "managing entity." Makes additional clarifying changes.
Makes a conforming correction to a statutory cross-reference to GS 93A-42 in GS 93A-58, regarding the designation of a registrar and broker for registered timeshare programs.
Replaces the content of new GS 93A-60, now providing that any nonmaterial errors or omissions cannot be grounds for any claims or defenses asserted by the purchaser so long as the developer or managing entity has substantially complied with the Article; provided, however, that the developer or managing entity bears the burden of proof (previously, provided that if a developer or managing entity has, in good faith, attempted to comply with the Article and the developer has in fact substantially complied, nonmaterial errors or omissions are deemed not actionable and do not give rise to any purchaser cancellation rights provided that the developer or managing entity has the burden of proof).
Revises the language used in new GS 93A-61, now requiring the developer to provide each timeshare program with a managing entity, which must be either the developer, a third-party management firm (was, a separate management firm), or timeshare owners' association. Regarding the new statutory management responsibilities and rights of managing entities, no longer provides for the predecessor in interest to give the managing entity a copy of an instrument of transfer for timeshare uses. Regarding rights of the managing entity when a state of emergency has been declared under the North Carolina Emergency Management Act or by any governmental agency with authority where the timeshare property is located, now allows the managing entity to toll the expiration of any claim of lien specifically arising under GS 93A-62(d)(4) (providing for delinquent assessments) for the duration of the state of emergency so long as the beginning and ending date for each of tolling are recorded in the public records and the owner is notified of the end of the tolling period (was, so long as the tolling is recorded in the public records and the owner is notified prior to the end of the tolling period).
Revises new GS 93A-62, which sets out allowable charges on delinquent assessments. Makes clarifying changes regarding the expiration of a timeshare lien. Adds a new subsection providing that if the developer agrees to guarantee the level of assessments for the timeshare program for any period of time, the developer can be excused from the payment of the developer's share of the assessments that otherwise would have been assessed against developer-owned timeshares during the guarantee period, provided that the developer guarantees that (1) during the guarantee period the assessments against owner timeshares will not increase over the dollar amount stated in the adopted, good faith budget of the timeshare program, and (2) the developer will pay any amount by which all common expenses incurred during the guarantee period exceed the total revenues of the timeshare program during the guarantee period (similar to language previously required to be included in the public offering statement in GS 93A-44, now removed).
Revises new GS 93A-64 regarding items that must be included in the timeshare declaration with respect to (1) addition of timeshare units, amenities, or timeshare projects to the multisite timeshare program or (2) substitution of timeshare units, amenities, or timeshare projects for existing timeshare units, amenities, or timeshare projects in a multisite timeshare program. Now requires compliance with the one-to-one use night to use right ration and the requirement of GS 93A-63, Reservation systems (was, GS 93A-65, Resale purchase contracts; prohibition against advance listing fee, including the demand balancing standard), in ascertaining the desirability of the proposed addition and any impact upon the demand for and availability of existing timeshare units, amenities, or timeshare projects. Makes conforming changes.
Amends new GS 93A-65, which requires consumer timeshare resellers or their agents to use a resale purchase contact that contains specified items. Corrects a statutory cross-reference in subdivision (a)(3).
Makes organizational and clarifying changes to the recordkeeping requirements under GS 93A-66 for resale service providers, lead dealers, and transfer service providers. No longer provides that in any civil or criminal action relating to the wrongful possession or wrongful use of personal contact information by a resale service provider or lead dealer, any failure by a resale service provider, transfer service provider, or lead dealer to produce the required records leads to a presumption that the personal contact information was wrongfully obtained. Eliminates the proposed penalties for the use of wrongfully obtained personal contact information.
Amends new GS 93A-67 which governs resale service providers. Corrects a statutory cross-reference in sub subdivision (c)(6)d. regarding required terms of a brokerage agreement to provide resale advertising services that must be signed by the consumer timeshare reseller. Eliminates the provision which made the use of any unfair or deceptive act or practice by any person in connection with resale advertising services a violation of the Act. Instead, makes any violation of the statute an unfair or deceptive trade practice prohibited by GS 75-1.1. Now requires the resale service provider who offers timeshare transfer services to comply with GS 93A-68 (was, GS 93A-68 through GS 93A-72).
Revises new GS 93A-68, which sets out six actions that are prohibited in the course of advertising, marketing, promoting, offering, sale, or performance of any timeshare transfer services. Now prohibits engaging in any timeshare transfer services for compensation (was, consideration), or the expectation of receiving compensation (was, consideration), without first obtaining a written timeshare transfer services agreement signed by the consumer timeshare reseller. Regarding the statement that must be included in a timeshare transfer services agreement providing that no compensation can be received by or paid to the transfer service provider before the delivery of all promised services are performed, no longer specifies that the services listed are not exhaustive. Of the terms that must be included in timeshare transfer services agreements, now includes the total cost to the consumer timeshare reseller of each timeshare transfer service promised to be provided pursuant to subdivision (c)(3) [previously, did not cross-reference (c)(3)] together with an itemized list of all of the fees and costs that comprise the total cost of that service (previously, also required a description of the related good or service). Revises the required statement of notice offering relief (was, assistance). Eliminates the provision which makes the use of any unfair or deceptive act or practice by any person in connection with timeshare transfer services a violation of the act. Instead, makes any violation of the statute an unfair or deceptive trade practice prohibited by GS 75-1.1. Makes further technical and clarifying changes.
Changes the act's titles.
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