Senate Bill No. 735
(By Senators Ross and Helmick)
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[Introduced February 23, 1998; referred to the
Committee on the Judiciary; and then to the Committee on
Finance.]
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A BILL to amend and reenact sections three, four, six and twenty- four, article nine, chapter thirty-six of the code of West
Virginia, one thousand nine hundred thirty-one; and to
further amend said article by adding thereto a new section,
designated section twenty-seven, all relating to correcting
the scope of article nine in relation to out-of-state time- share offerings; expanding the definition of what kind of
entity may be designated to pay common expenses; extending
public offering statement registration processing response
times for both the developer and the division of land sales
and condominiums; increasing registration fees from fifty
cents to one dollar or a minimum fee of not less than two
hundred fifty dollars for the registration of time-share plans in which the situs of the real property upon which the
time-share is located in West Virginia; increasing the
registration fee from fifty cents to two dollars but not
less than a minimum fee of five hundred dollars for the
registration of time-share plans located outside the state
of West Virginia but offered for sale to residents of the
state; providing for the application of the changed scope of
the definitions to allow any seller, developer or other
legally designated third party to pay the division of land
sales and condominiums annual fee; increasing the annual fee
from fifty cents to one dollar for plans located within West
Virginia and from fifty cents to two dollars for plans
located outside the state of West Virginia but offered for
sale to residents of the state; requiring sales reports from
developers or others responsible for sales; and establishing
penalties and authorizing administrative and legal action by
the division where a finding of noncompliance has been made.
Be it enacted by the Legislature of West Virginia:
That sections three, four, six and twenty-four, article
nine, chapter thirty-six of the code of West Virginia, one
thousand nine hundred thirty-one, as amended be amended and
reenacted; and that said article nine be further amended by
adding thereto a new section, designated section twenty-seven, all to read as follows:
ARTICLE 9. WEST VIRGINIA REAL ESTATE TIME-SHARING ACT.
§36-9-3. Scope.
(a) This article applies only to time-sharing plans
consisting of more than seven time-sharing periods other than
condominium fee ownership time-sharing plans, except that
sections six, ten, eleven, twelve, thirteen, seventeen, twenty,
twenty-one, twenty-four, twenty-five and twenty-six of this
article shall apply to all time-sharing plans.
(b) All time-sharing accommodations or facilities which are
located outside the state but offered for sale in this state
shall be subject to all of the provisions of this article except
sections eleven twelve through sixteen and twenty through
twenty-three twenty-two.
(c) Notwithstanding other provisions of this article, either
expressed or implied, to the contrary, it is the legislative
intent that nothing herein be deemed to alter the existing
procedure for the assessment and collection of ad valorem taxes
on accommodations or facilities subject to a time-sharing plan.
§36-9-4. Definitions.
As used in this article:
(a) "Accommodations" means any apartment, condominium or
cooperative unit, cabin, lodge, hotel or motel room or any other private or commercial structure which is situated on real
property and designed for occupancy by one or more individuals;
(b) "Assessment" means the share of funds required for the
payment of common expenses which is assessed from time to time
against each purchaser by the managing entity, or paid on behalf
of the managing entity by the developer, a separate management
firm, a legally designated third party, or some combination
thereof;
(c) "Common expenses" means those expenses properly incurred
for the maintenance, operation and repair of all accommodations
or facilities, or both, constituting the time-sharing plan;
(d) "Contract" means any agreement conferring the rights and
obligations of the time-sharing plan on the purchaser;
(e) "Developer" means the person creating a time-sharing
plan;
(f) "Division" means the division of land sales and
condominiums in the office of the state auditor;
(g) "Facilities" means any structure, service, improvement
or real property, improved or unimproved, which is made available
to the purchasers of a time-sharing plan;
(h) "Managing entity" means the person responsible for
operating and maintaining the time-sharing plan;
(i) "Offer to sell," "offer for sale," "offered for sale" or "offer" means solicitation of purchasers, the taking of
reservations or any other method whereby a purchaser is offered
the opportunity to participate in a time-sharing plan;
(j) "Owners' association" means the association made up of
all purchasers of a time-sharing plan who have purchased a fee
simple interest in real property;
(k) "Purchaser" means any person who is buying or who has
bought a time-share period in a time-sharing plan;
(l) "Seller" means any developer or any other person, or
agent or employee thereof, who is offering time-share periods for
sale to the public in the ordinary course of business, except a
person who has acquired a time-share period for his own occupancy
and later offers it for resale;
(m) "Time-share period" means that period of time when a
purchaser of a time-sharing plan is entitled to the possession
and use of the accommodations or facilities, or both, of a time- sharing plan;
(n) "Time-sharing plan" means any arrangement, plan, scheme
or similar device, other than an exchange program, whether by
membership, agreement, tenancy in common, sale, lease, deed,
rental agreement, license or right-to-use agreement or by any
other means, whereby a purchaser, in exchange for a consideration
receives a right to use accommodations or facilities, or both, for a specific period of time less than a full year during any
given year, but not necessarily for consecutive years, and which
extends for a period of more than three years; and
(o) "Time-share unit" means an accommodation or facility of
a time-sharing plan which is divided into time-share periods.
§36-9-6. Public offering statement.
Each developer shall file with the division a complete copy
of the public offering statement to be used in the sale of the
time-share periods. Until the division approves such filing, any
contract regarding the sale of the time-sharing plan which is the
subject of the public offering statement shall be voidable by the
purchaser. The proposed offering statement shall be received,
reviewed and monitored in the following manner:
(a) The division shall, upon receiving a public offering
statement from a developer, mail the developer an acknowledgment
of receipt. The failure of the division to send such
acknowledgment shall not, however, relieve the developer from the
duty of complying with this section;
(b) Within twenty thirty days after receipt of a public
offering statement, the division shall determine whether the
proposed public offering statement is adequate to meet the
requirements of this section and shall notify the developer by
mail that the division has either approved the public offering statement or found specified deficiencies. If the division fails
to respond within twenty thirty days, the filing shall be deemed
approved. The developer may correct the deficiencies; and,
within fifteen twenty days after receipt of materials filed by
the developer to correct the deficiencies found by the division,
the division shall notify the developer by mail that the division
has either approved the filing or found additional specified
deficiencies. If the division fails to respond within fifteen
twenty days, the filing shall be deemed approved;
(c) Any material change to the public offering statement
shall be filed with the division within fifteen days of the
change. The division shall approve, or cite for deficiencies,
the change within ten fifteen days after the date of filing. If
the division fails to respond within ten fifteen days, the change
shall be deemed approved;
(d) Upon filing a public offering statement with the
division, a developer shall pay a filing fee of fifty cents for
each time-share period which is to be part of the proposed time- sharing plan in which the situs of the time-share plan is located
upon real property in West Virginia, a developer shall pay a
filing fee of one dollar for each time-share period which is to
be a part of the proposed time-sharing plan, but not less than a
minimum filing fee of two hundred fifty dollars;
(e) Upon filing a public offering statement with the
division, in which the situs of the real property upon which the
time-share plan is located is outside the state of West Virginia,
a developer shall pay a filing fee of two dollars for each time- share period offered for sale in West Virginia, but not less than
a minimum filing fee of five hundred dollars.
(e) (f) Every public offering statement shall contain the
following:
(1) A cover page stating:
(A) The name of the time-sharing plan; and
(B) The following, in conspicuous type:
"THIS PUBLIC OFFERING STATEMENT CONTAINS IMPORTANT MATTERS
TO BE CONSIDERED IN ACQUIRING A TIME-SHARE PERIOD. THE
STATEMENTS CONTAINED HEREIN ARE ONLY SUMMARY IN NATURE. A
PROSPECTIVE PURCHASER SHOULD REFER TO ALL REFERENCES, EXHIBITS
HERETO, CONTRACT DOCUMENTS AND SALES MATERIALS. ORAL
REPRESENTATIONS CANNOT BE RELIED UPON AS CORRECT STATEMENTS OF
SELLER REPRESENTATIONS. REFER TO THIS DOCUMENT FOR CORRECT
REPRESENTATIONS";
(2) A separate index of the contents and exhibits of the
public offering statement;
(3) A text, which shall be a summary of the disclosure
required by paragraphs five through thirteen and subsection (f), and a cross-reference to the location in the public offering
statement of each exhibit;
(4) Exhibits, setting forth in detail the information
summarized in the text of the public offering statement;
(5) An explanation of the time-share form of ownership that
is being offered;
(6) A general description of the time-sharing plan,
including the numbers of time-share units and time-share periods
which are a part of the plan;
(7) An explanation of the purchaser's rights of
cancellation;
(8) A copy of each executed escrow agreement and, if
applicable, any nondisturbance instrument and/or notice to
creditors;
(9) An explanation of the status of the title to the real
property underlying the time-sharing plan, including a statement
of the existence of any lien, defect, judgment or other
encumbrance affecting the title to the property;
(10) A description of any judgment against the seller or the
managing entity and the status of any pending suit to which the
seller or the managing entity is a party, which is material to
the time-sharing plan, and any other suit material to the time- sharing plan of which the seller has actual knowledge;
(11) A description of the insurance coverage provided for
the benefit of the purchasers;
(12) A statement of whether the time-sharing plan is
participating in an exchange program and, if so, the name and
address of the exchange company offering the exchange program;
and
(13) Any other information that the seller, with the
approval of the division, desires to include in the public
offering statement.
(f) (g) A public offering statement regarding a time-
sharing plan shall contain or fully and accurately disclose the
following:
(1) The name and address of the developer and the identity
of the chief operating officer or principal directing the
creation and sale of the time-sharing plan;
(2) The name and address of the accommodations and
facilities;
(3) The schedule of commencement and completion of all
improvements;
(4) The name of any person who will or may have the right to
alter, amend or add to the charges to which the purchaser may be
subject and the terms and conditions under which such
alterations, amendments or additions may be imposed;
(5) The documents, if any, creating the time-sharing plan;
(6) Any contracts or leases to be signed by purchasers;
(7) The identity of the managing entity and the manner, if
any, whereby the seller may change the managing entity or its
control;
(8) A copy of the rules, regulations, conditions or
limitations on the use of the accommodations or facilities
available to purchasers;
(9) Any restrictions on the transfer of any time-share
period; and
(10) A description of the recreational and other facilities
of the time-sharing plan.
(g) (h) In addition, a public offering statement regarding
any time-sharing plan which transfers fee simple interests in
real property shall also contain or fully and accurately disclose
the following:
(1) All unusual and material circumstances, features and
characteristics of the real property;
(2) An estimated operating budget and a schedule of each
purchaser's expenses; and
(3) Any service, maintenance or recreation contracts or
leases that may be canceled by the purchasers.
§36-9-24. Annual fee for each time-share period in plan.
(a) On or before the first day of July of each year, each
managing entity, seller, developer, or legally designated their
party shall collect as a common expense and pay to the division
an annual fee of fifty cents one dollar for each time-share
period within the time-sharing plan offered for sale and located
in West Virginia.
(b) On or before the first day of July of each year, each
managing entity, seller, developer, or legally designated third
party, shall collect as a common expense and pay to the division
an annual fee of two dollars for each time-share period within
the time-sharing plan that is located out-of-state but offered
for sale in West Virginia.
(c) On or before the first day of July of each, each
managing entity, seller, developer, or legally designated third
party shall submit to the division a sales report providing such
information as the division may require to ascertain compliance
with this section.
§36-9-27. Compliance, fines, administrative and legal remedies.
Failure by persons or entities covered by this article to
comply with the terms of this article may result in the division
making a finding of noncompliance. Based upon a finding of
noncompliance the division may: (a) Assess fines not to exceed
ten thousand dollars; (b) take such administrative action as is warranted or required including, but not limited to: (1)
Revocation of all registrations of the offender; (2) disallowance
of future registrations for a period of time up to three years
from the date of the final administrative action taken by the
division, or a final order from a court of record; (3) Enjoining
the offender from any further activity within the state of West
Virginia; and (4) any other relief available under law.
NOTE: The purpose of this bill is to eliminate payment by
developers of time-share properties already sole, differentiate
fees paid by instate and out-of-state developers, raise the
uniform fee from fifty cents per time-share to one dollar per
time-share for instate time-shares and raise the sales fee
from fifty cents for out-of-state developers of out-of-state
time-shares to two dollars. Additionally, the purpose of this
bill is to establish penalties for noncompliance and authorize
any appropriate legal action to be taken by the division of
condominiums and land sales.
Strike-throughs indicate language that would be stricken
from the present law, and underscoring indicates new language
that would be added.
§36-9-27 is new; therefore, strike-throughs and underscoring
have been omitted.