73R9585 T
By Clemons H.B. No. 362
Substitute the following for H.B. No. 362:
By Averitt C.S.H.B. No. 362
A BILL TO BE ENTITLED
1-1 AN ACT
1-2 relating to reports of timeshare expenses charged and collected by
1-3 managing entities of timeshare properties; providing a civil
1-4 penalty.
1-5 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
1-6 SECTION 1. Section 221.002, Property Code, is amended by
1-7 amending Subsection (23) and adding Subsections (32), (33), and
1-8 (34) to read as follows:
1-9 (23) "Timeshare expenses" means expenditures, <fees,>
1-10 charges, or liabilities for the operation of a timeshare property
1-11 or timeshare system, including any allocations to maintain reserves
1-12 but excluding any purchase money payable for timeshare interests:
1-13 (A) incurred in connection with a timeshare interest
1-14 by or on behalf of the owner of all timeshare interests in a
1-15 timeshare property; and
1-16 (B) imposed on timeshare interests by the managing
1-17 entity.
1-18 (32) "Timeshare fees" means an amount assessed against or
1-19 collected from an owner by a managing entity in a fiscal year,
1-20 without regard to the frequency with which the amount is assessed
1-21 or collected.
1-22 (33) "Owner" means a person who holds a legal or equitable
1-23 interest in a timeshare interest in timeshare property subject to
1-24 the requirements of this act.
2-1 (34) "Timeshare system" means two or more timeshare
2-2 properties located in separate geographic areas which are:
2-3 (a) managed by the same managing entity; and
2-4 (b) subject to a written arrangement or agreement
2-5 whereby an owner of a timeshare interest in any one of the
2-6 timeshare properties may use a timeshare unit and the amenities of
2-7 any of the other timeshare properties as provided in the project
2-8 instruments.
2-9 SECTION 2. Section 221.011(b), Property Code, is amended to
2-10 read as follows:
2-11 (b) The declaration made under this section must include:
2-12 (1) a legal description of the timeshare property,
2-13 including a ground plan indicating the location of each existing or
2-14 proposed building to be constructed on the timeshare property;
2-15 (2) a description of each existing or proposed
2-16 timeshare unit, including the location and square footage of each
2-17 unit and an interior floor plan of each existing or proposed
2-18 building;
2-19 (3) a description of the amenities furnished or to be
2-20 furnished to the purchaser;
2-21 (4) a statement of the fractional or percentage part
2-22 that each timeshare interest bears to the entire timeshare regime;
2-23 <and>
2-24 (5) if applicable, a statement that the timeshare
2-25 property is part of a timeshare system; and
2-26 (6) any additional provisions that are consistent with
2-27 this section.
3-1 SECTION 3. Section 221.032(b), Property Code, is amended to
3-2 read as follows:
3-3 (17) a statement disclosing that any deposit made in
3-4 connection with the purchase of a timeshare interest will be held
3-5 in an escrow account until expiration of any right to cancel the
3-6 contract or any later time specified in the contract and will be
3-7 returned to the purchaser if he elects to exercise his right of
3-8 cancellation; <and>
3-9 (18) if applicable, a statement that the timeshare property
3-10 is part of a timeshare system and that timeshare fees collected
3-11 from the owners may be placed in a common account with the
3-12 timeshare fees collected from the owners of other timeshare
3-13 properties participating in the timeshare system; and
3-14 (19) any other material circumstances concerning a timeshare
3-15 interest.
3-16 SECTION 4. Section 221.041, Property Code, is amended to
3-17 reads as follows:
3-18 (a) A purchaser may cancel a contract to purchase a
3-19 timeshare interest before the sixth day after the date the contract
3-20 is signed.
3-21 (b) If a purchaser does not receive a copy of the contract
3-22 at the time the contract is signed, the purchaser may cancel the
3-23 contract to purchase the timeshare interest before the sixth day
3-24 after the date the contract is received by the purchaser.
3-25 (c) A purchaser may not waive his right of cancellation
3-26 under this section. A contract containing a waiver is voidable by
3-27 the purchaser.
4-1 SECTION 5. Section 221.043, Property Code, is amended to
4-2 read as follows:
4-3 (a) Attached to each contract shall be a separate page
4-4 identified as Exhibit A. Exhibit A <The following statement> shall
4-5 be provided to each purchaser at the time the contract is signed<.
4-6 The statement shall be on a separate page and attached to the
4-7 contract as Exhibit A. The statement> and shall contain the
4-8 following information <language>. Subsections 1 and 3 shall be
4-9 provided in the exact language set forth in this section with the
4-10 seller's name and address, the date of the last day of the fiscal
4-11 year and the address of the managing entity inserted where
4-12 indicated:
4-13 (1) "PURCHASER'S RIGHT TO CANCEL.
4-14 "A. "BY SIGNING <PURCHASING> THIS CONTRACT YOU
4-15 ARE INCURRING AN OBLIGATION TO PURCHASE A TIMESHARE INTEREST. YOU
4-16 MAY, HOWEVER, CANCEL THIS CONTRACT WITHOUT PENALTY OR OBLIGATION
4-17 BEFORE THE SIXTH DAY AFTER THE DATE YOU SIGN THE CONTRACT. IF YOU
4-18 DO NOT RECEIVE A COPY OF THE CONTRACT AT THE TIME THE CONTRACT IS
4-19 SIGNED, YOU MAY CANCEL THIS CONTRACT WITHOUT PENALTY OR OBLIGATION
4-20 BEFORE THE SIXTH DAY AFTER THE DATE YOU RECEIVE A COPY OF THE
4-21 CONTRACT.
4-22 "B. IF YOU DECIDE TO CANCEL THIS CONTRACT, YOU
4-23 MAY DO SO BY EITHER HAND-DELIVERING NOTICE OF CANCELLATION TO THE
4-24 SELLER OR BY MAILING NOTICE BY PREPAID UNITED STATES MAIL TO THE
4-25 SELLER OR THE SELLER'S AGENT FOR SERVICE OF PROCESS. YOUR NOTICE
4-26 OF CANCELLATION IS EFFECTIVE ON THE DATE SENT OR DELIVERED TO
4-27 (INSERT NAME OF SELLER) AT (INSERT ADDRESS OF SELLER). FOR YOUR
5-1 PROTECTION, SHOULD YOU DECIDE TO CANCEL YOU SHOULD EITHER SEND YOUR
5-2 NOTICE OF CANCELLATION BY CERTIFIED MAIL WITH A RETURN RECEIPT
5-3 REQUESTED OR OBTAIN A SIGNED AND DATED RECEIPT IF DELIVERING IT IN
5-4 PERSON.
5-5 "C. A PURCHASER SHOULD NOT RELY ON STATEMENTS
5-6 OTHER THAN THOSE INCLUDED IN THIS CONTRACT AND THE DISCLOSURE
5-7 STATEMENT."
5-8 (2) A statement disclosing the amount of the timeshare
5-9 fees, on a monthly or annual basis, which are being assessed
5-10 currently against or collected from the owners of a timeshare
5-11 interest. Immediately following the timeshare fee disclosure
5-12 statement shall be a statement that the timeshare fees collected by
5-13 the managing entity may be used to pay for the administrative and
5-14 operating expenses of the property; and
5-15 (3) "As a timeshare owner you have a right to request
5-16 a written annual timeshare fee and expense statement. This
5-17 statement is prepared annually by the managing entity and will be
5-18 available no later than the 90th day following (insert the date of
5-19 the last day of the fiscal year). You may request the statement,
5-20 by writing to (insert address of the managing entity)."
5-21 (b) Immediately following the required statements
5-22 <statement> on Exhibit A shall be a space reserved for the
5-23 signature of the purchaser. The seller shall obtain the
5-24 purchaser's signature on Exhibit A at the time the contract is
5-25 signed.
5-26 (c) The contract must also include the following:
5-27 (1) the name and address of the seller and the address
6-1 of the timeshare units;
6-2 (2) whether the purchaser visited the location of the
6-3 timeshare units before signing the contract;
6-4 (3) an agreement by the seller that if the purchaser
6-5 timely exercises the right of cancellation under the contract, all
6-6 payments made by the purchaser to the seller in connection with the
6-7 contract shall be returned to such purchaser before the 21st day
6-8 after the seller receives notice of cancellation;
6-9 (4) the name of the person or persons actively
6-10 involved in the sales presentation on behalf of the seller;
6-11 (5) a warranty that the timeshare common properties
6-12 are not mortgaged, unless the mortgage contains a nondisturbance
6-13 clause which protects the timeshare owner in the event of
6-14 foreclosure; and
6-15 (6) in the event such timeshare interests are sold
6-16 under a lease, right to use, or membership agreement where free and
6-17 clear title to the timeshare unit is not passed to the buyer, then
6-18 the contract must contain a warranty that the timeshare is free and
6-19 clear; or if subject to a mortgage, the mortgage must contain a
6-20 nondisturbance clause which protects the timeshare owner in the
6-21 event of foreclosure.
6-22 SECTION 6. Section 221.071(a), Property Code, is amended to
6-23 read as follows:
6-24 (a) A seller or other person commits a false, misleading, or
6-25 deceptive act or practice within the meaning of Subsections (a) and
6-26 (b) of Section 17.46 of the Texas Deceptive Trade
6-27 Practices-Consumer Protection Act (Article 17.46 et seq., Business
7-1 & Commerce Code), by engaging in any of the following acts:
7-2 (1) failing to disclose information concerning a
7-3 timeshare interest required by Subchapter D;
7-4 (2) making false or misleading statements of fact
7-5 concerning the characteristics of accommodations or amenities
7-6 available to a consumer;
7-7 (3) predicting specific or immediate increases in the
7-8 value of a timeshare interest without a reasonable basis for such
7-9 predictions;
7-10 (4) making false or misleading statements of fact
7-11 concerning the duration that accommodations or amenities will be
7-12 available to a consumer;
7-13 (5) making false or misleading statements of fact
7-14 concerning the conditions under which a purchaser of a timeshare
7-15 interest may exchange the right to occupy a unit for the right to
7-16 occupy a unit in the same or another timeshare property; <or>
7-17 (6) representing that a prize, gift, or other benefit
7-18 will be awarded in connection with a promotion with the intent not
7-19 to award that prize, gift, or benefit in the manner represented;
7-20 (7) failing to provide a copy of the contract to the
7-21 purchaser at the time the contract is signed by the purchaser,
7-22 unless the purchaser requests in writing that the contract be
7-23 mailed, and the contract is mailed to the purchaser before the end
7-24 of the next business day;
7-25 (8) failing to provide the annual timeshare fee and
7-26 expense statement as required by Section 221.074; or
7-27 (9) furnishing false information in the annual
8-1 timeshare fee and expense statement as required by
8-2 Section 221.074.
8-3 SECTION 7. Chapter 221, Subchapter H, Property Code, is
8-4 amended by adding Sections 221.074 and 221.075 to read as follows:
8-5 Sec. 221.074. ANNUAL TIMESHARE FEE AND EXPENSE STATEMENT.
8-6 (a) Notwithstanding a provision of the promotional disclosure
8-7 statement, project instrument, timeshare instrument, or bylaws
8-8 adopted pursuant to a timeshare instrument, not later than the 60th
8-9 day after the last day of each fiscal year, the managing entity
8-10 shall make available to each owner a written annual accounting of
8-11 the operation of the timeshare property or timeshare system. The
8-12 statement shall include:
8-13 (1) a balance sheet;
8-14 (2) an income and expense statement which complies
8-15 with generally accepted accounting principles and reflects the
8-16 collection and expenditure of timeshare fees;
8-17 (3) the current operating budget for the timeshare
8-18 property or timeshare system required by Sec. 221.032(b)(6);
8-19 (4) an accounting identifying any unfunded reserves
8-20 for capital improvements and maintenance and upkeep of the
8-21 timeshare property; and
8-22 (5) the name and address of each member of the board
8-23 of directors of the council of purchasers or the owners'
8-24 association, if one exists, and the name, address, and telephone
8-25 number of a designated representative of the managing entity.
8-26 (b) The managing entity shall make the fee statement
8-27 available to owners of record of a timeshare interest as of the
9-1 last day of the fiscal year as reflected in the managing entity's
9-2 records.
9-3 (c) The statement shall be delivered in person or by mail to
9-4 each person on the board of directors of the council of purchasers
9-5 or the owners' association, if one exists.
9-6 (d) The managing entity shall post prominently in the
9-7 registration area of each timeshare property the following notice,
9-8 with the date of the last day of the current fiscal year and the
9-9 address of the managing entity inserted where indicated:
9-10 "As a timeshare owner you have a right to request a
9-11 written annual timeshare fee and expense statement. This statement
9-12 is prepared annually by the managing entity and will be available
9-13 no later than the 90th day following (insert the date of the last
9-14 day of the current fiscal year). You may request the statement, by
9-15 writing to (insert address of the managing entity)."
9-16 (f) If a request for the statement is received by the
9-17 managing entity prior to the date by which the statement is
9-18 available, the statement shall be provided no later than one week
9-19 after the date the statement becomes available. If a request for
9-20 the statement is received by the managing entity after the date the
9-21 statement becomes available, the statement shall be provided no
9-22 later than two weeks after the date the request is received by the
9-23 managing entity. For the purposes of this section, the statement
9-24 shall be deemed provided if it is deposited in the mail properly
9-25 addressed with postage prepaid.
9-26 (g) A managing entity shall provide a separate annual
9-27 timeshare fee and expense statement for each timeshare property
10-1 unless the property is part of a timeshare system. A managing
10-2 entity may provide a consolidated statement for all timeshare
10-3 properties comprising a timeshare system.
10-4 Sec. 221.075. CIVIL PENALTY FOR LATE STATEMENT; INJUNCTION.
10-5 (a) On a written request filed with the commission by a managing
10-6 entity before the date on which the statement required by
10-7 Section 221.074 must be made available, the commission for good
10-8 cause shown may grant the managing entity an extension of no more
10-9 than 30 days in which to provide the statement.
10-10 (b) If the statement required by Section 221.074 is late,
10-11 and an extension has not been granted under Subsection (a), the
10-12 managing entity required to provide the statement is liable to the
10-13 state for a civil penalty not to exceed:
10-14 (1) $500 per day for each of the first 10 days that
10-15 the statement is late; and
10-16 (2) $1,000 per day for each day after the 10th day,
10-17 until the managing entity has complied with Section 221.074.
10-18 (c) In no event shall the civil penalties exceed $25,000 for
10-19 any one statement period.
10-20 (d) A managing entity may not assess against or collect from
10-21 the owners of a timeshare property the amount of a penalty incurred
10-22 under this section.
10-23 (e) If it appears that a managing entity has violated
10-24 Section 221.074, the attorney general may institute an action for
10-25 injunctive relief, a civil penalty, or both.
10-26 SECTION 8. Chapter 221, Subchapter H, Property Code, is
10-27 amended by adding Sections 221.076 and 221.077 to read as follows:
11-1 Sec. 221.076. MANAGING ENTITIES THAT MANAGE MORE THAN ONE
11-2 TIMESHARE SYSTEM OR PROPERTY. (a) A managing entity that manages
11-3 two or more timeshare properties which are not participants of the
11-4 same timeshare system may not commingle the timeshare fees
11-5 collected from owners of one timeshare property with the timeshare
11-6 fees collected from owners of any other timeshare property.
11-7 (b) A managing entity that manages two or more timeshare
11-8 systems may not commingle the timeshare fees collected from owners
11-9 participating in one timeshare system with the timeshare fees
11-10 collected from owners participating in any other timeshare system.
11-11 (c) A managing entity which manages a timeshare system may
11-12 deposit timeshare fees collected from owners of one timeshare
11-13 property into a common account with timeshare fees collected from
11-14 owners of other timeshare properties participating in the same
11-15 timeshare system only if the practice is disclosed in the timeshare
11-16 disclosure statement for each timeshare property in the timeshare
11-17 system and the appropriate statement is included in the declaration
11-18 for each timeshare regime as required by Subchapter B. Nothing in
11-19 this section shall be construed to allow a managing entity to
11-20 commingle the timeshare fees of:
11-21 (1) separate timeshare systems;
11-22 (2) separate timeshare properties which are not part
11-23 of a timeshare system; or
11-24 (3) a timeshare system with the timeshare fees of a
11-25 separate timeshare property which is not a participant in the
11-26 timeshare system.
11-27 Sec. 221.077. AVAILABILITY OF BOOKS AND RECORDS. A managing
12-1 entity, on written request of an owner, shall make available for
12-2 examination at its registered office or principal place of business
12-3 and at any reasonable time or times the relevant books and records
12-4 relating to the collection and expenditure of timeshare fees.
12-5 SECTION 9. This Act takes effect September 1, 1993, except
12-6 that Section 7 takes effect January 1, 1995.
12-7 SECTION 10. The importance of this legislation and the
12-8 crowded condition of the calendars in both houses create an
12-9 emergency and an imperative public necessity that the
12-10 constitutional rule requiring bills to be read on three several
12-11 days in each house be suspended, and this rule is hereby suspended.