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A BILL TO BE ENTITLED
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AN ACT
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relating to amendments to the Texas Timeshare Act. |
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BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS: |
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SECTION 1. Section 221.022(c), Property Code, is amended to |
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read as follows: |
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(c) The commission may accept an abbreviated registration |
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application from a developer of a timeshare plan for any [if all] |
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accommodations in the plan [are] located outside this state. The |
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developer must file written notice of the intent to register under |
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this section not later than the 15th day before the date the |
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abbreviated application is submitted. |
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SECTION 2. Sections 221.032(b) and (d), Property Code, are |
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amended to read as follows: |
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(b) The timeshare disclosure statement for a single-site |
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timeshare plan or a multisite timeshare plan that includes a |
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specific timeshare interest must include: |
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(1) the type of timeshare plan offered and the name and |
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address of: |
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(A) the developer; and |
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(B) the single site or specific site offered for |
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the multisite timeshare plan; |
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(2) a description of the duration and operation of the |
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timeshare plan; |
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(3) a description of the existing or proposed |
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accommodations, including the type and number of timeshare |
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interests in the accommodations expressed in periods of seven-day |
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use availability or other time increment applicable to the |
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timeshare plan. The description of each type of accommodation |
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included in the timeshare plan shall be categorized by the number of |
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bedrooms, the number of bathrooms, and sleeping capacity, and shall |
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include a statement indicating whether the accommodation contains a |
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full kitchen, which means a kitchen that has a minimum of a |
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dishwasher, range, sink, oven, and refrigerator. If the |
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accommodations are proposed or incomplete, a schedule for |
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commencement, completion, and availability of the accommodations |
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shall be provided; |
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(4) a description of any existing or proposed |
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amenities of the timeshare plan and, if the amenities are proposed |
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or incomplete, a schedule for commencement, completion, and |
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availability of the amenities; |
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(5) the extent to which financial arrangements have |
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been provided for the completion of all promised accommodations and |
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amenities that are committed to be built; |
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(6) a description of the method and timing for |
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performing maintenance of the accommodations; |
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(7) a statement indicating that, on an annual basis, |
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the sum of the nights that purchasers are entitled to use the |
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accommodations does not exceed the number of nights the |
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accommodations are available for use by the purchasers; |
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(8) a description of the method by which purchasers' |
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use of the accommodations is scheduled; |
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(9) a statement that an association exists or is |
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expected to be created or that such an association does not exist |
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and is not expected to be created and, if such an association exists |
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or is reasonably contemplated, a description of its powers and |
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responsibilities; |
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(10) relating to the single-site timeshare plan or the |
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specific timeshare interest of a multisite timeshare plan, copies |
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of the following documents, if applicable, including any amendments |
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to the documents, unless separately provided to the purchaser |
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simultaneously with the timeshare disclosure statement: |
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(A) the declaration; |
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(B) the association articles of incorporation; |
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(C) the association bylaws; |
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(D) the association rules; and |
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(E) any lease or contract, excluding the purchase |
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contract and other loan documents required to be signed by the |
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purchaser at closing; |
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(11) the name and principal address of the managing |
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entity and a description of the procedures, if any, for altering the |
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powers and responsibilities of the managing entity and for removing |
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or replacing it; |
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(12) the current annual budget, if available, or the |
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projected annual budget for the timeshare plan or timeshare |
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properties managed by the same managing entity if assessments are |
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deposited in a common account. The budget must include: |
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(A) a statement of the amount reserved or |
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budgeted for repairs, replacements, and refurbishment; |
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(B) the projected common expense liability, if |
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any, by category of expenditure for the timeshare plan or timeshare |
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properties managed by the same managing entity; and |
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(C) [the name and address of the person who
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prepared the operating budget; and
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[(D)] the assumptions on which the operating |
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budget is based; |
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(13) the projected assessments and a description of |
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the method for calculating and apportioning those assessments among |
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purchasers; |
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(14) any initial fee or special fee due from the |
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purchaser at closing, together with a description of the purpose |
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and method of calculating the fee; |
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(15) a description of any lien, defect, or encumbrance |
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on or affecting title to the timeshare interest and, if applicable, |
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a copy of each written warranty provided by the developer; |
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(16) a description of any bankruptcy that is pending |
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or that has occurred within the past five years, pending civil or |
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criminal suit, adjudication, or disciplinary actions material to |
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the timeshare plan of which the developer has knowledge; |
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(17) a description of any financing offered by or |
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available through the developer; |
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(18) any current or anticipated fees or charges to be |
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paid by timeshare purchasers for the use of any accommodations or |
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amenities related to the timeshare plan, and a statement that the |
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fees or charges are subject to change; |
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(19) a description and amount of insurance coverage |
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provided for the protection of the purchaser; |
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(20) the extent to which a timeshare interest may |
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become subject to a tax lien or other lien arising out of claims |
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against purchasers of different timeshare interests; |
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(21) a description of those matters required by |
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Section 221.041; |
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(22) a statement disclosing any right of first refusal |
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or other restraint on the transfer of all or any portion of a |
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timeshare interest; |
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(23) a statement disclosing that any deposit made in |
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connection with the purchase of a timeshare interest must be held by |
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an escrow agent until expiration of any right to cancel the contract |
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and that any deposit must be returned to the purchaser if the |
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purchaser elects to exercise the right of cancellation; or, if the |
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commission accepts from the developer a surety bond, irrevocable |
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letter of credit, or other form of financial assurance instead of an |
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escrow deposit, a statement disclosing that the developer has |
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provided a surety bond, irrevocable letter of credit, or other form |
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of financial assurance in an amount equal to or in excess of the |
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funds that would otherwise be held by an escrow agent and that the |
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deposit must be returned if the purchaser elects to exercise the |
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right of cancellation; |
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(24) if applicable, a statement that the assessments |
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collected from the purchasers may be placed in a common account with |
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the assessments collected from the purchasers of other timeshare |
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properties managed by the same managing entity; |
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(25) if the timeshare plan provides purchasers with |
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the opportunity to participate in an exchange program, a |
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description of the name and address of the exchange company and the |
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method by which a purchaser accesses the exchange program; and |
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(26) any other information the commission determines |
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is necessary to protect prospective purchasers or to implement the |
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purpose of this chapter. |
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(d) A developer who offers a nonspecific timeshare interest |
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in a multisite timeshare plan must disclose the following |
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information in written, graphic, or tabular form: |
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(1) the name and address of the developer; |
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(2) a description of the type of interest and the usage |
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rights the purchaser will receive; |
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(3) a description of the duration and operation of the |
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timeshare plan; |
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(4) a description of the type of insurance coverage |
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provided for each component site; |
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(5) an explanation of who holds title to the |
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accommodations of each component site; |
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(6) a description of each component site, including |
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the name and address of each component site; |
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(7) a description of the existing or proposed |
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accommodations, expressed in periods of seven-day use availability |
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or any other time increment applicable to the timeshare plan. The |
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description of each type of accommodation included in the timeshare |
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plan shall be categorized by the number of bedrooms, the number of |
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bathrooms, and sleeping capacity, and shall include a statement |
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indicating whether the accommodation contains a full kitchen, which |
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means a kitchen that has a minimum of a dishwasher, range, sink, |
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oven, and refrigerator. If the accommodations are proposed or |
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incomplete, a schedule for commencement, completion, and |
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availability of the accommodations shall be provided; |
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(8) a statement that an association exists or is |
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expected to be created or that such an association does not exist |
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and is not expected to be created and, if such an association exists |
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or is reasonably contemplated, a description of its powers and |
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responsibilities; |
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(9) if applicable, copies of the following documents |
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applicable to the multisite timeshare plan, including any |
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amendments to the documents, unless separately provided to the |
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purchaser simultaneously with the timeshare disclosure statement: |
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(A) the declaration; |
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(B) the association articles of incorporation; |
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(C) the association bylaws; |
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(D) the association rules; and |
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(E) any lease or contract, excluding the purchase |
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contract and other loan documents required to be signed by the |
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purchaser at closing; |
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(10) a description of the method and timing for |
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performing maintenance of the accommodations; |
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(11) a statement indicating that, on an annual basis, |
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the sum of the nights that purchasers are entitled to use the |
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accommodations does not exceed the number of nights the |
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accommodations are available for use by the purchasers; |
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(12) a description of each type of accommodation |
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included in the timeshare plan, categorized by the number of |
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bedrooms, the number of bathrooms, and sleeping capacity, and a |
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statement indicating whether the accommodation contains a full |
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kitchen, which means a kitchen that has a minimum of a dishwasher, |
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range, sink, oven, and refrigerator; |
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(13) a description of amenities available for use by |
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the purchaser at each component site; |
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(14) the location of each component site of the |
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multisite timeshare plan, the historical occupancy of each |
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component site for the prior 12-month period, if the component site |
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was part of the multisite timeshare plan during such 12-month time |
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period, as well as any periodic adjustment or amendment to the |
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reservation system that may be needed in order to respond to actual |
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purchaser use patterns and changes in purchaser use demand for the |
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accommodations existing at the time within the multisite timeshare |
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plan; |
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(15) a description of the right to make any additions, |
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substitutions, or deletions of accommodations, amenities, or |
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component sites, and a description of the basis upon which |
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accommodations, amenities, or component sites may be added to, |
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substituted in, or deleted from the multisite timeshare plan; |
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(16) a description of the reservation system that |
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shall include all of the following: |
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(A) the entity responsible for operating the |
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reservation system, its relationship to the developer, and the |
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duration of any agreement for operation of the reservation system; |
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(B) a summary of the rules governing access to |
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and use of the reservation system; and |
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(C) the existence of and an explanation regarding |
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any priority reservation features that affect a purchaser's ability |
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to make reservations for the use of a given accommodation on a |
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first-come, first-served basis; |
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(17) the name and principal address of the managing |
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entity for the multisite timeshare plan and a description of the |
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procedures, if any, for altering the powers and responsibilities of |
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the managing entity and for removing or replacing it, and a |
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description of the relationship between the multisite timeshare |
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plan managing entity and the managing entity of the component sites |
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of the multisite timeshare plan, if different from the multisite |
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timeshare plan managing entity; |
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(18) the current annual budget of the multisite |
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timeshare plan, if available, or the projected annual budget for |
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the multisite timeshare plan, which must include: |
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(A) a statement of the amount reserved or |
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budgeted for repairs, replacements, and refurbishment; |
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(B) the projected common expense liability, if |
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any, by category of expenditure for the multisite timeshare plan; |
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and |
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(C) [the name and address of the person who
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prepared the operating budget; and
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[(D)] the assumptions on which the operating |
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budget is based; |
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(19) the projected assessments and a description of |
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the method for calculating and apportioning those assessments among |
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purchasers of the multisite timeshare plan; |
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(20) if applicable, a statement that the assessments |
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collected from the purchasers may be placed in a common account with |
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the assessments collected from the purchasers of other timeshare |
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properties managed by the same managing entity; |
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(21) any current fees or charges to be paid by |
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timeshare purchasers for the use of any amenities related to the |
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timeshare plan and a statement that the fees or charges are subject |
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to change; |
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(22) any initial or special fee due from the purchaser |
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at closing, together with a description of the purpose of and method |
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of calculating the fee; |
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(23) a description of the purchaser's liability for |
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any fees associated with the multisite timeshare plan; |
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(24) a description of any lien, defect, or encumbrance |
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on or affecting title to the timeshare interest and, if applicable, |
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a copy of each written warranty provided by the developer; |
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(25) the extent to which a timeshare interest may |
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become subject to a tax lien or other lien arising out of claims |
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against purchasers of different timeshare interests; |
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(26) a description of those matters required by |
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Section 221.041; |
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(27) a description of any financing offered by or |
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available through the developer; |
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(28) a description of any bankruptcy that is pending |
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or that has occurred within the past five years, pending civil or |
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criminal suits, adjudications, or disciplinary actions material to |
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the timeshare plan of which the developer has knowledge; |
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(29) a statement disclosing any right of first refusal |
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or other restraint on the transfer of all or a portion of a |
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timeshare interest; |
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(30) a statement disclosing that any deposit made in |
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connection with the purchase of a timeshare interest must be held by |
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an escrow agent until expiration of any right to cancel the contract |
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and that any deposit must be returned to the purchaser if the |
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purchaser elects to exercise the right of cancellation; or, if the |
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commission accepts from the developer a surety bond, irrevocable |
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letter of credit, or other form of financial assurance instead of an |
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escrow deposit, a statement disclosing that the developer has |
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provided a surety bond, irrevocable letter of credit, or other form |
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of financial assurance in an amount equal to or in excess of the |
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funds that would otherwise be held by an escrow agent and that the |
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deposit must be returned if the purchaser elects to exercise the |
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right of cancellation; |
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(31) if the timeshare plan provides purchasers with |
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the opportunity to participate in an exchange program, a |
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description of the name and address of the exchange company and the |
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method by which a purchaser accesses the exchange program; and |
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(32) any other information the commission determines |
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is necessary to protect prospective purchasers or to implement the |
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purpose of this chapter. |
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SECTION 3. Subchapter D, Chapter 221, Property Code, is |
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amended by adding Section 221.037 to read as follows: |
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Sec. 221.037. ALTERNATIVE TERMINOLOGY OR NAME. (a) In |
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providing the disclosures required by this chapter, the use of the |
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terms "vacation ownership interest" or "vacation ownership plan" to |
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refer to the timeshare interest or plan offered by the developer, or |
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the use of other terms that are substantially similar and that are |
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regularly used by the developer to denote a timeshare interest or |
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plan, is sufficient and complies with the requirements of this |
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chapter. |
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(b) In providing the full name of a developer or a marketing |
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company as required by this chapter, the disclosure of an assumed |
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name of the developer or the marketing company, if the entity has |
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complied with the requirements of the applicable assumed business |
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names statutes or other laws regarding the use of the assumed name, |
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is sufficient and complies with this chapter. |
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SECTION 4. Section 221.043(c), Property Code, is amended to |
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read as follows: |
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(c) The purchase contract must also include the following: |
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(1) the name and address of the developer and the |
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address of the timeshare property or the address of any available |
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timeshare interest being offered; |
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(2) an agreement describing the cancellation policy |
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prescribed by Section 221.041; |
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(3) the name of the person or persons primarily |
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involved in the sales presentation on behalf of the developer; |
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(4) a statement disclosing the amount of the periodic |
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assessments currently assessed against or collected from the |
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purchasers of the timeshare interest, immediately followed by a |
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statement providing that collected assessments will be used by the |
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managing entity to pay for expenditures, charges, reserves, or |
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liabilities relating to the operation of the timeshare plan or |
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timeshare properties managed by the managing entity; |
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(5) [a statement disclosing that the timeshare common
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properties are not mortgaged, unless the mortgage contains a
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nondisturbance clause which fully protects the use and enjoyment
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rights of each timeshare owner in the event of foreclosure;
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[(6)
in the event such timeshare interests are sold
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under a lease, right to use, or membership agreement where free and
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clear title to the accommodation is not passed to the purchaser,
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then the purchase contract must contain a statement that the
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timeshare is free and clear; or if subject to a mortgage, the
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mortgage must contain a nondisturbance clause which fully protects
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the use and enjoyment rights of each timeshare owner in the event of
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foreclosure;
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[(7)] the date the purchaser signs the contract; and |
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(6) [(8)] the following statement: |
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"AS A TIMESHARE OWNER, YOU HAVE A RIGHT TO REQUEST A WRITTEN |
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ANNUAL TIMESHARE FEE AND EXPENSE STATEMENT. THIS STATEMENT IS |
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PREPARED ANNUALLY BY THE MANAGING ENTITY AND WILL BE AVAILABLE NOT |
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LATER THAN FIVE MONTHS AFTER (INSERT THE DATE OF THE LAST DAY OF THE |
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FISCAL YEAR). YOU MAY REQUEST THE STATEMENT BY WRITING TO (INSERT |
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NAME AND ADDRESS OF THE MANAGING ENTITY)." |
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SECTION 5. Section 221.062, Property Code, is amended by |
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adding Subsection (h) to read as follows: |
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(h) Excluding any encumbrance placed against the |
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purchaser's timeshare interest that secures the purchaser's payment |
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of purchase money financing for the purchase, the developer is not |
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entitled to the release of any funds escrowed with respect to each |
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timeshare interest until the developer has provided the commission |
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with satisfactory evidence that: |
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(1) the timeshare interest and any other property or |
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rights to property appurtenant to the timeshare interest, including |
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any amenities represented to the purchaser as being part of the |
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timeshare plan, are free and clear of any of the claims of the |
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developer, any owner of the underlying fee, a mortgagee, judgment |
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creditor, or other lienor, or any other person having an interest in |
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or lien or encumbrance against the timeshare interest or |
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appurtenant property or property rights; |
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(2) the developer, any owner of the underlying fee, a |
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mortgagee, judgment creditor, or other lienor, or any other person |
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having an interest in or lien or encumbrance against the timeshare |
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interest or appurtenant property or property rights, including any |
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amenities represented to the purchaser as being part of the |
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timeshare plan, has recorded a subordination and notice to |
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creditors document in the jurisdiction in which the timeshare |
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interest is located that expressly and effectively provides that |
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the interest holder's right, lien, or encumbrance does not |
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adversely affect and is subordinate to the rights of the owners of |
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the timeshare interests in the timeshare plan, regardless of the |
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date of purchase, on and after the effective date of the |
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subordination document; |
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(3) the developer, any owner of the underlying fee, a |
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mortgagee, judgment creditor, or other lienor, or any other person |
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having an interest in or lien or encumbrance against the timeshare |
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interest or appurtenant property or property rights, including any |
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amenities represented to the purchaser as being part of the |
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timeshare plan, has transferred the subject accommodations or |
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amenities or all use rights therein to a nonprofit organization or |
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an owners' association to be held for the use and benefit of the |
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purchasers of the timeshare plan, which entity shall act as a |
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fiduciary to the purchasers, provided that the developer has |
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transferred control of that entity to the purchasers or does not |
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exercise its voting rights in that entity with respect to the |
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subject accommodations or amenities and, prior to the transfer, any |
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lien or other encumbrance against the accommodation or facility is |
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subject to a subordination and notice to creditors instrument |
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pursuant to this subsection; or |
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(4) alternative arrangements have been made that are |
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adequate to protect the rights of the purchasers of the timeshare |
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interests and are approved by the commission. |
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SECTION 6. This Act applies to timeshare plans created on or |
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after January 15, 2010, and to any developer who offers or disposes |
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of an interest in a timeshare plan and a managing entity that |
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manages a timeshare property under Chapter 221, Property Code, as |
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amended by this Act, on or after that date. |
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SECTION 7. This Act takes effect September 1, 2009. |