11250-11256

BUSINESS AND PROFESSIONS CODE
SECTION 11250-11256




11250.  A time-share plan may be created in any accommodation unless
otherwise prohibited. All time-share plans shall maintain a
one-to-one purchaser to accommodation ratio, which means the ratio of
the number of purchasers eligible to use the accommodations of a
time-share plan on a given night to the number of accommodations
available for use within the plan on that night, such that the total
number of purchasers eligible to use the accommodations of the
time-share plan during a given calendar year never exceeds the total
number of accommodations available for use in the time-share plan
during that year. For purposes of the calculation under this section,
each purchaser must be counted at least once, and no individual
accommodation may be counted more than 365 times per calendar year or
more than 366 times per leap year. A purchaser who is delinquent in
the payment of time-share plan assessments shall continue to be
considered eligible to use the accommodations of the time-share plan
for purposes of calculating the one-to-one purchaser to accommodation
ratio.



11251.  (a) The developer of a single site time-share plan and for
the component sites of a multisite time-share plan located in the
state, shall cause to be recorded prior to the closing of the first
sale of a time-share interest in each accommodation in the time-share
plan, covenants dedicating the accommodations to the time-share plan
and incorporating all covenants of the grantor or lessor of the
time-share interests, and the following provisions:
   (1) Organization of an association of time-share interest owners.
   (2) A description of the real property for the common ownership or
use of the time-share interest owners. Where the time-share plan is
a personal property time-share plan, a description of the personal
property for common use of the time-share interest owners.
   (3) A description of the method for calculating and collecting
regular and special assessments from time-share interest owners to
defray expenses of the time-share property and for related purposes.
   (4) A description of the method for terminating the membership and
selling the interest of a time-share interest owner for failure to
pay regular or special assessments.
   (5) A description of the method for the disciplining of time-share
interest owners for the late payment of assessments.
   (6) Provisions requiring comprehensive general liability insurance
and adequate property and casualty insurance covering the time-share
property.
   (7) Restrictions upon partition of an accommodation of the
time-share plan.
   (8) A description of the method for amending the covenants
affecting the time-share plan.
   (9) Where applicable, a description of the method relating to the
annexation or de-annexation of additional accommodations, phases, or
properties to the time-share plan.
   (10) A description of the procedures in the event of condemnation,
destruction, or extensive damage to an accommodation, including
provisions for the disposition of insurance proceeds or damages
payable on account of damage or condemnation.
   (11) A method of the procedures on regular termination of the
time-share plan.
   (12) Where applicable, allocation of the cost of maintenance and
operation between different elements or mixed uses within the
portions of a project or relating to reciprocal rights and
obligations between the time-share project and other property.
   (13) A description of the method for entry into accommodations of
the time-share plan under authority granted by the association for
the purpose of cleaning, maid service, maintenance, and repair
including emergency repairs and for the purpose of abating a nuisance
or a known or suspected dangerous or unlawful activity.
   (14) Delineate all reserved rights of the developer.
   (15) For projects located within the state, the covenants shall,
insofar as reasonably possible, satisfy the requirements of Section
1468 or Sections 1469 and 1470 of the Civil Code for real property
located in this state.
   (b) For single site time-share plans and component sites of a
multisite time-share plan located outside of the state, the developer
shall cause to be recorded a declaration dedicating the
accommodations to the time-share plan and incorporating all covenants
of the grantor or lessor of the time-share interests. The
declaration shall include the subject matter set forth in paragraphs
(1) to (14), inclusive, of subdivision (a). If there is no provision
for the recording of a declaration in the state or jurisdiction in
which the time-share property or component site is located,
alternatively, the developer shall establish that the declaration is
otherwise enforceable in the state or jurisdiction in which the
time-share property or component site is located. The declaration
shall be in compliance with the applicable laws of the state or
jurisdiction in which the time-share property or component site is
located, and if a conflict exists between laws of the situs state and
the requirements set forth in this section, the law of the situs
state shall control. If the declaration provides for the matters
contained in paragraphs (1) to (14), inclusive, of subdivision (a),
the declaration shall be deemed to be in compliance with the
requirements of subdivision (a) and this subdivision and the
developer shall not be required to make revisions in order to comply
with subdivision (a) and this subdivision.
   (c) The developer of a time-share plan located within the state
shall make provisions in the time-share instruments for all of the
following:
   (1) A description of the services to be made available to
time-share interest owners under the time-share plan.
   (2) A description, to be contained in the declaration or the
bylaws of the association, of the procedures regarding transfer to
the association of control over the time-share property and services
comprising the time-share plan.
   (3) A description of the method for preparation and availability
to time-share interest owners of budgets, financial statements, and
other information related to the time-share plan.
   (4) A description of the methods for employing and for terminating
the employment of a managing entity for the time-share plan.
   (5) A description of the method for adoption of standards and
rules of conduct for the use of accommodations by time-share interest
owners.
   (6) A description of the method for establishment of the rights of
time-share interest owners to the use of an accommodation according
to schedule or under a first-reserved, first-served priority system.
   (7) A description of the method for compensating use periods or
monetary compensation for an owner of a time-share estate if an
accommodation cannot be made available for the period of use to which
the owner is entitled by schedule or under a reservation system
because of an error by the association or managing entity.
   (8) A description of the method for the use of accommodations for
transient accommodations or other income-producing purpose during
periods of nonuse by time-share interest owners.
   (9) A description of the method for the inspection of the books
and records of the association by time-share interest owners.
   (10) A description of the method for collective decisionmaking and
the undertaking of action by or in the name of the association
including, where applicable, representation of time-share
accommodations in an association for the time-share in which the
accommodations are located.
   (d) For single site time-share plans and component sites of a
multisite time-share plan located outside of the state, the developer
shall cause to be included in the time-share instrument the subject
matter set forth in subdivision (c). The time-share instruments shall
be in compliance with the applicable laws of the state or
jurisdiction in which the time-share property or component site is
located, and if there is a conflict between laws of the situs state
and the requirements set forth in this section, the law of the situs
state shall control. If the time-share instruments provide for the
matters contained in subdivision (c), the time-share instruments
shall be deemed to be in compliance with the requirements of
subdivision (c) and this subdivision and the developer shall not be
required to make revisions in order to comply with subdivision (c)
and this subdivision.


11252.  In a time-share plan offering time-share use interests, the
developer shall not encumber the accommodations of the time-share
plan in a manner that could materially and adversely affect the use
rights of the purchasers of the accommodations without the written
assent of not less than 51 percent of the time-share interest owners
other than the developer. This section shall not prevent the
developer from encumbering the purchaser's use rights so long as the
developer has sufficient protection as permitted by Section 11244.



11253.  For single site time-share plans and component sites of
multisite time-share plans located in this state, the time-share
instrument shall require that the following insurance be at all times
maintained in force to protect time-share interest owners in the
time-share plan:
   (a) Insurance against property damage as a result of fire and
other hazards commonly insured against, covering all real and
personal property comprising the time-share plan in an amount not
less than 80 percent of the full replacement value of the time-share
property.
   (1) In a time-share use offering, the trustee shall be a named
coinsured, and if for any reason, title to the accommodation is not
held in trust, the association shall be named as a coinsured as the
agent for each of the time-share interest owners.
   (2) In a time-share estate offering, the association shall be
named as a coinsured if it has title to the property or as a
coinsured as agent for each of the time-share interests owners if
title is held by the owners as tenants in common.
   (3) If, after control of the governing body of the association has
passed to the owners other than the developer, and the association
amends the time-share instrument to reduce the percentage below 80
percent, the failure of the association to maintain coverage at 80
percent of replacement value shall not be grounds for denial of a
public report.
   (b) Liability insurance against death, bodily injury, and property
damage arising out of or in connection with the use, ownership, or
maintenance of the accommodations of the time-share plan.
   (1) The amounts of the insurance shall be determined by the
association, but shall not be less than five hundred thousand dollars
($500,000) to one million dollars ($1,000,000) for personal injury
and one hundred thousand dollars ($100,000) for property damage.
   (2) The liability insurance policy shall provide for all of the
following:
   (A) All time-share interest owners as a class are named as
additional insureds in a policy issued to the association.
   (B) The waiver by the insurer of its right to subrogation under
the policy against any time-share interest owner or member of his or
her household.
   (C) No act or omission by a time-share interest owner, unless
acting within the scope of his or her authority on behalf of the
association, shall void the policy or operate as a condition to
recovery under the policy by any other person.



11254.  (a) In a time-share plan in which the fee or a long-term
leasehold interest in all or some of the accommodations and in
appurtenant real and personal property is to be transferred to the
association or to a corporate trustee under a trust agreement, the
conveyance shall be made prior to the closing of the escrow for the
first sale of a time-share interest in the accommodation.
   (b) The developer may reserve easements in the real property
conveyed for purposes reasonably related to the conduct of commercial
activities in the time-share property, if the developer covenants to
use the easements in a manner that will minimize any adverse impact
on the use and enjoyment of the accommodation by any time-share
interest owner occupying it.



11255.  (a) The department shall require that each of the
accommodations in a time-share plan offering time-share use interests
be conveyed to a trustee or an association acceptable to the
commissioner prior to the closing of the escrow for the first sale of
a time-share use interest that entitles the purchaser to occupy the
accommodation in question.
   (b) If the accommodation in a time-share plan offering time-share
use interests that is free and clear of blanket encumbrances, other
than a lien of current real property taxes, is conveyed to a trustee
or an association, the trust or association instruments shall
include, but not be limited to, all of the following:
   (1) Transfer of title to the accommodations to the trustee or
association.
   (2) If the time-share use interests are conveyed to a trust, the
association as a party to the trust or an express third-party
beneficiary of the trust.
   (3) Notice to the department of the intention of the trustee to
resign, if applicable.
   (4) Continuance of the trustee in that capacity until a successor
trustee acceptable to the department assumes the position, if
applicable.
   (5) Prohibition against any amendments of the trust or association
instruments adversely affecting the interests or rights of
time-share interest owners without the prior approval of the
association.
   (6) Instructions for the distribution of condemnation or insurance
proceeds by the trustee or the association.
   (c) The department may require that each of the accommodations in
a time-share plan offering time-share estate interests that is
subject to a blanket encumbrance be conveyed to a trustee acceptable
to the department prior to the closing of the escrow for the first
sale of a time-share estate which entitles the purchaser to occupy
the accommodation in question.
   (d) If an accommodation in the time-share plan is conveyed to a
trustee pursuant to subdivision (c), the trust instrument shall
include all of the following provisions in addition to those set
forth in subdivision (b):
   (1) The deposit into trust, and the retention for the duration of
the trust, of nondelinquent installment sales contracts or promissory
notes of time-share interests purchases having an aggregate
principal balance owing not ordinarily less than 150 percent of the
difference between the aggregate principal balance owing under
blanket encumbrances against the accommodation and the amount of
money, or its equivalent, in the trust and available at any time to
be applied to the reduction of the principal balance of the blanket
encumbrances.
   (A) The trust instrument shall further provide that if the 150
percent requirement has not been met within six months after
execution of the trust instrument by the developer, the trustee shall
thereafter retain in the trust, or apply to debt service on the
blanket encumbrance, the entire amount of all installment payments
received on contracts or promissory notes until the 150 percent
requirement has been met.
   (B) For purposes of this regulation, a contract or promissory note
is deemed delinquent when an installment payment is more than 60
days past due.
   (C) If the developer for purposes of satisfying the requirements
of this subdivision proposes to deposit installment sales contracts
or promissory notes of obligor other than purchasers of interests in
the time-share plan into the trust, the developer shall have the
burden of establishing the liquidated value of the notes and
contracts to the satisfaction of the department.
   (2) The deposit into trust, and the retention for the duration of
the trust, of funds in an amount at all times sufficient to pay the
total of three successive monthly installments of debt service on the
blanket encumbrance.
   (A) If installments of debt service on a blanket encumbrance that
is fully amortized are due less frequently than monthly, the funds
retained in the trust shall be sufficient to pay all installments
becoming due within the next succeeding six months, or, if no
installments are due within the next succeeding six months the next
installment due.
   (B) If a blanket encumbrance against the trust property is an
interest-only loan, contains a balloon payment provision, or is
otherwise not fully amortized under the terms for repayment, the
trust instrument shall require that the developer make monthly
payments into the trust sufficient to pay debt service installments
as they become due and to create a sinking fund to extinguish the
debt at its maturity.
   (3) Payment by the trustee of debt service on the blanket
encumbrance, property taxes, or assessments on insurance premiums,
either as the entity having primary responsibilities for the payments
or the entity secondarily responsible if the person with primary
responsibility fails to make the payments in a timely manner.
   (4) The deposit or investment by the trustee of funds constituting
a part of the trust corpus in interest bearing accounts, treasury
bills, certificates of deposit, or similar investments.
   (e) In the case of a time-share plan offering time-share use
interests that have been conveyed to a trustee, the trust for the
accommodation shall be irrevocable during the time that any
time-share interest owner has a right to the occupancy of an
accommodation.
   (f) In the case of a time-share plan offering time-share use
interests that have been conveyed to an association, the association
shall not be dissolved or terminated during the time that any
time-share interest owner has the right to occupancy of an
accommodation.
   (g) In a time-share plan offering time-share estate interests, the
trust for an accommodation shall be irrevocable until the
extinguishment of all blanket monetary encumbrances against the
accommodation.



11256.  (a) The contract proposed to be used by a developer applying
for a public report for the sale or lease of time-share interests
shall provide that if the escrow for sale or lease of a time-share
interest does not close on or before the date set forth in the
contract, or a later closing date mutually agreed to by the developer
and the prospective purchaser or lessee, within 15 days after the
closing date set forth in the contract or an extended closing date
mutually agreed to by the developer and the prospective purchaser or
lessee, the developer shall, except as provided in subdivisions (c)
to (h), inclusive, order all of the money remitted by the prospective
purchaser or lessee under the terms of the contract for acquisition
of the time-share interest (purchase money) to be refunded to the
prospective purchaser or lessee. Any extension of the closing of
escrow shall be in writing and shall clearly and conspicuously
disclose that the purchaser is not obligated to extend the closing of
escrow.
   (b) The contract may provide for disbursements or charges to be
made against purchase money for payments to third parties for credit
reports, escrow services, preliminary title reports, appraisals, and
loan processing services by the parties if the contract includes the
following:
   (1) Specific enumeration of all of the disbursements or charges
that may be made against purchase money.
   (2) The developer's estimate of the total amount of the
disbursements and charges.
   (c) Any contractual provision that calls for disbursement or a
charge against purchase money based upon the prospective purchaser's
or lessee's alleged failure to complete the purchase of the
time-share interest shall conform with Sections 1675, 1676, 1677, and
1678 of the Civil Code.
   (d) Except for a disbursement made following substantial
compliance with the procedures set forth in subdivision (f) or
pursuant to a written agreement of the parties that either cancels
the contract or is executed after the final closing date specified by
the parties, a disbursement or charge against purchase money as
liquidated damages may be done only pursuant to a determination by a
court of law, or by an arbitrator if the parties have so provided by
contract, that the developer is entitled to a disbursement or charge
against purchase money as liquidated damages.
   (e) A contractual provision for a determination by arbitration
that the developer is entitled to a disbursement or charge against
purchase money as liquidated damages shall require that the
arbitration be conducted in accordance with procedures that are
equivalent in substance to the Commercial Arbitration Rules of the
American Arbitration Association, that any arbitration include every
cause of action that has arisen between the prospective purchaser or
lessee and the developer under the contract, and that the developer
remit the fee to initiate arbitration with the costs of the
arbitration ultimately to be borne as determined by the arbitrator.
   (f) The contract of sale may include a procedure under which
purchase money may be disbursed by the escrowholder to the developer
as liquidated damages upon the prospective purchaser's or lessee's
failure to timely give the escrowholder the prospective purchaser's
or lessee's written objection to disbursement of purchase money as
liquidated damages. This procedure shall contain at least the
following elements:
   (1) The developer shall give written notice, in the manner
prescribed by Section 116.340 of the Code of Civil Procedure for
service in a small claims action, to the escrowholder and to the
prospective purchaser or lessee that the prospective purchaser or
lessee is in default under the contract that the developer is
demanding that the escrowholder remit _____ dollars ($____) from the
purchase money to the developer as liquidated damages unless, within
20 days, the prospective purchaser or lessee gives the escrowholder
the prospective purchaser's or lessee's written objection to the
disbursement of purchase money as liquidated damages.
   (2) The prospective purchaser or lessee shall have a period of 20
days from the date of receipt of the developer's 20-day notice and
demand in which to give the escrowholder the prospective purchaser or
lessee written objection to the disbursement of purchase money as
liquidated damages.
   (g) The contract may not make the prospective purchaser's or
lessee's failure to timely give the escrowholder the aforesaid
written objection a waiver of any cause of action the prospective
purchaser or lessee may have against the developer under the contract
unless the waiver is conditioned upon service of the developer's
20-day notice and demand in a manner prescribed by Section 116.340 of
the Code of Civil Procedure for service in a small claims action.
   (h) If the developer has had the use of purchase money pending
consummation of the sale or lease transaction under authorization by
the department pursuant to Section 11243, the developer shall
immediately upon alleging the default of the prospective purchaser or
lessee, transmit to the escrowholder, funds equal to all of the
purchase money paid by the prospective purchaser or lessee.