§ 34-41-3.04 - Transfer of special developer rights.
SECTION 34-41-3.04
§ 34-41-3.04 Transfer of special developerrights. – (a) For the purposes of this section, "special developer right" means a rightreserved for the benefit of a developer to add more units to a time-shareproperty (§ 34-41-2.02(a)(5)); to maintain sales offices, managementoffices, models, and signs (§ 34-41-2.06); or to appoint, control, orserve as the managing entity. No special developer right created or reservedunder this chapter may be transferred except by an instrument evidencing thetransfer recorded in every office of municipal land evidence records in whichany portion of the time-share property is located. The instrument is noteffective unless it is also executed by the transferee.
(b) Upon transfer of a special developer right, the liabilityof a transferor developer is as follows:
(1) A transferor is not relieved of any obligation orliability arising before the transfer and remains liable for warrantyobligations imposed upon him or her by this chapter. Lack of privity does notdeprive any time-share owner of standing to maintain an action to enforce anyobligation of the transferor.
(2) If a successor to any special developer right is anaffiliate of a developer (§ 34-41-1.02(1)), the transferor is jointly andseverally liable with the successor for any obligations or liabilities of thesuccessor relating to the time-share property.
(3) If a transferor retains any special developer right, buttransfers other special developer rights to a successor who is not an affiliateof the developer, the transferor is liable for any obligations or liabilitiesimposed on a developer either by this chapter or by the time-share instrumentrelating to the retained special developer rights and arising after thetransfer.
(4) A transferor has no liability for any act or omission orany breach of a contractual or warranty obligation arising from the exercise ofa special developer right by a successor developer who is not an affiliate ofthe transferor.
(c) Unless otherwise provided in a mortgage instrument ordeed of trust, in case of foreclosure of a mortgage, tax sale, judicial sale,sale by a trustee under a deed of trust, or sale under Bankruptcy Code, 11U.S.C. § 101 et seq., or receivership proceedings, of any time sharesowned by a developer in the time-share property, a person acquiring title toall the time shares being foreclosed or sold, but only upon his or her request,succeeds to all special developer rights, or only to any rights reserved in thetime-share instrument to § 34-41-2.06 and held by that developer tomaintain sales offices, management offices, models, and signs. The judgment orinstrument conveying title must provide for transfer of only the specialdeveloper rights requested.
(d) Upon foreclosure, tax sale, judicial sale, sale by atrustee under a deed of trust, or sale under Bankruptcy Code, 11 U.S.C. §101 et seq., or receivership proceedings, of all time shares in a propertyowned by a developer:
(1) The right to appoint, control, or serve as the managingentity terminates unless the judgment or instrument conveying title providesfor transfer of all special developer rights to a successor developer; and
(2) The developer ceases to have any other special developerrights.
(e) The liabilities and obligations of a person who succeedsto a special developer right are as follows:
(1) A successor to any special developer right who is anaffiliate of a developer is subject to all obligations and liabilities imposedon the transferor by this chapter or by the time-share instrument.
(2) A successor to any special developer right, other than asuccessor described in subdivisions (3) or (4) of this subsection, who is notan affiliate of a developer, is subject to all obligations and liabilitiesimposed by this chapter or the time-share instrument:
(i) On a developer, which relate to his or her exercise ornon-exercise of special developer rights; or
(ii) On his or her transferor, other than:
(A) Misrepresentations by any previous developer;
(B) Warranty obligations on improvements made by any previousdeveloper or made before the property became a time-share property;
(C) Breach of any fiduciary obligation by any previousdeveloper of his or her appointees; or
(D) Any liability or obligation imposed on the transferor asa result of the transferor's acts or omissions after the transfer.
(3) A successor to only a right to maintain sales offices,management offices, models, and signs (§ 34-41-2.06), if he or she is notan affiliate of a developer, may not exercise any other special developer rightand is not subject to any liability or obligation as a developer, except theobligation to provide a public offering statement, and any liability arising asa result thereof, and obligations under Article V of this chapter.
(4) A successor to all special developer rights held by hisor her transferor who is not an affiliate of that developer and who hassucceeded to those rights pursuant to a deed in lieu of foreclosure or ajudgment or instrument conveying title to the time shares under subsection (c)may declare his or her intention in a recorded instrument to hold those rightssolely for transfer to another person. Thereafter, until transferring allspecial developer rights to any person acquiring title to any time share ownedby the successor, or until recording an instrument permitting exercise of allthose rights, that successor may not exercise any of those rights other thanany right held by his or her transferor to appoint, control, or serve as themanaging entity, and any attempted exercise of those rights is void. So long asa successor may not exercise special developer rights under this subsection, heor she is not subject to any liability or obligation as a developer other thanliability for his or her acts and omissions in appointing, controlling, orserving as the managing entity.
(f) Nothing in this section subjects any successor to aspecial developer right to any claims against or other obligations of atransferor developer, other than claims and obligations arising under thischapter or the time-share instrument.