§ 34-41-4.03 - Public offering statement – General provisions.
SECTION 34-41-4.03
§ 34-41-4.03 Public offering statement– General provisions. – (a) A public offering statement must contain or fully and accurately disclose:
(1) The name and principal address of the developer and thelocation of the time-share property;
(2) A general description of the time-share property and thetime-share units, including without limitation the number of units in thetime-share property and in any project of which it is a part, and the scheduleof commencement and completion of all improvements;
(3) As to all units owned or offered by the developer in thesame project:
(i) The types and number of units;
(ii) Identification of units that are time-share units;
(iii) The types and durations of the time shares;
(iv) The maximum number of units that may become part of thetime-share property; and
(v) A statement of the maximum number of time shares that maybe created or that there is no maximum;
(4) Copies and a brief narrative description of thesignificant features of the time-share instrument and any documents referred totherein (other than any plats and plans), copies of any contracts or leases tobe signed by purchasers at closing, and a brief narrative description of anycontracts or leases that will or may be subject to cancellation by the ownersof time-share estates under § 34-41-3.05;
(5) The identity of the managing entity and the manner, ifany, whereby the developer may change the managing entity or its control;
(6) A current balance sheet and a projected budget for theassociation, if there is an association, either within or as an exhibit to thepublic offering statement, for one year after the date of the first transfer toa purchaser, and thereafter the current budget, a statement of who prepared thebudget, and a statement of the budgetary assumptions concerning occupancy andinflation factors. The budget must include, without limitation:
(i) A statement of the amount, or a statement that there isno amount, included in the budget as a reserve for repairs and replacement;
(ii) A statement of any other reserves;
(iii) The projected time-share expense liability by categoryof expenditures for the time-share units; and
(iv) The projected time-share expense liability for each timeshare;
(7) A description of (i) the nature and purposes of allcharges, dues, maintenance fees, and other expenses that may be assessed, (ii)the current amounts assessed, and (iii) the method and formula for alteringcharges in the future;
(8) Any services which the developer provides or expenses heor she pays and which he or she expects may become at any subsequent time atime-share expense of the time shares, and the projected time-share expenseliability attributable to each of those services or expenses for each timeshare;
(9) Any initial or special fee due from the purchaser atclosing, together with a description of the purpose of the fee and the methodof its calculation;
(10) A statement of the effect on the time-share owners ofliens, defects, or encumbrances on or affecting the title to the time-shareunits;
(11) A description of any financing offered by the developer;
(12) The terms and significant limitations of any warrantiesprovided by the developer, including statutory warranties and limitations onthe enforcement thereof or on damages;
(13) A statement that:
(i) Within three (3) days excluding Sundays and holidaysafter receipt of a public offering statement a purchaser, before transfer oftitle, may cancel any contract for purchase of a time share from a developer,by hand delivering notice thereof to the seller or by mailing notice thereof bycertified or registered mail, return receipt requested, to the developer or tohis or her agent for service of process,
(ii) If a developer fails to provide a public offeringstatement to a purchaser before the transferring of title to a time share, thepurchaser is entitled to recover from the developer ten percent (10%) of thesales price of the time share, and
(iii) If a purchaser receives the public offering statementmore than three (3) days excluding Sundays and holidays before signing acontract, he or she cannot cancel the contract for failure timely to receivethe public offering statement;
(14) A statement of any unsatisfied judgments against thedeveloper or the managing entity, the status of any pending suits involving thesale or management of real estate to which the developer or an affiliate of thedeveloper or the managing entity is a defending party, and the status of anypending suits of which the developer has actual knowledge, of significance tothe time-share units;
(15) A statement that any deposit made in connection with thepurchase of a time share will be held in an escrow (or trust) account untilexpiration of the time for rescission or any later time specified in thecontract to purchase the time share and will be returned to the purchaser ifthe purchaser cancels the contract pursuant to § 34-41-4.06;
(16) Any restraints on transfer of time shares or portionsthereof;
(17) A description of the insurance coverage provided for thebenefit of time-share owners;
(18) Any current or expected fees or charges to be paid bytime-share owners for the use of any facilities related to the project;
(19) The extent to which financial arrangements have beenprovided for completion of all promised improvements pursuant to §34-41-4.17 (Developer's Obligation to Complete);
(20) The extent to which a time-share unit may become subjectto a tax or other lien arising out of claims against other time-share owners ofthe same time-share unit;
(21) A description of the rights and remedies provided in thetime-share instrument of a time-share owner who is prevented from enjoyingexclusive occupancy of a time-share unit, or a statement that there are noneprovided in the instrument; and
(22) All unusual and material circumstances, features, andcharacteristics of the project.
(b) As used in this subsection, "exchange company" means aperson operating a program of the kind described in this subsection. If thetime-share owners are to be permitted or required to become members of or toparticipate in a program for the exchange of occupancy rights among themselvesor with the time-share owners of other time-share units or both, the publicoffering statement or a supplement delivered therewith must contain or fullyand accurately disclose:
(1) Whether membership or participation in the program by atime-share owner is voluntary or mandatory;
(2) The name and address of the exchange company and whetherthe exchange company is an affiliate of the developer; or whether the exchangecompany or any of its officers or directors has any legal or beneficialinterest in any developer or manager for any time-share property participatingin the exchange program;
(3) The names of all officers, directors, and shareholdersowning five percent (5%) or more of the outstanding stock of the exchangecompany;
(4) The terms and conditions of the contractual relationshipbetween the time-share owner and the exchange company;
(5) The procedures whereby that contractual relationship canbe changed or terminated, and whether it can be terminated or otherwiseaffected by action or inaction of the developer or the managing entity or byother factors beyond the control of the time-share owner;
(6) A complete and accurate description of all limitations,restrictions, or priorities employed in the operation of the exchange program,including, but not limited to, limitations on exchanges based on seasonality,unit size, or levels of occupancy, expressed in boldfaced type, and, in theevent that such limitations, restrictions, or priorities are not uniformlyapplied by the program, a clear description of the manner in which they areapplied;
(7) The procedures to qualify for and effectuate exchanges,and the manner in which exchanges are arranged by the exchange company;
(8) Whether exchanges are arranged on a space-available basisand whether any guarantees of fulfillment of specific requests for exchangesare made by the program;
(9) Whether and under what circumstances a time-share owner,in dealing with the exchange company, may lose the use and occupancy of his orher time share in any properly applied for exchange without his or her beingprovided with substitute accommodations by the exchange company;
(10) The fees or range of fees for participation bytime-share owners in the program, a statement whether the fees may be alteredby the exchange company, and the circumstances under which alterations may bemade;
(11) The name and address of the site of each time-shareproperty, accommodation or facility that is participating in the program;
(12) The number of units in each time-share propertyparticipating in the program that are available for occupancy and that qualifyfor participation in the program, expressed within the following numericalgroupings: 1-5; 6-10; 11-20; 21-50; and 51 and over; and a statement of thecriteria used to determine those units that are available for occupancy;
(13) The number of owners with respect to each time-shareproperty who are eligible to participate in the program expressed within thefollowing numerical groupings: 1-100; 101-249; 250-499; 500-999; and 1,000 andover; and a statement of the criteria used to determine those time-share ownerswho are currently eligible to participate in the program;
(14) The disposition made by the exchange company of timeshares deposited with the program by time-share owners eligible to participatein the program and not used by the exchange company in effecting exchanges;
(15) The following information which shall be independentlyaudited by a certified public accountant or accounting firm in accordance withthe standards of the accounting standards board of the American institute ofcertified public accountants;
(i) The number of time-share owners eligible to participatein the program. The numbers shall disclose the relationship between theexchange company and time-share owners as being either fee paying or gratuitousin nature;
(ii) The number of time-share properties, accommodations orfacilities eligible to participate in the exchange program categorized by thosehaving a contractual relationship between the developer or the managing entityand the exchange company and those having solely a contractual relationshipbetween the exchange company and owners directly;
(iii) The percentage of confirmed exchanges, which shall bethe number of exchanges confirmed by the exchange company divided by the numberof exchanges properly applied for, together with a complete and accuratestatement of the criteria used to determine whether an exchange request wasproperly applied for;
(iv) The number of time shares for which the exchange companyhas an outstanding obligation to provide an exchange to a time-share owner whorelinquished a time share during the year in exchange for a time share in anyfuture year; and
(v) The number of exchanges confirmed by the exchange companyduring the year.
(16) A statement in boldfaced type to the effect that thepercentage described in subsection (b)(15)(iii) is a summary of the exchangerequests entered with the exchange company in the period reported and that thepercentage does not indicate a purchaser's probabilities of being confirmed toany specific choice or range of choices, since availability at individuallocations may vary.
(c) In the event an exchange company offers a programdirectly to the purchaser or time-share owner without any contract between atime-share developer and the exchange company, the exchange company shalldeliver to each purchaser or time-share owner the information set forth insubsection (b) above. The requirements of this paragraph shall not apply to anyrenewal of the contract between a time-share owner and an exchange company,unless there are significant changes in the information required by subsection(b) adversely affecting the interests of the time share owner that have notbeen delivered in any appropriate form before renewal. An exchange companysubject to this subsection for the purposes of delivering the information setforth in subsection (b) is subject to § 34-41-4.02 for the purposes ofdetermining liability.
(d) Each exchange company offering a program to purchasers inthis state must include the statement set forth in subsection (b)(16) on allpromotional brochures, pamphlets, advertisements, or other materialsdisseminated by the exchange company which also contain the percentage ofconfirmed exchanges described in subsection (b)(15)(iii).
(e) As used in this subsection, "multi-location developer"means a developer creating or selling its own time shares in more than onetime-share property under a program permitting time-share owners, byreservation or other similar procedure, to occupy time-share units in more thanone time-share property. If time-share owners are to be permitted or requiredto participate in a multi-location program, the public offering statement or asupplement delivered therewith must contain or fully and accurately disclose:
(1) A complete and accurate description of the procedure toqualify for and effectuate use rights in time-share units in the multi-locationprogram;
(2) A complete and accurate description of all limitations,restrictions, or priorities employed in the operation of the multi-locationprogram, including, but not limited to, limitations on reservations, use orentitlement rights based on seasonality, unit size, levels of occupancy orclass of owner, expressed boldfaced type, and, in the event that suchlimitations, restrictions, or priorities are not uniformly applied by themulti-location program, a clear description of the manner in which they areapplied;
(3) Whether use is arranged on a space-available basis andwhether any guarantees of fulfillment of specific requests for use are made bythe multi-location developer;
(4) The name and address of the site of each time-shareproperty included in the multi-location program;
(5) The number of time-share units in each time-shareproperty which are available for occupancy; with respect to each time-shareunit, the interest which the multi-location developer has therein (e.g. feeownership, leasehold, option to purchase), and if less than fee ownership astatement of all relevant terms of the multi-location developer's interesttherein; and with respect to each such time-share unit, whether it may bewithdrawn from the multi-location program;
(6) The following information which shall be independentlyaudited by a certified public accountant or accounting firm in accordance withthe standards of the accounting standards board of the American institute ofcertified public accountants:
(i) The number of time-share owners in the multi-locationprogram;
(ii) For each time-share property in the multi-locationprogram, the number of properly made requests for use of time-share units inthe time-share property; and
(iii) For each time-share property, the number of owners whoreceived the right to use a unit in the time-share property as a percentage ofthe time-share owners who properly requested use in the time-share property.
(7) A statement in boldfaced type to the effect that thepercentages described in subsection (e)(6) do not indicate a purchaser'sprobabilities of being able to use any time-share unit since availability atindividual locations may vary.
(f) A developer shall promptly amend:
(1) The public offering statement to report any materialchange in the information required by subsection (a) of this section and §34-41-4.04, and
(2) The public offering statement or any supplement theretoto report any material change known to him or her in the information requiredby subsection (b), except that:
(i) Any significant change in information required bysubsections (b)(2), (3) and (11) that adversely affect purchasers' interestsshall be reported to purchasers within 30 days after the change occurs. Noliability shall be attributed to any person if the change is reported withinthe 30-day period; and
(ii) The information required by subsections (b)(13), (14)and (15) shall be calculated, at the minimum, from the records of the exchangecompany for each calendar year, and need be available no later than July 1 ofthe succeeding year.
(3) The public offering statement or any supplement theretoto report any material change in the information required by subsection (e),except that the information required by subsections (e)(4), (5), and (6) shallbe calculated, at the minimum, from the records of the multi-location developerfor the preceding calendar year, and need be available no later than July 1, ofthe succeeding year.
(4) Insofar as the developer relies in good faith oninformation provided by others in making disclosures required by subsection(b), he or she is responsible for a misrepresentation only if he or she hasknowledge of its falsity.