REPORT TITLE:
Condominiums; Time Shares


DESCRIPTION:
Creates a preliminary permit that allows a developer to begin
offering and selling time share units or time share interests
while the registration is in process; allows developer to file a
disclosure statement in which all accommodations are located
outside Hawaii; adds to requirements for time share registration.

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
                                                        
THE SENATE                              S.B. NO.           1458
TWENTIETH LEGISLATURE, 1999                                
STATE OF HAWAII                                            
                                                             
________________________________________________________________
________________________________________________________________


                     A BILL FOR AN ACT

RELATING TO CONDOMINIUMS.



BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF HAWAII:

 1      SECTION 1.  Chapter 514E, Hawaii Revised Statutes, is
 
 2 amended by adding a new section to be appropriately designated
 
 3 and to read as follows:
 
 4      "§514E-    Six month preliminary permit.  Notwithstanding
 
 5 anything in section 514E-10 to the contrary, the director may
 
 6 issue a six month preliminary permit allowing the developer to
 
 7 begin offering and selling time share units or time share
 
 8 interests while the registration is in process.  To obtain a
 
 9 preliminary permit, the developer shall:
 
10      (1)  Submit a formal written request to the director for a
 
11           preliminary permit;
 
12      (2)  Submit a substantially complete application for
 
13           registration to the director, including all appropriate
 
14           fees and exhibits;
 
15      (3)  Provide evidence acceptable to the director that all
 
16           funds, negotiable instruments, and purchase money
 
17           contracts received by the developer will be placed into
 
18           an escrow account pursuant to section 514E-16, with
 
19           instructions that the funds, negotiable instruments,
 

 
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 1           and purchase money contracts will not be released until
 
 2           the time share plan to be offered by the developer is
 
 3           accepted by the director for registration;
 
 4      (4)  Give to each purchaser a copy of the proposed
 
 5           disclosure statement submitted to the director with the
 
 6           application; and
 
 7      (5)  Give to each purchaser the opportunity to cancel the
 
 8           purchase in accordance with section 514E-8.  The
 
 9           purchaser shall have an additional opportunity to
 
10           cancel upon the acceptance of the registration if the
 
11           director determines that there is a material difference
 
12           in the disclosures contained in the approved disclosure
 
13           statement and those given to the purchaser in the
 
14           proposed disclosure statement."
 
15      SECTION 2.  Section 514E-9, Hawaii Revised Statutes, is
 
16 amended to read as follows:
 
17      "§514E-9 Disclosure [statement.] Statements.  (a)  Any
 
18 offering of a time sharing plan to the public shall disclose:
 
19      (1)  The name and address of the developer and of the time
 
20           share units;
 
21      (2)  The name and address of the plan manager, if any, and a
 
22           description of the plan manager's responsibilities and
 
23           authority;
 

 
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 1      (3)  A description of the time share units, including the
 
 2           developer's schedule for completion of all buildings,
 
 3           units, and amenities and dates of availability;
 
 4      (4)  If the time share plan is located in a condominium
 
 5           property regime, a description of the project and any
 
 6           pertinent provisions of the project instruments;
 
 7      (5)  Any restraints on the transfer of the buyer's time
 
 8           share interest in the time share units or plan;
 
 9      (6)  Whether the time share plan is a time share ownership
 
10           plan or a time share use plan, along with a description
 
11           of the rights and responsibilities under [said] the
 
12           plan;
 
13      (7)  A statement that there is a seven-calendar-day period
 
14           of mutual rescission;
 
15      (8)  A statement that pursuant to section 514E-11.3, every
 
16           sale or transfer, made in violation of this chapter is
 
17           voidable at the election of the purchaser;
 
18      (9)  Notice of any liens, title defects, or encumbrances on
 
19           or affecting the title to the units or plan;
 
20     (10)  Notice of any pending or anticipated suits that are
 
21           material to the time share units or plan, of which the
 
22           developer has, or should have, knowledge;
 
23     (11)  The total financial obligation of the purchaser, which
 

 
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 1           shall include the initial price and any additional
 
 2           charges to which the purchaser may be subject;
 
 3     (12)  An estimate of the dues, maintenance fees, real
 
 4           property taxes, and similar periodic expenses, and the
 
 5           method or formula by which they are derived and
 
 6           apportioned; and
 
 7     (13)  Other disclosures required by the director, as provided
 
 8           by rules adopted pursuant to chapter 91.
 
 9      (b)  Notwithstanding anything in subsection (a) to the
 
10 contrary, the director may accept for filing the disclosure
 
11 statement of a developer of a time share plan in which all
 
12 accommodations are located outside of Hawaii if the developer
 
13 provides a certificate of registration or other evidence of
 
14 registration from the appropriate regulatory agency of any other
 
15 jurisdiction within the United States in which some or all of the
 
16 accommodations are located, and the other jurisdiction has
 
17 disclosure requirements that are substantially equivalent to or
 
18 greater than the information required to be disclosed to
 
19 purchasers by Hawaii, as determined by the director.  A developer
 
20 filing a disclosure statement under this subsection shall provide
 
21 to the director:
 
22      (1)  The developer's legal name, any assumed names used by
 
23           the developer, principal office location, mailing
 

 
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 1           address, primary contact person, and telephone number;
 
 2      (2)  The name, location, mailing address, primary contact
 
 3           person, and telephone number of the time share plan;
 
 4      (3)  The name and address of the plan manager, if any, and a
 
 5           description of the plan manager's responsibilities and
 
 6           authority;
 
 7      (4)  The name and Hawaii address of the authorized agent or
 
 8           registered agent in Hawaii upon whom claims or service
 
 9           of process can be served;
 
10      (5)  The certificate of registration or other evidence of
 
11           registration from any jurisdiction in which the time
 
12           share plan is approved or accepted;
 
13      (6)  A declaration as to whether the time share plan is a
 
14           time share ownership plan or time share use plan;
 
15      (7)  Disclosure of each jurisdiction in which the time share
 
16           plan has applied for registration, and whether the
 
17           developer was denied registration or was the subject of
 
18           any disciplinary proceeding in such jurisdiction;
 
19      (8)  Copies of any disclosure documents required to be given
 
20           to purchasers or required to be filed with the
 
21           jurisdiction in which the time share plan is approved
 
22           or accepted as may be requested by the director; and
 
23      (9)  Any other information reasonably required by the
 

 
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 1           director and established by rule.  
 
 2      [(b)] (c)  The requirements of this section shall not apply
 
 3 to the following transactions:
 
 4      (1)  Any transaction pursuant to order of any court;
 
 5      (2)  Any disposition by a government or governmental agency;
 
 6      (3)  Normal hotel operations; or
 
 7      (4)  Any gratuitous transfer.
 
 8      [(c)] (d)  A developer or sales agent shall promptly amend
 
 9 or supplement the disclosure statement to report any material
 
10 change in the information required by this section."
 
11      SECTION 3.  Section 514E-10, Hawaii Revised Statutes, is
 
12 amended by amending subsection (a) to read as follows:
 
13      (a)  A developer shall not offer or dispose of a time share
 
14 unit or a time share interest unless one of the disclosure
 
15 [statement] statements required by section 514E-9 is filed with
 
16 the director pursuant to the time specified in this chapter, or
 
17 the development is exempt from filing, and the time share plan to
 
18 be offered by the developer is accepted by the director for
 
19 registration under this chapter.  The director shall not accept a
 
20 developer's time share plan if the developer does not possess a
 
21 history of honesty, truthfulness, financial integrity, and fair
 
22 dealing.
 
23      Notwithstanding anything to the contrary set forth in this
 

 
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 1 section, the director shall accept a time share plan for
 
 2 registration if the developer submits:
 
 3      (1)  An application form provided by the director that
 
 4           contains the following information:
 
 5           (i)  The developer's legal name, any assumed names used
 
 6                by the developer, principal office location,
 
 7                mailing address, primary contact person, and
 
 8                telephone number;
 
 9          (ii)  The name, location, mailing address, main contact
 
10                person, and telephone number of the time share
 
11                plan included in the filing;
 
12         (iii)  The name and address of the plan manager, if any,
 
13                and a description of the plan manager's
 
14                responsibilities and authority;
 
15          (iv)  The name and Hawaii address of the authorized
 
16                agent or registered agent in Hawaii upon whom
 
17                claims or service of process can be served;
 
18           (v)  A declaration as to whether the time share plan is
 
19                a time share ownership plan or time share use
 
20                plan; and
 
21          (vi)  Disclosure of each jurisdiction in which the time
 
22                share plan has applied for registration, and
 
23                whether the developer was denied registration or
 

 
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 1                was the subject of any disciplinary proceeding in
 
 2                the jurisdiction; and
 
 3      (2)  A surety bond, letter of credit or other acceptable
 
 4           assurance in the amount of $1,000,000; and
 
 5      (3)  The appropriate registration fee;
 
 6      A developer who registers a time share plan pursuant to this
 
 7 subsection shall provide a purchaser with a disclosure statement
 
 8 that complies with any written disclosures required to be
 
 9 provided to a purchaser under this chapter.
 
10      For purposes of this subsection, if any final, non-
 
11 appealable judgment is entered on behalf of any Hawaii purchaser
 
12 asserting any violation of this chapter by a developer in
 
13 connection with the offering of a time share plan registered
 
14 under this subsection, the director may satisfy the amount of the
 
15 judgment, with the exception of punitive damages, from the surety
 
16 bond, letter of credit, or other acceptable assurance provided to
 
17 the director, if the judgment is not paid within ninety days
 
18 after it becomes final.
 
19      A developer registered pursuant to this subsection shall not
 
20 be entitled to continue offering the time share plan pursuant to
 
21 this subsection within the State unless, within ten days
 
22 following payment of the judgment, the developer confirms to the
 
23 director the continued availability of the surety bond, letter of
 

 
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 1 credit, or other acceptable assurance.  Any surety bond, letter
 
 2 of credit, or other acceptable assurance provided pursuant to
 
 3 this subsection shall remain in effect with the director for a
 
 4 period of twelve months after the developer that provided it
 
 5 ceases offering time share interests in the time share plan
 
 6 within the State.  Thereafter, the surety bond, letter of credit
 
 7 or other acceptable assurance may be released; provided the
 
 8 developer seeking the release certifies in writing that there is
 
 9 no pending litigation alleging a violation of any provision of
 
10 this chapter brought by any Hawaii purchaser in connection with
 
11 the time share plan.  Nothing contained within this section shall
 
12 affect the director's ability to initiate disciplinary
 
13 proceedings against a developer in accordance with this chapter
 
14 or the rules adopted under this chapter.
 
15      For purposes of this subsection, "Hawaii purchaser" means a
 
16 person who, within Hawaii, is solicited, offered, or sold a time
 
17 share interest in a time share plan registered pursuant to this
 
18 subsection."
 
19      SECTION 4.  Statutory material to be repealed is bracketed.
 
20 New statutory material is underscored.
 
21      SECTION 5.  This Act shall take effect upon its approval.
 
22 
 
23                              INTRODUCED BY:______________________