SB2026 SD1

SECTION 1. Chapter 514E, Hawaii Revised Statutes, is amended by adding a new section to be appropriately designated and to read as follows:

"§514E‑ Existing owner purchase exemptions. (a) Notwithstanding any other provision of this chapter, the offer or sale of an additional interest in a time share plan in this State to an existing purchaser in the same time share plan shall not be subject to this chapter if:

(1) The contract for purchase signed by the purchaser includes a notice, which is the same as or similar to the rescission notice required pursuant to section 514E‑9(a)(7), and the rescission period shall be at least seven days;

(2) In satisfaction of the disclosure requirements of section 514E-9, the purchaser is provided the time share disclosure documents the purchaser would have received if the purchase had occurred in the state or jurisdiction where the purchaser initially purchased the time share interest;

(3) All funds and any negotiable instruments received during the seven day rescission period are placed in an escrow account in Hawaii. The escrow agent shall be a bank, savings and loan association, or trust company authorized to do business in the State under an escrow arrangement or a corporation licensed as an escrow depository under chapter 449;

(4) The contract for purchase shall contain the following statement in conspicuous type:

This timeshare plan has not been reviewed or approved by the State of Hawaii;

(5) The offer complies with sections 514E-11(2)-(9), (11)‑(12) and 514E-11.1;

(6) The developer or an affiliated entity of the developer has a time share plan currently registered with the department; provided that the registration was originally approved or amended within seven years from the date of the offer or disposition and the registration has been neither terminated nor withdrawn; and

(7) The developer has not, during the two year period preceding the time of the offer, had a timeshare registration suspended, restricted or revoked in any state.

(b) Notwithstanding any other provision of this chapter, the offer or sale in this State by a developer of a time share interest in a time share plan located outside of Hawaii, but within the United States, to an individual who currently owns a timeshare interest that was purchased from that developer, or from an affiliated entity of that developer, shall be exempt from the requirements under sections 514E-3, 514E-4, 514E‑5, 514E‑6, 514E-7, 514E-10.5, and 514E-14; the disclosure statement requirements under sections 514E-9 and 514E-11(1); and the registration requirements under section 514E-10; provided that:

(1) The developer shall provide the purchaser with all time share disclosure documents required to be provided to purchasers as if the offer occurred in the state where the time share plan is located;

(2) The contract for purchase shall include a notice, which is the same as or similar to the rescission notice required pursuant to section 514E-9(a)(7), and the rescission period shall be at least seven days;

(3) In satisfaction of section 514E-16, all funds and any negotiable instruments received during the seven day rescission period shall be placed in an escrow account in Hawaii. The escrow agent shall be a bank, savings and loan association, or trust company authorized to do business in the State under an escrow arrangement or a corporation licensed as an escrow depository under chapter 449;

(4) The developer shall provide the purchaser, in writing, either in the disclosure documents or otherwise, all of the following:

(A) A description of the type of timeshare plan offered, including the duration and operation of the timeshare plan;

(B) A description of the existing or proposed accommodations and amenities in the timeshare plan;

(D) If applicable, copies of the declaration, association articles of incorporation, association bylaws, and association rules and regulations; and

(E) The current annual budget for the time share plan;

(5) The developer or an affiliated entity has a time share plan currently registered with the department; provided that the registration was originally approved or amended within seven years from the date of the offer or disposition and the registration has been neither terminated or withdrawn;

(6) The timeshare plan being offered is registered in the state where the timeshare plan is located; or in the event registration of the timeshare plan is not required in the state where the timeshare plan is located, the timeshare plan being offered is in compliance with the applicable laws of that state;

(7) The developer has not, during the two year period preceding the time of the offer, had a timeshare registration suspended, restricted or revoked in any state; and

(8) The contract for purchase shall contain the following statements in conspicuous type:

"This timeshare plan has not been reviewed or approved by the State of Hawaii. The timeshare interest you are purchasing requires certain procedures to be followed in order for you to use your interest. These procedures may be different from those followed in other timeshare plans. You should read and understand these procedures prior to purchasing."

(c) The developer of an out-of-state timeshare plan offered pursuant to subsection (b) shall be required to provide notice of the plan to the department on a form as set forth under subsection (e), along with payment of a one-time fee of $1,000 per time share plan. Upon receipt by the department of the notice and fee, the filing shall be deemed accepted and the offering of the time share plan will be permitted in accordance with the terms of this section.

(d) If at any time the department determines that any requirement under this section has not been complied with, the developer shall be subject to any remedies set forth in section 514E‑12.

(e) The notice as described in subsection (c) shall be signed by an officer or principal of the developer and shall contain the following information:

(1) The name and principal address of the developer;

(2) The name and address of the time share plan being offered;

(3) The name and address of the managing entity of the time share plan;

(4) The form of business entity of the developer; and

(5) The name, address, and telephone number of the officer or principal signing the notice on behalf of the developer.

(f) For purposes of this section:

"Affiliated entity" means a person or other entity that, directly or indirectly through one or more intermediaries, is controlled by or under common control with the developer.

"Control", "controlled by", or "under control with" means the possession of the power to direct or cause the direction of the management and policies of another person or entity, other than by commercial contract for goods or services. Control shall be presumed to exist if:

(A) The developer has an ownership interest of at least fifty per cent in the other person or entity; or

(B) The developer has the same parent corporation as the other entity."

SECTION 2. New statutory material is underscored.

SECTION 3. This Act shall take effect on July 1, 2050.

THE SENATE	S.B. NO.	2026
TWENTY-FOURTH LEGISLATURE, 2008		S.D. 1
STATE OF HAWAII