SB797

SECTION 1. Section 514E-9, Hawaii Revised Statutes, is amended by amending subsection (a) to read as follows:

"(a) Any offering of a time sharing plan to the public shall disclose:

(1) The name and address of the developer and of the time share units;

(2) The name and address of the plan manager, if any, and a description of the plan manager's responsibilities and authority;

(3) A list of the primary plan documents and supplementary plan documents.

For purposes of this paragraph:

"Primary plan documents" means the constituent documents of the time share plan, including any time share declaration, any trust agreement, the articles of incorporation and bylaws of the association (if the association is a corporation) or the operating agreement or similar organizational document (if the association is a limited liability company or other entity), the rules for reserving the use of the time share units, and the rules and regulations governing the occupancy of the time share units. "Primary plan documents" does not include the supplementary plan documents.

"Supplementary plan documents" means any declaration of annexation, active property declaration, notice of access, notice of conveyance, notice of activation, deed conveying property to the trustee of a time share plan or to the time share owners association, and other instruments submitting or committing property to the time share plan or removing property from the time share plan. To the extent that any such documents modify the terms and provisions of the time share plan as established in the existing primary plan documents (for example, by establishing a new class or category of time share interest having rights that differ from existing time share interests in the time share plan), such documents shall constitute primary plan documents and shall not constitute supplementary plan documents;

[~~(3)~~] (4) A description of the time share units, including the developer's schedule for completion of all buildings, units, and amenities and dates of availability;

[~~(4)~~] (5) If the time share plan is located in a condominium property regime, a description of the project and, if the purchaser will be a direct owner of a unit in the condominium project, a brief description of any pertinent provisions of the project instruments;

[~~(5)~~] (6) Any restraints on the transfer of the buyer's time share interest in the time share units or plan;

[~~(6)~~] (7) Whether the time share plan is a time share ownership plan or a time share use plan, along with a description of the rights and responsibilities under said plan;

[~~(7)~~] (8) A statement that there is a seven-calendar-day period of mutual rescission;

[~~(8)~~] (9) A statement that pursuant to section 514E-11.3, every sale or transfer, made in violation of this chapter is voidable at the election of the purchaser;

[~~(9)~~] (10) Notice of any material liens, title defects, or encumbrances on or affecting the title to the units or plan[;]. For all other liens, title defects, and encumbrances, in lieu of listing these in the disclosure statement, a reference may be made to a website by way of link or otherwise, wherein such items may be listed and thereby disclosed, and be available for review;

[~~(10)~~] (11) Notice of any pending or anticipated suits that are material to the time share units or plan, of which the developer has, or should have, knowledge;

[~~(11)~~] (12) The total financial obligation of the purchaser, which shall consist of:

(A) A statement that the purchaser is obligated to pay the initial price stated in the purchaser's purchase agreement; and

(B) A list or description of any additional charges to which the purchaser may be subject;

[~~(12)~~] (13) An estimate of the dues, maintenance fees, real property taxes, and similar periodic expenses, and the method or formula by which they are derived and apportioned;

[~~(13)~~] (14) The disclosure statement under subsection (d), if applicable; and

[~~(14)~~] (15) Other disclosures required by the director, as provided by rules adopted pursuant to chapter 91."

SECTION 2. Section 514E-10.2, Hawaii Revised Statutes, is amended as follows:

1. By amending subsection (a) to read:

"(a) Notwithstanding any other provision of this chapter, the director may issue a limited permit to a developer permitting the offer or sale, in this State, of an additional interest in a time share plan to an existing purchaser in the same time share plan; provided that:

(1) The developer or an affiliated entity of the developer has a time share plan currently registered with the director; provided that the registration was originally approved or amended within seven years from the date of the offer or disposition, and the registration has not been terminated or withdrawn;

(2) The developer has not, during the two-year period preceding the time of the offer, had a time share registration suspended, restricted, or revoked in any state or been convicted of an offense involving fraud or dishonesty. In the event the developer satisfies the requirement of paragraph (1) above through an affiliated entity, the developer has not, during the twenty-year period preceding the time of the offer, had a time share registration suspended, restricted, or revoked in any state or been convicted of an offense involving fraud or dishonesty;

(3) 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;

(4) The contract for purchase signed by the purchaser includes a notice that is the same as or similar to the rescission notice required pursuant to section [~~514E-9(a)(7);~~] 514E-9(a)(8); provided that the rescission period shall be at least seven days;

(5) All funds and any negotiable instruments received during the seven-day rescission period shall be placed in an escrow account in the State. 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. The funds or negotiable instruments may be released from escrow; provided that the release is in accordance with section 514E-17 or 514E-18. Any escrow account established for any out-of-state time share plan offered under this subsection may be maintained in the state where the time share plan is located after the seven-day rescission period has expired; provided that the escrow agent submits to personal jurisdiction in this State;

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

"THIS TIME SHARE PLAN HAS NOT BEEN REVIEWED OR APPROVED BY THE STATE OF HAWAII BECAUSE YOU ALREADY OWN AN INTEREST IN THIS TIME SHARE PLAN AND BECAUSE (DEVELOPER OR AFFILIATE'S NAME) HAS A TIME SHARE PLAN CURRENTLY REGISTERED WITH THE STATE OF HAWAII (INCLUDE REGISTRATION #). (IF APPLICABLE) (AFFILIATE) IS AN AFFILIATED ENTITY OF THE SELLER AS THE TERM IS DEFINED IN CHAPTER 514E, HAWAII REVISED STATUTES."; and

(7) The offer complies with the provisions of sections 514E-11(2) to 514E-11(9), 514E-11(11) to 514E-11(13), and 514E-11.1."

2. By amending subsection (c) to read:

"(c) Notwithstanding any other provision of this chapter, the director may issue a limited permit to a developer permitting the offer or sale by the developer, in this State, of a time share interest in a time share plan located outside of this State, but within the United States, to an individual who currently owns a time share interest that was purchased from that developer, or from an affiliated entity of that developer; provided that:

(1) The developer or an affiliated entity of the developer has a time share plan currently registered with the director; provided that the registration of the developer or an affiliated entity of the developer was originally approved or amended within seven years from the date of the offer or disposition and which registration has not been terminated or withdrawn;

(3) 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;

(4) The contract for purchase shall include a notice that is the same as or similar to the rescission notice required pursuant to section [~~514E-9(a)(7);~~] 514E-9(a)(8); provided that the rescission period shall be at least seven days;

(5) 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 the State. 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. The funds or negotiable instruments may be released from escrow; provided that the release is in accordance with section 514E-17 or 514E-18. Any escrow account established for any out-of-state time share plan offered under this subsection may be maintained in the state where the time share plan is located after the seven-day rescission period has expired; provided that the escrow agent submits to personal jurisdiction in this State;

(6) 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 time share plan offered, including the duration and operation of the time share plan;

(B) A description of the existing or proposed accommodations and amenities in the time share 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;

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

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

"THIS TIME SHARE PLAN HAS NOT BEEN REVIEWED OR APPROVED BY THE STATE OF HAWAII BECAUSE YOU ALREADY OWN AN INTEREST IN A TIME SHARE PLAN THAT YOU PURCHASED FROM (DEVELOPER OR AFFILIATE'S NAME), AND HAS A TIME SHARE PLAN CURRENTLY REGISTERED WITH THE STATE OF HAWAII (INCLUDE REGISTRATION #). (IF APPLICABLE) (AFFILIATE) IS AN AFFILIATED ENTITY OF THE SELLER AS THAT TERM IS DEFINED IN CHAPTER 514E, HAWAII REVISED STATUTES. THE TIME SHARE 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 TIME SHARE PLANS. YOU SHOULD READ AND UNDERSTAND THESE PROCEDURES PRIOR TO PURCHASING.""

SECTION 3. Section 514E-10.5, Hawaii Revised Statutes, is amended to read as follows:

"§514E-10.5 Consultant review of developer filing. The director may contract with private consultants in connection with the review of the filing required of time share developers pursuant to section 514E-10(a) and [[](e)[]]. The cost of contracting private consultants shall be borne by the developer; provided that the consultant review required under this section shall not affect the scope of the review under section 514E-27 that the director may request for filings that encompass alternative arrangements for purchaser protection. The consultant shall be asked to thoroughly review the filing for the purpose of examining its compliance with the requirements of this chapter and any rule adopted by the director, including the documentation and other provided materials[.]; provided that in lieu of reviewing copies of all encumbrances on title, the consultant shall accept a certification from the developer that the time share interest being sold is free and clear of blanket liens or other material encumbrances that may materially and adversely impact utilization of the property by a purchaser, or if that is not the case, identifying the blanket liens or other material encumbrances and either specifying how those encumbrances will be addressed or what the impact of such encumbrances may be to the purchaser. Upon completing the review, the consultant shall provide a written analysis of the filing and an opinion of the nature and extent to which it complies with this chapter and adopted rules. The director may adopt rules pursuant to chapter 91 to further delineate the duties of the consultant in undertaking the review and analysis required pursuant to this section."

SECTION 3. Statutory material to be repealed is bracketed and stricken. New statutory material is underscored.

SECTION 4. This Act shall take effect upon its approval.

INTRODUCED BY:	_____________________________

THE SENATE	S.B. NO.	797
THIRTY-SECOND LEGISLATURE, 2023
STATE OF HAWAII