HB 1163CS


1The Civil Justice Committee recommends the following:
3     Council/Committee Substitute
4     Remove the entire bill and insert:
A bill to be entitled
6An act relating to vacation and timeshare plans; amending
7s. 721.03, F.S.; revising the formula for funding reserve
8accounts; authorizing a seller to offer timeshare
9interests in timeshare plans located outside of this state
10without filing a public offering statement for such out-
11of-state timeshare plan; providing criteria for such
12offers; requiring certain notice; providing for a fee;
13amending s. 721.05, F.S.; revising the definition of the
14term "one-to-one purchaser to accommodation ratio";
15amending s. 721.13, F.S.; providing conditions under which
16certain timeshare condominium associations and timeshare
17cooperative associations are subject to certain provisions
18relating to transfer of association control; authorizing
19funding of reserve accounts to be waived or reduced;
20amending s. 721.165, F.S.; authorizing certain insurance
21to include reasonable deductibles as determined initially
22by the seller and thereafter by the managing entity;
23providing an effective date.
25Be It Enacted by the Legislature of the State of Florida:
27     Section 1.  Paragraph (e) of subsection (3) of section
28721.03, Florida Statutes, is amended, and subsection (11) is
29added to that section, to read:
30     721.03  Scope of chapter.--
31     (3)  A timeshare plan which is subject to the provisions of
32chapter 718 or chapter 719, if fully in compliance with the
33provisions of this chapter, is exempt from the following:
34     (e)  Part VI of chapter 718 and part VI of chapter 719,
35relating to conversion of existing improvements to the
36condominium or cooperative form of ownership, respectively,
37provided that a developer converting existing improvements to a
38timeshare condominium or timeshare cooperative must comply with
39ss. 718.606, 718.608, 718.61, and 718.62, or ss. 719.606,
40719.608, 719.61, and 719.62, if applicable, and, if the existing
41improvements received a certificate of occupancy more than 18
42months before such conversion, one of the following:
43     1.  The accommodations and facilities shall be renovated
44and improved to a condition such that the remaining useful life
45in years of the roof, plumbing, air-conditioning, and any
46component of the structure which has a useful life less than the
47useful life of the overall structure is equal to the useful life
48of accommodations or facilities that would exist if such
49accommodations and facilities were newly constructed and not
50previously occupied.
51     2.  The developer shall fund reserve accounts for capital
52expenditures and deferred maintenance for the roof, plumbing,
53air-conditioning, and any component of the structure the useful
54life of which is less than the useful life of the overall
55structure. The reserve accounts shall be funded for each
56component in an amount equal to the product of the estimated
57current replacement cost of such component as of the date of
58such conversion (as disclosed and substantiated by a certificate
59under the seal of an architect or engineer authorized to
60practice in this state) multiplied by a fraction, the numerator
61of which shall be the age remaining life of the component in
62years (as disclosed and substantiated by a certificate under the
63seal of an architect or engineer authorized to practice in this
64state) and the denominator of which shall be the total useful
65life of the component in years (as disclosed and substantiated
66by a certificate under the seal of an architect or engineer
67authorized to practice in this state). Alternatively, the
68reserve accounts may be funded for each component in an amount
69equal to the amount that, except for the application of this
70subsection, would be required to be maintained pursuant to s.
71718.618(1) or s. 719.618(1). The developer shall fund the
72reserve accounts contemplated in this subparagraph out of the
73proceeds of each sale of a timeshare interest, on a pro rata
74basis, in an amount not less than a percentage of the total
75amount to be deposited in the reserve account equal to the
76percentage of ownership allocable to the timeshare interest
77sold. When an owners' association makes an expenditure of
78reserve account funds before the developer has initially sold
79all timeshare interests, the developer shall make a deposit in
80the reserve account if the reserve account is insufficient to
81pay the expenditure. Such deposit shall be at least equal to
82that portion of the expenditure which would be charged against
83the reserve account deposit that would have been made for any
84such timeshare interest had the timeshare interest been
85initially sold. When a developer deposits amounts in excess of
86the minimum reserve account funding, later deposits may be
87reduced to the extent of the excess funding.
88     3.  The developer shall provide each purchaser with a
89warranty of fitness and merchantability pursuant to s.
90718.618(6) or s. 719.618(6).
91     (11)  A seller may offer timeshare interests in a real
92property timeshare plan located outside of this state without
93filing a public offering statement for such out-of-state real
94property timeshare plan pursuant to s. 721.07 or s. 721.55,
95provided all of the following criteria have been satisfied:
96     (a)  The seller shall provide a disclosure statement to
97each prospective purchaser of such out-of-state timeshare plan.
98The disclosure statement shall contain information that is
99substantively equivalent to the disclosures required to be
100provided for similar timeshare plans pursuant to s. 721.07 or s.
101721.55, whichever is applicable. The disclosure statement shall
102also include the exhibits that are required by s.
103721.07(5)(ff)1., 2., 3., 4., 5., 7., 8., and 20.
104     (b)  With respect to any offer for an out-of-state
105timeshare plan made pursuant to this subsection, the delivery by
106the seller to a prospective purchaser of the disclosure
107statement required by paragraph (a) shall be deemed to satisfy
108any requirement of this chapter regarding a public offering
110     (c)  The seller shall utilize and furnish to each purchaser
111of an out-of-state timeshare plan offered pursuant to this
112subsection a fully completed and executed copy of a purchase
113contract that contains the statement set forth in s.
114721.065(2)(c) in conspicuous type located immediately prior to
115the space in the contract reserved for the purchaser's
116signature. The contract shall also contain the initial purchase
117price and any additional charges to which the purchaser may be
118subject in connection with the purchase of the timeshare plan,
119such as financing, or that will be collected from the purchaser
120on or before closing, such as the current year's annual
121assessment for common expenses.
122     (d)  All purchase contracts for out-of-state timeshare
123plans offered pursuant to this subsection must also contain the
124following statements in conspicuous type:
126This timeshare plan has not been reviewed or approved by
127the State of Florida.
129The timeshare interest you are purchasing requires certain
130procedures to be followed in order for you to use your
131interest. These procedures may be different from those
132followed in other timeshare plans. You should read and
133understand these procedures prior to purchasing.
135     (e)1.  An out-of-state timeshare plan may only be offered
136pursuant to this subsection by the seller on behalf of:
137     a.  The developer of a timeshare plan that has been
138approved by the division within the preceding 7 years pursuant
139to s. 721.07 or s. 721.55, or concerning which an amendment by
140the developer has been approved by the division within the
141preceding 7 years, which timeshare plan has been neither
142terminated nor withdrawn; or
143     b.  A developer under common ownership or control with a
144developer described in sub-subparagraph a., provided that any
145common ownership shall constitute at least a 50-percent
146ownership interest.
147     2.  An out-of-state timeshare plan may only be offered
148pursuant to this subsection to a person who already owns a
149timeshare interest in a timeshare plan filed by a developer
150described in subparagraph 1.
151     (f)1.  Except for ss. 721.06, 721.065, 721.07, 721.27,
152721.55, and 721.58, any out-of-state timeshare plan offered
153pursuant to this subsection must meet all requirements of this
154chapter. The out-of-state timeshare plan shall also be eligible
155for any exemptions provided by this chapter.
156     2.  Any escrow account required to be established by s.
157721.08 for any out-of-state timeshare plan offered under this
158subsection may be maintained in the situs jurisdiction.
159     (g)  Any seller of an out-of-state timeshare plan offered
160pursuant to this subsection shall be required to provide notice
161of such plan to the division on a form prescribed by the
162division, along with payment of a one-time fee not to exceed
163$1,000 per filing.
164     Section 2.  Subsection (25) of section 721.05, Florida
165Statutes, is amended to read:
166     721.05  Definitions.--As used in this chapter, the term:
167     (25)  "One-to-one purchaser to accommodation ratio" means
168the ratio of the number of purchasers eligible to use the
169accommodations of a timeshare plan on a given day to the number
170of accommodations available for use within the plan on that day,
171such that the total number of purchasers eligible to use the
172accommodations of the timeshare plan during any 12-month period
173a given calendar year never exceeds the total number of
174accommodations available for use in the timeshare plan during
175that 12-month period year. For purposes of calculation under
176this subsection, each purchaser must be counted at least once,
177and no individual timeshare unit may be counted more than 365
178times per 12-month period calendar year (or more than 366 times
179per leap year). A purchaser who is delinquent in the payment of
180timeshare plan assessments shall continue to be considered
181eligible to use the accommodations of the timeshare plan for
182purposes of this subsection notwithstanding any application of
183s. 721.13(6).
184     Section 3.  Paragraph (b) of subsection (1) and paragraph
185(c) of subsection (3) of section 721.13, Florida Statutes, are
186amended to read:
187     721.13  Management.--
188     (1)
189     (b)1.  With respect to a timeshare plan which is also
190regulated under chapter 718 or chapter 719, or which contains a
191mandatory owners' association, the board of administration of
192the owners' association shall be considered the managing entity
193of the timeshare plan.
194     2.  During any period of time in which such owners'
195association has entered into a contract with a manager or
196management firm to provide some or all of the management
197services to the timeshare plan, both the board of administration
198and the manager or management firm shall be considered the
199managing entity of the timeshare plan and shall be jointly and
200severally responsible for the faithful discharge of the duties
201of the managing entity.
202     3.  An owners' association which is the managing entity of
203a timeshare plan that includes condominium units or cooperative
204units shall not be considered a condominium association pursuant
205to the provisions of chapter 718 or a cooperative association
206pursuant to the provisions of chapter 719, unless such owners'
207association also operates the entire condominium pursuant to s.
208718.111 or the entire cooperative pursuant to s. 719.104.
209     4.a.  Notwithstanding anything to the contrary contained in
210chapter 718 or chapter 719, timeshare condominium associations
211and timeshare cooperative associations created after July 1,
2122006, are not subject to the provisions of s. 718.301(1) and (2)
213or s. 719.301(1) and (2) unless a majority of those present at a
214duly called meeting of the association other than any developer,
215which majority shall constitute at least 15 percent of the total
216voting interests other than those owned by any developer, vote
217to hold a transfer-of-control election. A meeting to decide
218whether to have a transfer-of-control election shall be
219conducted upon the written request of 15 percent of the total
220voting interests other than those owned by any developer. If a
221transfer-of-control election is approved, that election, when
222held, shall entitle purchasers other than a developer to elect a
223majority of the members of the board of administration of the
225     b.  No transfer-of-control election held pursuant to this
226subparagraph shall be held prior to the time that transfer of
227majority control of the members of the board of administration
228of the association would otherwise be required by the provisions
229of s. 718.301(1) or s. 719.301(1). After such time, the election
230approved under sub-subparagraph a. shall be held with 75 days
231after the vote authorizing a transfer-of-control election. After
232purchasers other than a developer vote to elect a majority of
233the members of the board of administration of the association, a
234developer may exercise the right to vote any developer-owned
235timeshare interests in the same manner as any purchaser except
236for purposes of reacquiring control of the association or
237electing a majority of the members of the board of
239     (3)  The duties of the managing entity include, but are not
240limited to:
241     (c)1.  Providing each year to all purchasers an itemized
242annual budget which shall include all estimated revenues and
243expenses. The budget shall be in the form required by s.
244721.07(5)(u). The budget shall be the final budget adopted by
245the managing entity for the current fiscal year. The final
246adopted budget is not required to be delivered if the managing
247entity has previously delivered a proposed annual budget for the
248current fiscal year to purchasers in accordance with chapter 718
249or chapter 719 and the managing entity includes a description of
250any changes in the adopted budget with the assessment notice and
251a disclosure regarding the purchasers' right to receive a copy
252of the adopted budget, if desired. The budget shall contain, as
253a footnote or otherwise, any related party transaction
254disclosures or notes which appear in the audited financial
255statements of the managing entity for the previous budget year
256as required by paragraph (e). A copy of the final budget shall
257be filed with the division for review within 30 days after the
258beginning of each fiscal year together with a statement of the
259number of periods of 7-day annual use availability that exist
260within the timeshare plan, including those periods filed for
261sale by the developer but not yet committed to the timeshare
262plan, for which annual fees are required to be paid to the
263division under s. 721.27.
264     2.  Notwithstanding anything contained in chapter 718 or
265chapter 719 to the contrary, the board of administration of an
266owners' association which serves as the managing entity may from
267time to time reallocate reserves for deferred maintenance and
268capital expenditures required by s. 721.07(5)(u)3.a.(XI) from
269any deferred maintenance or capital expenditure reserve account
270to any other deferred maintenance or capital expenditure reserve
271account or accounts in its discretion without the consent of
272purchasers of the timeshare plan. Funds in any deferred
273maintenance or capital expenditure reserve account may not be
274transferred to any operating account without the consent of a
275majority of the purchasers of the timeshare plan. The managing
276entity may from time to time transfer excess funds in any
277operating account to any deferred maintenance or capital
278expenditure reserve account without the vote or approval of
279purchasers of the timeshare plan. In the event any amount of
280reserves for accommodations and facilities of a timeshare plan
281containing timeshare licenses or personal property timeshare
282interests exists at the end of the term of the timeshare plan,
283such reserves shall be refunded to purchasers on a pro rata
285     3.  With respect to any timeshare plan that has a managing
286entity that is an owners' association, reserves may be waived or
287reduced by a majority vote of those voting interests that are
288present, in person or by proxy, at a duly called meeting of the
289owners' association. If a meeting of the purchasers has been
290called to determine whether to waive or reduce the funding of
291reserves and no such result is achieved or a quorum is not
292attained, the reserves as included in the budget shall go into
294     Section 4.  Subsection (1) of section 721.165, Florida
295Statutes, is amended to read:
296     721.165  Insurance.--
297     (1)  The seller, initially, and thereafter the managing
298entity, shall be responsible for obtaining insurance to protect
299the accommodations and facilities of the timeshare plan in an
300amount equal to the replacement cost of such accommodations and
301facilities. Any insurance, regardless of any requirement in the
302timeshare instrument for coverage for "full insurable value,"
303"replacement cost," or the like, may include reasonable
304deductibles as determined initially by the seller and thereafter
305by the managing entity. Failure to obtain and maintain the
306insurance required by this subsection during any period of
307developer control of the managing entity shall constitute a
308breach of s. 721.13(2)(a) by the managing entity, unless the
309managing entity can show that, despite such failure, it
310exercised due diligence to obtain and maintain the insurance
311required by this subsection.
312     Section 5.  This act shall take effect July 1, 2006.

CODING: Words stricken are deletions; words underlined are additions.