1 | The Civil Justice Committee recommends the following: |
2 |
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3 | Council/Committee Substitute |
4 | Remove the entire bill and insert: |
5 | A bill to be entitled |
6 | An act relating to vacation and timeshare plans; amending |
7 | s. 721.03, F.S.; revising the formula for funding reserve |
8 | accounts; authorizing a seller to offer timeshare |
9 | interests in timeshare plans located outside of this state |
10 | without filing a public offering statement for such out- |
11 | of-state timeshare plan; providing criteria for such |
12 | offers; requiring certain notice; providing for a fee; |
13 | amending s. 721.05, F.S.; revising the definition of the |
14 | term "one-to-one purchaser to accommodation ratio"; |
15 | amending s. 721.13, F.S.; providing conditions under which |
16 | certain timeshare condominium associations and timeshare |
17 | cooperative associations are subject to certain provisions |
18 | relating to transfer of association control; authorizing |
19 | funding of reserve accounts to be waived or reduced; |
20 | amending s. 721.165, F.S.; authorizing certain insurance |
21 | to include reasonable deductibles as determined initially |
22 | by the seller and thereafter by the managing entity; |
23 | providing an effective date. |
24 |
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25 | Be It Enacted by the Legislature of the State of Florida: |
26 |
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27 | Section 1. Paragraph (e) of subsection (3) of section |
28 | 721.03, Florida Statutes, is amended, and subsection (11) is |
29 | added to that section, to read: |
30 | 721.03 Scope of chapter.-- |
31 | (3) A timeshare plan which is subject to the provisions of |
32 | chapter 718 or chapter 719, if fully in compliance with the |
33 | provisions of this chapter, is exempt from the following: |
34 | (e) Part VI of chapter 718 and part VI of chapter 719, |
35 | relating to conversion of existing improvements to the |
36 | condominium or cooperative form of ownership, respectively, |
37 | provided that a developer converting existing improvements to a |
38 | timeshare condominium or timeshare cooperative must comply with |
39 | ss. 718.606, 718.608, 718.61, and 718.62, or ss. 719.606, |
40 | 719.608, 719.61, and 719.62, if applicable, and, if the existing |
41 | improvements received a certificate of occupancy more than 18 |
42 | months before such conversion, one of the following: |
43 | 1. The accommodations and facilities shall be renovated |
44 | and improved to a condition such that the remaining useful life |
45 | in years of the roof, plumbing, air-conditioning, and any |
46 | component of the structure which has a useful life less than the |
47 | useful life of the overall structure is equal to the useful life |
48 | of accommodations or facilities that would exist if such |
49 | accommodations and facilities were newly constructed and not |
50 | previously occupied. |
51 | 2. The developer shall fund reserve accounts for capital |
52 | expenditures and deferred maintenance for the roof, plumbing, |
53 | air-conditioning, and any component of the structure the useful |
54 | life of which is less than the useful life of the overall |
55 | structure. The reserve accounts shall be funded for each |
56 | component in an amount equal to the product of the estimated |
57 | current replacement cost of such component as of the date of |
58 | such conversion (as disclosed and substantiated by a certificate |
59 | under the seal of an architect or engineer authorized to |
60 | practice in this state) multiplied by a fraction, the numerator |
61 | of which shall be the age remaining life of the component in |
62 | years (as disclosed and substantiated by a certificate under the |
63 | seal of an architect or engineer authorized to practice in this |
64 | state) and the denominator of which shall be the total useful |
65 | life of the component in years (as disclosed and substantiated |
66 | by a certificate under the seal of an architect or engineer |
67 | authorized to practice in this state). Alternatively, the |
68 | reserve accounts may be funded for each component in an amount |
69 | equal to the amount that, except for the application of this |
70 | subsection, would be required to be maintained pursuant to s. |
71 | 718.618(1) or s. 719.618(1). The developer shall fund the |
72 | reserve accounts contemplated in this subparagraph out of the |
73 | proceeds of each sale of a timeshare interest, on a pro rata |
74 | basis, in an amount not less than a percentage of the total |
75 | amount to be deposited in the reserve account equal to the |
76 | percentage of ownership allocable to the timeshare interest |
77 | sold. When an owners' association makes an expenditure of |
78 | reserve account funds before the developer has initially sold |
79 | all timeshare interests, the developer shall make a deposit in |
80 | the reserve account if the reserve account is insufficient to |
81 | pay the expenditure. Such deposit shall be at least equal to |
82 | that portion of the expenditure which would be charged against |
83 | the reserve account deposit that would have been made for any |
84 | such timeshare interest had the timeshare interest been |
85 | initially sold. When a developer deposits amounts in excess of |
86 | the minimum reserve account funding, later deposits may be |
87 | reduced to the extent of the excess funding. |
88 | 3. The developer shall provide each purchaser with a |
89 | warranty of fitness and merchantability pursuant to s. |
90 | 718.618(6) or s. 719.618(6). |
91 | (11) A seller may offer timeshare interests in a real |
92 | property timeshare plan located outside of this state without |
93 | filing a public offering statement for such out-of-state real |
94 | property timeshare plan pursuant to s. 721.07 or s. 721.55, |
95 | provided all of the following criteria have been satisfied: |
96 | (a) The seller shall provide a disclosure statement to |
97 | each prospective purchaser of such out-of-state timeshare plan. |
98 | The disclosure statement shall contain information that is |
99 | substantively equivalent to the disclosures required to be |
100 | provided for similar timeshare plans pursuant to s. 721.07 or s. |
101 | 721.55, whichever is applicable. The disclosure statement shall |
102 | also include the exhibits that are required by s. |
103 | 721.07(5)(ff)1., 2., 3., 4., 5., 7., 8., and 20. |
104 | (b) With respect to any offer for an out-of-state |
105 | timeshare plan made pursuant to this subsection, the delivery by |
106 | the seller to a prospective purchaser of the disclosure |
107 | statement required by paragraph (a) shall be deemed to satisfy |
108 | any requirement of this chapter regarding a public offering |
109 | statement. |
110 | (c) The seller shall utilize and furnish to each purchaser |
111 | of an out-of-state timeshare plan offered pursuant to this |
112 | subsection a fully completed and executed copy of a purchase |
113 | contract that contains the statement set forth in s. |
114 | 721.065(2)(c) in conspicuous type located immediately prior to |
115 | the space in the contract reserved for the purchaser's |
116 | signature. The contract shall also contain the initial purchase |
117 | price and any additional charges to which the purchaser may be |
118 | subject in connection with the purchase of the timeshare plan, |
119 | such as financing, or that will be collected from the purchaser |
120 | on or before closing, such as the current year's annual |
121 | assessment for common expenses. |
122 | (d) All purchase contracts for out-of-state timeshare |
123 | plans offered pursuant to this subsection must also contain the |
124 | following statements in conspicuous type: |
125 |
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126 | This timeshare plan has not been reviewed or approved by |
127 | the State of Florida. |
128 |
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129 | The timeshare interest you are purchasing requires certain |
130 | procedures to be followed in order for you to use your |
131 | interest. These procedures may be different from those |
132 | followed in other timeshare plans. You should read and |
133 | understand these procedures prior to purchasing. |
134 |
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135 | (e)1. An out-of-state timeshare plan may only be offered |
136 | pursuant to this subsection by the seller on behalf of: |
137 | a. The developer of a timeshare plan that has been |
138 | approved by the division within the preceding 7 years pursuant |
139 | to s. 721.07 or s. 721.55, or concerning which an amendment by |
140 | the developer has been approved by the division within the |
141 | preceding 7 years, which timeshare plan has been neither |
142 | terminated nor withdrawn; or |
143 | b. A developer under common ownership or control with a |
144 | developer described in sub-subparagraph a., provided that any |
145 | common ownership shall constitute at least a 50-percent |
146 | ownership interest. |
147 | 2. An out-of-state timeshare plan may only be offered |
148 | pursuant to this subsection to a person who already owns a |
149 | timeshare interest in a timeshare plan filed by a developer |
150 | described in subparagraph 1. |
151 | (f)1. Except for ss. 721.06, 721.065, 721.07, 721.27, |
152 | 721.55, and 721.58, any out-of-state timeshare plan offered |
153 | pursuant to this subsection must meet all requirements of this |
154 | chapter. The out-of-state timeshare plan shall also be eligible |
155 | for any exemptions provided by this chapter. |
156 | 2. Any escrow account required to be established by s. |
157 | 721.08 for any out-of-state timeshare plan offered under this |
158 | subsection may be maintained in the situs jurisdiction. |
159 | (g) Any seller of an out-of-state timeshare plan offered |
160 | pursuant to this subsection shall be required to provide notice |
161 | of such plan to the division on a form prescribed by the |
162 | division, 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 |
165 | Statutes, 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 |
168 | the ratio of the number of purchasers eligible to use the |
169 | accommodations of a timeshare plan on a given day to the number |
170 | of accommodations available for use within the plan on that day, |
171 | such that the total number of purchasers eligible to use the |
172 | accommodations of the timeshare plan during any 12-month period |
173 | a given calendar year never exceeds the total number of |
174 | accommodations available for use in the timeshare plan during |
175 | that 12-month period year. For purposes of calculation under |
176 | this subsection, each purchaser must be counted at least once, |
177 | and no individual timeshare unit may be counted more than 365 |
178 | times per 12-month period calendar year (or more than 366 times |
179 | per leap year). A purchaser who is delinquent in the payment of |
180 | timeshare plan assessments shall continue to be considered |
181 | eligible to use the accommodations of the timeshare plan for |
182 | purposes of this subsection notwithstanding any application of |
183 | s. 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 |
186 | amended to read: |
187 | 721.13 Management.-- |
188 | (1) |
189 | (b)1. With respect to a timeshare plan which is also |
190 | regulated under chapter 718 or chapter 719, or which contains a |
191 | mandatory owners' association, the board of administration of |
192 | the owners' association shall be considered the managing entity |
193 | of the timeshare plan. |
194 | 2. During any period of time in which such owners' |
195 | association has entered into a contract with a manager or |
196 | management firm to provide some or all of the management |
197 | services to the timeshare plan, both the board of administration |
198 | and the manager or management firm shall be considered the |
199 | managing entity of the timeshare plan and shall be jointly and |
200 | severally responsible for the faithful discharge of the duties |
201 | of the managing entity. |
202 | 3. An owners' association which is the managing entity of |
203 | a timeshare plan that includes condominium units or cooperative |
204 | units shall not be considered a condominium association pursuant |
205 | to the provisions of chapter 718 or a cooperative association |
206 | pursuant to the provisions of chapter 719, unless such owners' |
207 | association also operates the entire condominium pursuant to s. |
208 | 718.111 or the entire cooperative pursuant to s. 719.104. |
209 | 4.a. Notwithstanding anything to the contrary contained in |
210 | chapter 718 or chapter 719, timeshare condominium associations |
211 | and timeshare cooperative associations created after July 1, |
212 | 2006, are not subject to the provisions of s. 718.301(1) and (2) |
213 | or s. 719.301(1) and (2) unless a majority of those present at a |
214 | duly called meeting of the association other than any developer, |
215 | which majority shall constitute at least 15 percent of the total |
216 | voting interests other than those owned by any developer, vote |
217 | to hold a transfer-of-control election. A meeting to decide |
218 | whether to have a transfer-of-control election shall be |
219 | conducted upon the written request of 15 percent of the total |
220 | voting interests other than those owned by any developer. If a |
221 | transfer-of-control election is approved, that election, when |
222 | held, shall entitle purchasers other than a developer to elect a |
223 | majority of the members of the board of administration of the |
224 | association. |
225 | b. No transfer-of-control election held pursuant to this |
226 | subparagraph shall be held prior to the time that transfer of |
227 | majority control of the members of the board of administration |
228 | of the association would otherwise be required by the provisions |
229 | of s. 718.301(1) or s. 719.301(1). After such time, the election |
230 | approved under sub-subparagraph a. shall be held with 75 days |
231 | after the vote authorizing a transfer-of-control election. After |
232 | purchasers other than a developer vote to elect a majority of |
233 | the members of the board of administration of the association, a |
234 | developer may exercise the right to vote any developer-owned |
235 | timeshare interests in the same manner as any purchaser except |
236 | for purposes of reacquiring control of the association or |
237 | electing a majority of the members of the board of |
238 | administration. |
239 | (3) The duties of the managing entity include, but are not |
240 | limited to: |
241 | (c)1. Providing each year to all purchasers an itemized |
242 | annual budget which shall include all estimated revenues and |
243 | expenses. The budget shall be in the form required by s. |
244 | 721.07(5)(u). The budget shall be the final budget adopted by |
245 | the managing entity for the current fiscal year. The final |
246 | adopted budget is not required to be delivered if the managing |
247 | entity has previously delivered a proposed annual budget for the |
248 | current fiscal year to purchasers in accordance with chapter 718 |
249 | or chapter 719 and the managing entity includes a description of |
250 | any changes in the adopted budget with the assessment notice and |
251 | a disclosure regarding the purchasers' right to receive a copy |
252 | of the adopted budget, if desired. The budget shall contain, as |
253 | a footnote or otherwise, any related party transaction |
254 | disclosures or notes which appear in the audited financial |
255 | statements of the managing entity for the previous budget year |
256 | as required by paragraph (e). A copy of the final budget shall |
257 | be filed with the division for review within 30 days after the |
258 | beginning of each fiscal year together with a statement of the |
259 | number of periods of 7-day annual use availability that exist |
260 | within the timeshare plan, including those periods filed for |
261 | sale by the developer but not yet committed to the timeshare |
262 | plan, for which annual fees are required to be paid to the |
263 | division under s. 721.27. |
264 | 2. Notwithstanding anything contained in chapter 718 or |
265 | chapter 719 to the contrary, the board of administration of an |
266 | owners' association which serves as the managing entity may from |
267 | time to time reallocate reserves for deferred maintenance and |
268 | capital expenditures required by s. 721.07(5)(u)3.a.(XI) from |
269 | any deferred maintenance or capital expenditure reserve account |
270 | to any other deferred maintenance or capital expenditure reserve |
271 | account or accounts in its discretion without the consent of |
272 | purchasers of the timeshare plan. Funds in any deferred |
273 | maintenance or capital expenditure reserve account may not be |
274 | transferred to any operating account without the consent of a |
275 | majority of the purchasers of the timeshare plan. The managing |
276 | entity may from time to time transfer excess funds in any |
277 | operating account to any deferred maintenance or capital |
278 | expenditure reserve account without the vote or approval of |
279 | purchasers of the timeshare plan. In the event any amount of |
280 | reserves for accommodations and facilities of a timeshare plan |
281 | containing timeshare licenses or personal property timeshare |
282 | interests exists at the end of the term of the timeshare plan, |
283 | such reserves shall be refunded to purchasers on a pro rata |
284 | basis. |
285 | 3. With respect to any timeshare plan that has a managing |
286 | entity that is an owners' association, reserves may be waived or |
287 | reduced by a majority vote of those voting interests that are |
288 | present, in person or by proxy, at a duly called meeting of the |
289 | owners' association. If a meeting of the purchasers has been |
290 | called to determine whether to waive or reduce the funding of |
291 | reserves and no such result is achieved or a quorum is not |
292 | attained, the reserves as included in the budget shall go into |
293 | effect. |
294 | Section 4. Subsection (1) of section 721.165, Florida |
295 | Statutes, is amended to read: |
296 | 721.165 Insurance.-- |
297 | (1) The seller, initially, and thereafter the managing |
298 | entity, shall be responsible for obtaining insurance to protect |
299 | the accommodations and facilities of the timeshare plan in an |
300 | amount equal to the replacement cost of such accommodations and |
301 | facilities. Any insurance, regardless of any requirement in the |
302 | timeshare instrument for coverage for "full insurable value," |
303 | "replacement cost," or the like, may include reasonable |
304 | deductibles as determined initially by the seller and thereafter |
305 | by the managing entity. Failure to obtain and maintain the |
306 | insurance required by this subsection during any period of |
307 | developer control of the managing entity shall constitute a |
308 | breach of s. 721.13(2)(a) by the managing entity, unless the |
309 | managing entity can show that, despite such failure, it |
310 | exercised due diligence to obtain and maintain the insurance |
311 | required by this subsection. |
312 | Section 5. This act shall take effect July 1, 2006. |