| 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 |
|
| 25 | Be It Enacted by the Legislature of the State of Florida: |
| 26 |
|
| 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 |
|
| 126 | This timeshare plan has not been reviewed or approved by |
| 127 | the State of Florida. |
| 128 |
|
| 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 |
|
| 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. |