2017-2018 Bill 3647 Text of Previous Version (Feb. 2, 2017) - South Carolina Legislature Online

1 2 3 4 5 6 7 8 9 A BILL 10 11 TO AMEND SECTION 273210, AS AMENDED, CODE OF 12 LAWS OF SOUTH CAROLINA, 1976, RELATING TO 13 DEFINITIONS CONCERNING VACATION TIME SHARING 14 PLANS, SO AS TO DEFINE AND REDEFINE CERTAIN 15 TERMS; TO AMEND SECTION 273255, RELATING TO FEES 16 FOR THE RESALE OF INTERESTS IN VACATION 17 TIMESHARES, SO AS TO PROVIDE REQUIREMENTS OF 18 RESALE VACATION TIMESHARE SERVICES AND 19 PROVIDERS OF THESE SERVICES; AND TO AMEND 20 SECTION 2732130, RELATING TO ENFORCEMENT AND 21 IMPLEMENTATION PROVISIONS, SO AS TO MAKE THE 22 PROVISIONS APPLICABLE TO VACATION TIME SHARING 23 ASSOCIATIONS. 24 25 Be it enacted by the General Assembly of the State of South 26 Carolina: 27 28 SECTION 1. Section 273210 of the 1976 Code, as last amended 29 by Act 310 of 2006, is further amended to read: 30 31 “Section 273210. For purposes of this chapter: 32 (1) ‘Accommodations’ means any hotel or motel room, 33 condominium or cooperative unit, cabin, lodge, apartment, or other 34 private or commercial structure designed for occupancy by one or 35 more individuals or a recreational vehicle campsite or 36 campground. 37 (2) ‘Person’ means any individual, corporation, firm, 38 association, joint venture, partnership, trust estate, business trust, 39 syndicate, fiduciary, and any other group or combination. 40 (3) ‘Contract’ means the agreement between the seller and a 41 purchaser: (a) setting forth the terms and conditions of the 42 purchase and sale of an ownership interest in a vacation time

[3647] 1 1 sharing ownership plan, or (b) setting forth the terms and 2 conditions of the purchase and sale of a lease or other righttouse 3 interest in a vacation time sharing lease plan. 4 (4) ‘Commission’ means the South Carolina Real Estate 5 Commission. 6 (5) ‘Facilities’ means a structure, service, or property, whether 7 improved or unimproved, made available to the purchaser for 8 recreational, social, family, or personal use. 9 (6) ‘Seller’ means a person who creates a vacation time sharing 10 plan or is in the business of selling interests in a vacation timeshare 11 plan, or employs agents to do the same, or a person who succeeds 12 to the interest of a seller by sale, lease, assignment, mortgage, or 13 other transfer; except that, the term includes only a person who 14 offers interests in vacation time sharing plans in the State of South 15 Carolina in the ordinary course of business. The term ‘seller’ does 16 not include the following: 17 (a) an owner of a time sharing interest who has acquired the 18 time sharing interest for his own use and occupancy and who later 19 offers it for resale on his own behalf or through a real estate 20 broker; 21 (b) a managing entity or owners’ association of a time 22 sharing plan, not otherwise a seller, that offers on the association’s 23 behalf time sharing interests in the time sharing plan transferred to 24 the association through foreclosure, deed in lieu of foreclosure, or 25 gratuitous transfer; or 26 (c) a person who owns or is conveyed, assigned, or 27 transferred time sharing interests, and who subsequently conveys, 28 assigns, or transfers all acquired time sharing interests to a single 29 purchaser in a single transaction, which transaction may occur in 30 stages. 31 (7) ‘Vacation time sharing ownership plan’ means any 32 arrangement, plan, or similar devise, whether by tenancy in 33 common, sale, term for years, deed, or other means, in which the 34 purchaser receives an ownership interest in real property and the 35 right to use accommodations or facilities, or both, for a period or 36 periods of time during a given year, but not necessarily for 37 consecutive years, which extends for a period of more than one 38 year. A vacation time sharing ownership plan may be created in a 39 condominium established on a term for years or leasehold interest 40 having an original duration of thirty years or longer. An interest in 41 a vacation time sharing ownership plan is recognized as an interest 42 in real property for all purposes pursuant to the laws of this State.

[3647] 2 1 (8) ‘Vacation time sharing lease plan’ means any arrangement, 2 plan, or similar devise, whether by membership agreement, lease, 3 rental agreement, license, use agreement, security, or other means, 4 in which the purchaser receives a right to use accommodations or 5 facilities, or both, but does not receive an ownership interest in real 6 property, for a period or periods of time during a given year, but 7 not necessarily for consecutive years, which extends for a period 8 of more than three years. These lease plans do not include an 9 arrangement or agreement in which a purchaser in exchange for an 10 advance fee and yearly dues is entitled to select from a designated 11 list of facilities located in more than one state, accommodations of 12 companies that operate nationwide in at least nine states in the 13 United States through franchises or ownership, for a specified time 14 period and at reduced rates and under which an interest in real 15 property is not transferred. 16 (9) ‘Vacation time sharing plan’ means either a vacation time 17 sharing ownership plan or a vacation time sharing lease plan. 18 (10) ‘Substantially complete’ means all structural components 19 and mechanical systems of all buildings containing or comprising 20 facilities or accommodations are finished in accordance with the 21 plans or specifications of the vacation time sharing plan, as 22 evidenced by a recorded certificate of completion executed by an 23 independent registered surveyor, architect, or engineer. 24 (11) ‘Unit week’ means a number of consecutive days, normally 25 seven consecutive days in duration, which may reasonably be 26 assigned to purchasers of vacation time sharing plans by the seller. 27 (12) ‘Escrow agent’ means a bank or trust company doing 28 business in this State or a bonded trust agent bonded in at least the 29 amount of the trust; except, that nothing contained in this chapter 30 prevents investment of funds escrowed pursuant to this chapter by 31 the bank, trust company, or bonded agent, with payment of all 32 interest and dividends to the seller of vacation time sharing plans. 33 For purposes of Section 273255, escrow agent also means a 34 licensed South Carolina attorney in good standing, a licensed 35 South Carolina real estate broker in good standing, or a licensed 36 South Carolina title insurance agent in good standing. 37 (13) ‘Escrow account’ means funds held or maintained by an 38 escrow agent. 39 (14) ‘Fund’ and ‘recovery fund’ means the South Carolina 40 Vacation Time Sharing Recovery Fund. 41 (15) ‘Claim’ means a monetary loss sustained or allegedly 42 sustained by a person due to the wrongdoing of a registrant or 43 licensee.

[3647] 3 1 (16) ‘Real estate broker’s trust account’ means a demand 2 account in a bank or savings institution in this State held by a duly 3 licensed South Carolina real estate broker. 4 (17) ‘Resale vacation time sharing interest’ means a vacation 5 time sharing interest, including all or substantially all ownership, 6 rights, or interests associated with the vacation time sharing 7 interest that has been previously acquired by an owner for his own 8 use and occupancy and is later offered or advertised for sale or 9 rent, or legal ownership is transferred by or with the assistance of a 10 resale service provider. 11 (18) ‘Resale service provider’ means any person or entity, 12 including any agent or employee of such person or entity, who, 13 directly or indirectly, offers or uses telemarketing, direct mail, 14 email, or any other forms of communication in connection with 15 offering of vacation time sharing resale services. This term does 16 not include the following: 17 (a) a newspaper, periodical, or publisher, unless the 18 newspaper, periodical, or publisher derives more than ten percent 19 of its gross revenue from vacation time sharing resale services. For 20 purposes of this chapter, the calculation of gross revenue derived 21 from providing vacation time sharing resale services includes 22 revenue of any affiliate, parent, agent, and subsidiary of the 23 newspaper, periodical, or publisher, so long as the resulting 24 percentage of gross revenue is not decreased by the inclusion of 25 such affiliate, parent, subsidiary, or agent in the calculation; 26 (b) a seller, vacation time sharing association, managing 27 entity, or other person responsible for managing or operating the 28 vacation time sharing plan to the extent they offer vacation time 29 sharing resale services to owners of vacation time sharing interests 30 in such a vacation time sharing plan; or 31 (c) a consumer vacation time sharing reseller who, in a 32 given calendar year, sells seven or fewer resale vacation time 33 sharing interests. 34 (19) ‘Vacation time sharing resale service’ means: 35 (a) the advertising of, or an offer to advertise, any resale 36 vacation time sharing interest for resale or rent; or 37 (b) the transfer or offer to assist in the transfer of legal 38 ownership of any resale vacation time sharing interest. 39 (20) ‘Vacation time sharing association’ means an association 40 made up of all owners of vacation time sharing interests in a 41 vacation time sharing plan, including sellers and owners of such 42 vacation time sharing plan.

[3647] 4 1 (21) ‘Consumer vacation time sharing reseller’ means an owner 2 of a resale vacation time sharing interest.” 3 4 SECTION 2. Section 273255 of the 1976 Code is amended to 5 read: 6 7 “Section 273255. An owner of an interest in a vacation time 8 sharing plan may not be charged an upfront appraisal fee for the 9 resale of his interest but may be charged only an upfront marketing 10 fee or commission upon the resale of the interest in an amount 11 stipulated by written agreement between the owner and his sales 12 agent. A person violating the provisions of this section has 13 committed an unfair trade practice pursuant to Section 39520 and 14 is subject to all penalties and remedies provided by law for this 15 violation. 16 (A) Before engaging in any vacation time sharing resale 17 services, a resale service provider must provide a written contract 18 to the consumer vacation time sharing reseller that includes: 19 (1) The name, physical address, telephone number, and 20 website address, if any, of the resale service provider and any other 21 agent or third party who will provide any of the vacation time 22 sharing resale services on behalf of the resale service provider. 23 (2) The name, physical address, telephone number, and 24 email address of the escrow agent, if applicable, that will be used 25 to hold funds or other property pursuant to this section. 26 (3) A complete description of the vacation timesharing 27 resale services. 28 (4) The duration of the contract for vacation time sharing 29 resale services expressed in days, weeks, months or years. 30 (5) A description of any fees, costs, or other consideration to 31 be paid to the resale service provider or any agent or third party of 32 it. These fees must include marketing and advertising fees or 33 commissions that are paid upon the resale of a resale vacation time 34 sharing interest. 35 (6) A statement, if applicable, that the resale service 36 provider will deliver to the consumer vacation time sharing reseller 37 all documentation evidencing the transfer of legal ownership of the 38 resale vacation time sharing interest as provided in subsection (B). 39 (7) A statement, if applicable, that the consumer time 40 sharing reseller shall have five business days from the date they 41 receive the notice of right to dispute the release funds from the 42 escrow agent as referenced in subsection (B).

[3647] 5 1 (8) The internet addresses and telephone numbers for both 2 the Department of Consumer Affairs and the commission. 3 (9) A statement printed in at least 12point boldfaced type 4 immediately preceding the space in the contract provided for the 5 consumer time sharing reseller’s signature in substantially the 6 following form: 7 ‘You have an unwaivable right to cancel this contract for any 8 reason within 5 business days after the date you sign this contract. 9 If you decide to cancel this contract, you must notify (name of 10 resale service provider) in writing of your intent to cancel. Your 11 notice of cancellation must be effective upon the date sent and 12 must be sent to (resale service provider’s mailing address) or to 13 (resale service provider’s email address). Your refund will be 14 made within 20 days after receipt of notice of cancellation or 15 within 5 days after receipt of funds from your cleared check, 16 whichever is later. You are not obligated to pay (name of resale 17 service provider) any money unless you sign this contract and 18 return it to (name of resale service provider).’ 19 ‘Before signing this contract, you should carefully review your 20 original vacation time sharing purchase contract and other project 21 documents to determine whether there are any restrictions or 22 special conditions applicable to the resale or rental of your 23 vacation time sharing interest. You may also wish to contact your 24 resort management company or your vacation time sharing 25 association to learn about resale or rental options that may be 26 available to you.’ 27 (B) With respect to all fees, costs and compensation paid to a 28 resale service provider, the following shall apply: 29 (1) A consumer vacation time sharing reseller may not be 30 charged an appraisal fee in connection with the sale or rental of a 31 resale vacation time sharing interest. 32 (2) A consumer vacation time sharing reseller may be 33 charged marketing or advertising fees prior to the sale or rental of 34 a resale vacation time sharing interest. 35 (3) A consumer vacation time sharing reseller shall not pay 36 any advance fee, cost or compensation for vacation time sharing 37 resale services, except as provided in item (2), unless one hundred 38 percent of all funds are deposited into an escrow account until the 39 vacation time sharing resale service is completed and all other 40 requirements of this section have been met. 41 (a) The funds or other property required to be escrowed 42 hereunder may only be released from escrow to or on the order of

[3647] 6 1 the person providing the vacation time sharing resale services upon 2 completion of all of the following: 3 (i) Presentation by the vacation time sharing resale 4 services provider of an affidavit by such person to the escrow 5 agent that all promised vacation time sharing resale services have 6 been performed, including delivery to both the consumer vacation 7 time sharing reseller and the vacation time sharing plan association 8 or managing entity of a copy of the recorded instrument or other 9 legal document evidencing the transfer of ownership or of legal 10 title to the resale vacation time sharing interest completed in 11 accordance with Section 273240, to the transferee. 12 (ii) The escrow agent’s submission of the affidavit and 13 a notice of right to dispute the release of funds or property in 14 escrow to the consumer vacation time sharing reseller. The notice 15 shall state the consumer vacation time sharing reseller shall have 16 five business days after receipt of such affidavit to submit a written 17 dispute to the escrow agent that all promised vacation time sharing 18 resale services have in fact not been fully performed by the resale 19 service provider. The consumer vacation time sharing reseller may 20 submit the dispute by electronic mail or regular mail. The dispute 21 is effective upon the date sent. 22 (iii) Failure of the consumer vacation time sharing 23 reseller to submit a dispute pursuant to subsubitem (ii). 24 (iv) Should the escrow agent receive conflicting 25 demands for funds or other property held in escrow, the escrow 26 agent must immediately notify the commission of the dispute and 27 either promptly submit the matter to arbitration or, by interpleader 28 or otherwise, seek an adjudication of the matter by court. 29 (b) The commission may audit or examine the escrow 30 account. The resale service provider must make available 31 documents relating to the escrow account or escrow obligation to 32 the commission upon the commission’s request. 33 (c) The escrow agent must retain all resale transfer 34 agreements, escrow account records, affidavits and notices of 35 dispute received pursuant to this subsection for a period of three 36 years. 37 (C) No person shall knowingly participate, for consideration or 38 with the expectation of consideration, in any plan or scheme, a 39 purpose of which is to transfer a resale vacation time sharing 40 interest to a person or entity that the person knows or reasonably 41 should know does not have the ability, means, or intent to pay all 42 assessments and taxes associated with ownership of the resale 43 vacation time sharing interest that are due or that come due during

[3647] 7 1 the transferee’s ownership. Failure to pay assessments or taxes 2 that are due or that come due after acquisition of a resale vacation 3 time sharing interest by a transferee who acquires the resale 4 vacation time sharing interest for commercial purposes and not for 5 personal use and enjoyment is prima facie evidence of an 6 intentional and purposeful violation of this subsection. It must be 7 considered a violation of this section if there is any transfer, series 8 of transfers, or other action made or taken by any person for the 9 purpose of circumventing this section. 10 (D) No individual consumer vacation timesharing reseller who 11 sells or transfers five or fewer resale vacation time sharing 12 interests owned by that consumer vacation timesharing reseller in a 13 given calendar year shall be subject to liability under subsection 14 (C) above. 15 (E) Engagement in any vacation time sharing resale service, or 16 receipt of consideration in connection with, any vacation time 17 sharing resale service without an executed written contract as 18 provided in this section or the transfer of a resale vacation time 19 sharing interest to a person who the resale service provider knows 20 or should have known has demonstrated a pattern of nonpayment 21 of assessments, taxes, or fees associated with the obligations of 22 ownership, is prima facie evidence of a violation of this section. 23 (F) Providing vacation time sharing resale services with respect 24 to a consumer resale vacation time sharing interest in a vacation 25 time sharing property located or offered within this State or 26 required to be registered in this State, including acting as an agent 27 or thirdparty service provider for a resale service provider, 28 constitutes operating, conducting, engaging in, or carrying on a 29 business or business venture in this State. 30 (G) A contract for vacation time sharing resale services 31 resulting from conduct in violation of this section is voidable by 32 the consumer vacation time sharing reseller and the resale service 33 provider shall return all consideration received pursuant to the 34 contract to the consumer vacation time sharing reseller. 35 (H) A person violating the provisions of this section has 36 committed an unfair trade practice pursuant to Title 39, Chapter 5 37 of the Unfair Trade Practices Act and is subject to all penalties and 38 remedies provided by law for this violation. 39 (I) The Department of Consumer Affairs may enforce this 40 section.” 41 42 SECTION 3. Section 2732130 of the 1976 Code is amended to 43 read:

[3647] 8 1 2 “Section 2732130. The Real Estate Commission is responsible 3 for the enforcement and implementation of this chapter and the 4 Department of Labor, Licensing and Regulation, at the request of 5 the Real Estate Commission, shall prosecute a violation under this 6 chapter. The commission shall promulgate regulations for the 7 implementation of this chapter, subject to the State Administrative 8 Procedures Act. The provisions of this section do not limit the 9 right of a purchaser or lessee or a vacation time sharing association 10 to bring a private action to enforce the provisions of this chapter.” 11 12 SECTION 4. This act takes effect upon approval by the 13 Governor. 14 XX 15

[3647] 9