HB5503 95TH GENERAL ASSEMBLY

LRB095 17259 AJO 45956 b

95TH GENERAL ASSEMBLY
State of Illinois
2007 and 2008
HB5503

Introduced , by Rep. Angelo Saviano

SYNOPSIS AS INTRODUCED:

765 ILCS 101/1-15
765 ILCS 101/5-35
765 ILCS 101/5-40
765 ILCS 101/5-45
765 ILCS 101/5-60
765 ILCS 101/10-25

Amends the Real Estate Timeshare Act of 1999. Provides that a resale agent means a person who sells, offers to sell, or advertises to sell a timeshare (instead of sells or offers to sell a timeshare). Provides that the minimum requirements of a timeshare sale listing agreement include the use, rental, or exchange of the unit during the listing period; designation of any rental fees recipient; disclosure of any relationship between the resale agent and any person receiving a benefit from the use of the timeshare; any pre-sale fees; the resale agent's prior experience; commissions; the resale agent's real estate license, or the lack of a license; and other matters (instead of requiring only disclosure of the resale agent's compensation, certain terms of the use or rental of the timeshare, and the length of the term of the listing contract). Provides for disclosures, in addition to those already required, to a prospective purchaser of a timeshare that include the status of assessments and real estate taxes and the location of documents about the timeshare. Provides that a timeshare resale agent shall be a licensed real estate broker or, if not, shall disclose that fact and supply a warning. Provides that a developer, exchange company, or resale agent shall renew their registrations at least biennially. Provides that a developer or promoter shall provide the required disclosures to a prospective purchaser in writing or electronically, although not in every ad or communication, at least once before the prospective purchaser leaves for a scheduled sales presentation. Makes other changes. Provides for severability of the provisions of this amendatory Act. Effective immediately.

A BILL FOR

AN ACT concerning civil law.

Be it enacted by the People of the State of Illinois, represented in the General Assembly:

Section 5. The Real Estate Timeshare Act of 1999 is amended by changing Sections 1-15, 5-35, 5-40, 5-45, 5-60, and 10-25 as follows:

(765 ILCS 101/1-15)

Sec. 1-15. Definitions. In this Act, unless the context otherwise requires:

"Accommodation" means any apartment, condominium or cooperative unit, cabin, lodge, hotel or motel room, or other private or commercial structure containing toilet facilities therein that is designed and available, pursuant to applicable law, for use and occupancy as a residence by one or more individuals, or any unit or berth on a commercial cruise line ship, which is included in the offering of a timeshare plan.

"Acquisition agent" means a person who, directly or through the person's employees, agents, or independent contractors, induces or attempts to induce by means of a promotion or an advertisement any individual located within the State of Illinois to attend a sales presentation for a timeshare plan.

"Advertisement" means any written, oral, or electronic communication that is directed to or targeted to persons within the State of Illinois and contains a promotion, inducement, or offer to sell a timeshare plan, including but not limited to brochures, pamphlets, radio and television scripts, electronic media, telephone and direct mail solicitations, and other means of promotion.

"Association" means the organized body consisting of the purchasers of interests in a timeshare plan.

"Assessment" means the share of funds required for the payment of common expenses which is assessed from time to time against each purchaser by the managing entity.

"Commissioner" means the Commissioner of Banks and Real Estate, or a natural person authorized by the Commissioner, the Office of Banks and Real Estate Act, or this Act to act in the Commissioner's stead.

"Component site" means a specific geographic location where accommodations which are part of a multi-site timeshare plan are located. Separate phases of a single timeshare property in a specific geographic location and under common management shall be deemed a single component site.

"Developer" means and includes any person or entity, other than a sales agent, acquisition agent, or resale agent, who creates a timeshare plan or is in the business of selling timeshare interests, or employs agents to do the same, or any person or entity who succeeds to the interest of a developer by sale, lease, assignment, mortgage, or other transfer, but the term includes only those persons who offer timeshare interests for disposition in the ordinary course of business.

"Dispose" or "disposition" means a voluntary transfer or assignment of any legal or equitable interest in a timeshare plan, other than the transfer, assignment, or release of a security interest.

"Exchange company" means any person owning or operating, or both owning and operating, an exchange program.

"Exchange program" means any method, arrangement, or procedure for the voluntary exchange of timeshare interests or other property interests. The term does not include the assignment of the right to use and occupy accommodations to owners of timeshare interests within a single-site timeshare plan. Any method, arrangement, or procedure that otherwise meets this definition, wherein the purchaser's total contractual financial obligation exceeds $3,000 per any individual, recurring timeshare period, shall be regulated as a timeshare plan in accordance with this Act.

"Managing entity" means the person who undertakes the duties, responsibilities, and obligations of the management of a timeshare plan.

"Offer" means any inducement, solicitation, or other attempt, whether by marketing, advertisement, oral or written presentation, or any other means, to encourage a person to acquire a timeshare interest in a timeshare plan, other than as security for an obligation.

"Person" means a natural person, corporation, limited liability company, partnership, joint venture, association, estate, trust, government, governmental subdivision or agency, or other legal entity, or any combination thereof.

"Promotion" means a plan or device, including one involving the possibility of a prospective purchaser receiving a vacation, discount vacation, gift, or prize, used by a developer, or an agent, independent contractor, or employee of any of the same on behalf of the developer, in connection with the offering and sale of timeshare interests in a timeshare plan.

"Purchaser" means any person, other than a developer, who by means of a voluntary transfer acquires a legal or equitable interest in a timeshare plan other than as security for an obligation.

"Purchase contract" means a document pursuant to which a person becomes legally obligated to sell, and a purchaser becomes legally obligated to buy, a timeshare interest.

"Resale agent" means a person who, directly or through the person's employees or agents, sells, or offers to sell, or advertises to sell a timeshare interest previously sold to a purchaser or solicits an owner of a timeshare interest to list the owner's timeshare interest for sale.

"Reservation system" means the method, arrangement, or procedure by which a purchaser, in order to reserve the use or occupancy of any accommodation of a multi-site timeshare plan for one or more timeshare periods, is required to compete with other purchasers in the same multi-site timeshare plan, regardless of whether the reservation system is operated and maintained by the multi-site timeshare plan managing entity, an exchange company, or any other person. In the event that a purchaser is required to use an exchange program as the purchaser's principal means of obtaining the right to use and occupy accommodations, that arrangement shall be deemed a reservation system. When an exchange company utilizes a mechanism for the exchange of use of timeshare periods among members of an exchange program, that utilization is not a reservation system of a multi-site timeshare plan.

"Sales agent" means a person, other than a resale agent, who, directly or through the person's employees, agents, or independent contractors, sells or offers to sell timeshare interests in a timeshare plan to any individual located in the State of Illinois.

"Timeshare instrument" means one or more documents, by whatever name denominated, creating or governing the operation of a timeshare plan.

"Timeshare interest" means and includes either:

(1) a "timeshare estate", which is the right to occupy a timeshare property, coupled with a freehold estate or an estate for years with a future interest in a timeshare property or a specified portion thereof; or

(2) a "timeshare use", which is the right to occupy a timeshare property, which right is neither coupled with a freehold interest, nor coupled with an estate for years with a future interest, in a timeshare property.

"Timeshare period" means the period or periods of time when the purchaser of a timeshare plan is afforded the opportunity to use the accommodations of a timeshare plan.

"Timeshare plan" means any arrangement, plan, scheme, or similar device, other than an exchange program, whether by membership agreement, sale, lease, deed, license, or right-to-use agreement or by any other means, whereby a purchaser, in exchange for consideration, receives ownership rights in or the right to use accommodations for a period of time less than a full year during any given year, but not necessarily for consecutive years. A timeshare plan may be:

(1) a "single-site timeshare plan", which is the right to use accommodations at a single timeshare property; or

(2) a "multi-site timeshare plan", which includes:

(A) a "specific timeshare interest", which is the right to use accommodations at a specific timeshare property, together with use rights in accommodations at one or more other component sites created by or acquired through the timeshare plan's reservation system; or

(B) a "non-specific timeshare interest", which is the right to use accommodations at more than one component site created by or acquired through the timeshare plan's reservation system, but including no specific right to use any particular accommodations.

"Timeshare property" means one or more accommodations subject to the same timeshare instrument, together with any other property or rights to property appurtenant to those accommodations.

(Source: P.A. 91-585, eff. 1-1-00.)

(765 ILCS 101/5-35)

Sec. 5-35. Resale agent registration requirements.

(a) Every resale agent as defined in this Act shall register with the Office of Banks and Real Estate.

(b) Every resale agent shall be responsible for registering the following information with the Office of Banks and Real Estate on forms provided by the Office of Banks and Real Estate:

(1) A description of the resale program offered by the resale agent.

(2) The legal name, any assumed names, and the mailing address, street address, contact person, and telephone number of the resale agent.

(3) A properly executed consent-to-audit form, which allows the Office of Banks and Real Estate to audit any escrow accounts held by the resale agent.

(4) Any other information required by the Office of Banks and Real Estate to be filed by resale agents, as established by rule.

(c) The following shall be exempt from registration under this Section:

(1) Any developer, exchange company, sales agent, acquisition agent, or managing entity that is currently registered pursuant to this Act.

(2) Any purchaser that sells or offers to sell his or her own timeshare interest.

(3) Any homeowners' association that sells or offers to sell its own timeshare interests acquired through foreclosure, deed in lieu of foreclosure, or gratuitous transfer.

(4) Any person who is licensed under the Real Estate License Act of 2000 1983 or its successor Act.

(Source: P.A. 91-585, eff. 1-1-00.)

(765 ILCS 101/5-40)

Sec. 5-40. Resale agent duties. Whether registered or exempt from registration under Section 5-35, a resale agent shall comply with all of the following:

(a) Prior to engaging in any resale activities on behalf of any owner of a timeshare interest or accepting anything of value from any owner of a timeshare interest, a resale agent shall enter into a listing agreement with that owner. Every listing agreement shall be in writing and signed by both the resale agent and the timeshare interest owner. The requirements of the written listing agreement shall be established by rule, but at a minimum the listing agreement shall disclose the following:

(1) Whether any person other than the timeshare interest owner may use the timeshare interest during the period before the timeshare interest is resold.

(2) Whether any person other than the timeshare interest owner may rent or exchange the use of the timeshare interest during the period before the timeshare interest is resold.

(3) The name of any person who will receive any rents, profits, or other consideration generated from the use of the timeshare interest during the period before the timeshare interest is resold.

(4) A detailed description of any relationship between the resale agent and any other person who receives any benefit from the use of the timeshare interest.

(5) A description of any fee, including the amount, to be paid by the timeshare interest owner to the resale agent prior to the sale of the timeshare interest. If any such fee is charged by the resale agent prior to the sale of the timeshare interest, then a statement must be included disclosing either (A) the number of timeshare interests sold by the resale agent for each of the past 3 years or (B) the ratio or percentage of the number of listings versus the number of timeshare interests sold by the resale agent for each of the past 3 years.

(6) A description of the amount or percentage and procedures for paying any commissions due to the resale agent upon resale of the timeshare interest.

(7) Whether or not the resale agent holds a real estate license and:

(A) if licensed, state the name, address, and telephone number of the State agency that issued the real estate license; or

(B) if not licensed, provide the following disclosure:

"WARNING: This resale agent DOES NOT have a real estate license and cannot perform many of the duties and services that may be conducted only by real estate licensees. The duties and services that only those holding a real estate license are typically permitted to conduct include listing, negotiating for purchase or sale, buying, offering for sale, selling, renting, and exchanging, among other actions reserved to licensees by State laws." the method of compensation, a definite date of termination, whether any fees are non-refundable, and whether the agreement permits the timeshare resale agent or any other person to make any use whatsoever of the owner's timeshare interest or receive any rents or profits generated from such use of the timeshare interest.

(b) A resale agent shall maintain records as required by rule. The records required to be maintained include, but are not limited to, all listing agreements, copies of disbursement authorizations in accordance with subsection (c), and resale contracts.

(c) A resale agent who collects any fees prior to a transfer of an interest from any owner shall deposit the fees in an escrow account. Any fees that are to be paid to the resale agent prior to closing may be disbursed from the escrow account only upon receipt of a disbursement authorization, signed by the owner, in the following form:

"I, (name of owner), am the owner of a timeshare interest in (name of timeshare plan). I understand that for my protection I can require the entire fee to be held in escrow until the closing on the resale of my timeshare interest, but I am authorizing a release before the transfer in the following amount: (amount written in words) ($ (amount in numbers)), for the following purpose or purposes (description of purpose or purposes). I understand that the resale agent is regulated by the Office of Banks and Real Estate under the Real Estate Timeshare Act of 1999. The Office of Banks and Real Estate requires the resale agent to obtain this disbursement authorization with my signature before disbursement of my funds."

(d) A resale agent shall utilize a purchase agreement that discloses to a purchaser of a timeshare interest all of the following:

(1) A legally sufficient description of the timeshare interest being purchased.

(2) The name and address of the managing entity of the timeshare property.

(3) The current year's assessment for the common expenses allocated to the timeshare interest being purchased including the time period to which the assessment relates and the date on which it is due. If not included in the applicable common expense assessment, the amount of any real or personal property taxes allocated to the timeshare interest being purchased.

(3.5) Whether all assessments and real property taxes against the timeshare interest are paid in full and, if not, the amount owed and the consequences of failure to pay any assessment or real property taxes.

(4) A complete and accurate disclosure of the terms and conditions of the purchase and closing, including the obligations of the owner, the purchaser, or both for closing costs and the title insurance.

(5) The entity responsible for providing notification to the managing entity of the timeshare plan and the applicable exchange company regarding any change in the ownership of the timeshare interest.

(6) A statement of the first year in which the purchaser is entitled to receive the actual use rights and occupancy of the timeshare interest, as determined by the managing entity of the timeshare plan and any exchange company.

(6.5) The place where the documents of formation of the association, if any, and the timeshare instrument may be obtained, together with the following disclosure:

"There are many important documents relating to the timeshare plan that you should review prior to purchasing a timeshare interest, which may include the declaration of restrictions, covenants, and conditions; the owners' association articles and bylaws; the current year's operating and reserve budgets; and any rules and regulations affecting the use of the timeshare plan accommodations and amenities."

(7) In making the disclosures required by this subsection (d), the timeshare resale agent may rely upon information provided in writing by the owner or managing entity of the timeshare plan.

(8) The purchaser's 5-day cancellation period as required by Section 10-10.

(9) Any other information determined by the Office of Banks and Real Estate and established by rule.

(e) A resale agent:

(1) shall be licensed as a real estate broker or salesperson pursuant to the provisions of the Real Estate License Act of 2000 or its successor Act or pursuant to the real estate laws of the state in which the resale agent has its principal place of business; or

(2) shall provide the disclosure required by subdivision (a)(7)(B) of this Section.

(Source: P.A. 91-585, eff. 1-1-00.)

(765 ILCS 101/5-45)

Sec. 5-45. Amendment to registration information or public offering statement. The developer, resale agent, and exchange company shall amend or supplement their disclosure documents and registration information to reflect any material change in any information required by this Act or the rules implementing this Act. All such amendments, supplements, and changes shall be filed with the Office of Banks and Real Estate within 30 20 calendar days of the material change.

(Source: P.A. 91-585, eff. 1-1-00.)

(765 ILCS 101/5-60)

Sec. 5-60. Registration; offer or disposal of interest.

(a) A developer, exchange company, or resale agent, or any of their agents, shall not sell, offer, or dispose of a timeshare interest unless all necessary registrations are filed and approved by the Office of Banks and Real Estate, or while an order revoking or suspending a registration is in effect.

(b) An applicant for registration under this Act shall submit the necessary information to complete the application, as required by the Office of Banks and Real Estate, within 6 months from the date the initial registration application was received by the Office of Banks and Real Estate. If the applicant fails to submit the information necessary to complete the application as required by the Office of Banks and Real Estate within the six month period, said application shall be voided, and a new registration application with applicable fees must be submitted.

(c) A developer, exchange company, or resale agent shall renew any registrations required by this Act no less frequently than on a biennial basis.

(Source: P.A. 91-585, eff. 1-1-00.)

(765 ILCS 101/10-25)

Sec. 10-25. Liability; material misrepresentation.

(a) A developer or other person offering a timeshare plan may not do any of the following:

(1) Misrepresent a fact material to a purchaser's decision to buy a timeshare interest.

(2) Predict specific or immediate increases in the value of a timeshare interest represented over a period of time, excluding bona fide pending price increases by the developer.

(3) Materially misrepresent the qualities or characteristics of accommodations or the amenities available to the occupant of those accommodations.

(4) Misrepresent the length of time accommodations or amenities will be available to the purchaser of a timeshare interest.

(5) Misrepresent the conditions under which a purchaser of a timeshare interest may exchange the right of his or her occupancy for the right to occupy other accommodations.

(b) A developer or other person using a promotion in connection with the offering of a timeshare interest shall clearly disclose all of the following:

(1) That the purpose of the promotion is to sell timeshare interests, which shall appear in bold face or other conspicuous type.

(2) That any person whose name or address is obtained during the promotion may be solicited to purchase a timeshare interest.

(3) The name of each developer or other person trying to sell a timeshare interest through the promotion, and the name of each person paying for the promotion.

(4) The complete rules of the promotion.

(5) The method of awarding prizes, gifts, vacations, discount vacations, or other benefits under the promotion; a complete and fully detailed description, including approximate retail value, of all prizes, gifts, or benefits under the promotion; the quantity of each prize, gift, or benefit to be awarded or conferred; and the date by which each prize, gift, or benefit will be awarded or conferred.

(6) Any other disclosures provided by rule.

(c) If a person represents that a prize, gift, or benefit will be awarded in connection with a promotion, the prize, gift, or benefit must be awarded or conferred in the manner represented, and on or before the date represented.

(d) A developer or other person using a promotion in connection with the offering of a timeshare interest shall provide the disclosures required by this Section in writing or electronically to the prospective purchaser at least once before a scheduled sales presentation and within a reasonable period before the scheduled sales presentation to ensure that the prospective purchaser receives the disclosures before leaving to attend the sales presentation.

(e) A developer or other person using a promotion in connection with the offering of a timeshare interest is not required to provide the disclosures required by this Section in every advertisement or other written, oral, or electronic communication provided or made to a prospective purchaser.

(Source: P.A. 91-585, eff. 1-1-00.)

Section 97. Severability. The provisions of this Act are severable under Section 1.31 of the Statute on Statutes.

Section 99. Effective date. This Act takes effect upon becoming law.