Bill Text: AZ HB2639 | 2019 | Fifty-fourth Legislature 1st Regular | Introduced
Bill Title: Timeshares; disclosures
Spectrum: Partisan Bill (Republican 13-0)
Status: (Passed) 2019-05-22 - Chapter 245 [HB2639 Detail]
Download: Arizona-2019-HB2639-Introduced.html
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REFERENCE TITLE: timeshares; disclosures |
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State of Arizona House of Representatives Fifty-fourth Legislature First Regular Session 2019
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HB 2639 |
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Introduced by Representatives Bolick: Biasiucci, Blackman, Carroll, Dunn, Fillmore, Finchem, Grantham, Kavanagh, Payne, Roberts, Toma, Weninger
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AN ACT
amending section 32‑2197.03, Arizona Revised Statutes; amending title 32, chapter 20, article 9, Arizona Revised Statutes, by adding section 32‑2197.16; relating to real estate.
(TEXT OF BILL BEGINS ON NEXT PAGE)
Be it enacted by the Legislature of the State of Arizona:
Section 1. Section 32-2197.03, Arizona Revised Statutes, is amended to read:
32-2197.03. Rescission of contract or agreement; cancellation or termination of timeshare interests; disclosures
A. The purchaser may rescind the purchase agreement without cause of any kind by sending or delivering a written notice of rescission by midnight of the seventh fourteenth calendar day following the day on which the purchaser or prospective purchaser executed the purchase agreement. The rescission rights shall be conspicuously disclosed in the purchase agreement. If the developer seller allows the rescission period to extend beyond the seven fourteen calendar days, the rescission period disclosure in the purchase agreement shall reflect the longer period of time. The disclosure required by this subsection shall be printed immediately before the space reserved in the purchase agreement for the signature of the purchaser disclosure required under subsection B of this section and shall include the following information:
1. The purchaser may cancel the purchase agreement without a penalty or obligation within seven fourteen calendar days after the purchaser signs the purchase agreement.
2. If the purchaser decides to cancel the purchase agreement, the purchaser shall notify the seller in writing of the purchaser's intent to cancel.
3. The purchaser's notice of cancellation is effective on the date the cancellation is sent and shall be sent to the seller at the seller's address. The seller's address and telephone number shall be listed on in the purchase agreement.
4. The purchaser may execute all closing documents in advance. However, the closing, as evidenced by delivery of the deed or other document, is prohibited before the seven fourteen calendar day cancellation period expires.
B. After the end of the rescission period described in subsection A of this section and before midnight on the fifteenth calendar day after the first use of the timeshare interest concludes, the purchaser may cancel the purchase agreement without cause and relinquish to the seller all timeshare interests and liabilities incurred under the purchase agreement by sending or delivering a written notice of cancellation and relinquishment to the seller. For the purposes of this subsection, "first use of the timeshare interest" means the first time the purchaser or the purchaser's third‑party transferee stays in a timeshare property pursuant to the purchase agreement.
C. On receiving the cancellation and relinquishment notice described in subsection B of this section:
1. The seller may charge a cancellation and relinquishment fee of up to ten percent of the purchase price if the specific dollar amount of the fee is conspicuously disclosed in the purchase agreement.
2. The seller must refund all purchase payments made by the purchaser within thirty days except that the seller may retain any purchase monies necessary to pay the cancellation and relinquishment fee assessed and any other assessments due at the time the notice of cancellation and relinquishment is sent.
D. The seller may charge regularly scheduled assessments for one year after the notice of cancellation and relinquishment is sent.
E. The seller is not required to refund any assessments paid by the purchaser before the notice of cancellation and relinquishment is sent.
F. The cancellation and relinquishment rights and any cancellation and relinquishment fee shall be conspicuously disclosed in the purchase agreement. If the seller allows the cancellation and relinquishment period to extend beyond one year, the cancellation and relinquishment period disclosure in the purchase agreement shall reflect the longer period of time. The disclosure required by this subsection shall be printed immediately after the disclosure of the rescission period required by subsection A of this section and shall include specific disclosures stating that:
1. The purchaser may cancel the purchase agreement and relinquish all timeshare interests under the purchase agreement within one year after the purchaser signs the purchase agreement.
2. If the purchaser decides to cancel the purchase agreement and relinquish the timeshare interests, the purchaser shall notify the seller in writing of the purchaser's intent to cancel and relinquish.
3. The purchaser's notice of cancellation and relinquishment is effective on the date that the cancellation and relinquishment notice is sent and shall be sent to the seller at the seller's address. The seller's address and telephone number shall be listed in the purchase agreement.
4. The purchaser may be charged a cancellation and relinquishment fee of up to ten percent of the total purchase price. The specific dollar amount of the cancellation and relinquishment fee shall also be included.
5. The purchaser may be liable for all assessments, taxes or other fees incurred during the period of ownership and may be liable for all regularly scheduled assessments, including maintenance fees, for a full year after the cancellation and relinquishment.
6. Within thirty days after the receipt of a cancellation and relinquishment notice, the seller shall refund all payments that the purchaser made toward the purchase of the timeshare, except that the seller may retain any purchase monies necessary to pay the cancellation and relinquishment fee and any other assessments due at the time the notice of cancellation and relinquishment is sent.
G. At least ten years after a purchaser purchases a timeshare, A purchaser who has paid the entire purchase price of the purchaser's timeshare and who does not have past-due assessments, unpaid fines, unpaid penalties or liens or other encumbrances on the property may terminate the purchase agreement without cause and surrender all rights or property interests under the purchase agreement to the seller without a fee or penalty. In a termination under this subsection, the purchaser is not liable for any assessments beyond regularly scheduled assessments incurred within one year after the surrender. Eligible purchasers may initiate the termination and surrender by sending or delivering a written notice of termination and surrender to the seller at the seller's address. Within thirty days after receiving the termination and surrender notice, the seller shall provide the purchaser a written notice stating whether the purchaser's request for termination and surrender is accepted or denied. If the purchaser's request is denied, the notice of denial must explain in detail the reason for denial. A request may be denied only if it does not meet the criteria described in this subsection. If the purchaser's request is accepted, the notice of acceptance must include:
1. All necessary documents for the purchaser to complete the surrender of the purchaser's timeshare interest.
2. Instructions for completing the necessary documentation.
3. A detailed explanation of the effect of the termination and surrender, including the purchaser's liability for any future regularly scheduled assessments or recording fees and the loss of any deed interest, timeshare points or other timeshare interest.
4. An explanation of the purchaser's right to cancel the termination and surrender process, if any.
H. The termination and surrender is effective on the date that the seller receives executed copies of all necessary documents from the purchaser seeking to terminate the purchase agreement and surrender the purchaser's timeshare interest. Within fourteen days after receiving this documentation, the seller must provide the purchaser a written copy of the termination and surrender documentation signed by both parties and a written notice to the purchaser that does both of the following:
1. Verifies the effective date of the termination and surrender.
2. States in detail any future liability that the purchaser may have for regularly scheduled assessments.
I. On the effective date of the termination and surrender, the timeshare interest shall immediately return to the seller or any third party designated by the seller. The seller may continue to assess and collect regularly scheduled assessments from the purchaser for one year after receiving executed copies of all necessary documents from the purchaser.
J. The termination and surrender rights shall be conspicuously disclosed in a purchase agreement. If the seller allows the termination and surrender of a timeshare interest earlier than ten years after the date of the purchase agreement, the purchase agreement shall reflect the shorter period of time. The disclosure required by this subsection shall be printed immediately after the disclosure of cancellation and relinquishment rights required by subsection F of this section and immediately before the space reserved in the purchase agreement for the signature of the purchaser and shall include specific disclosures that:
1. At least ten years after the date of the purchase agreement, if the purchaser has paid the entire purchase price and has no outstanding fees, assessments, penalties, liens or encumbrances, the purchaser may terminate the purchase agreement and surrender the purchaser's timeshare to the seller to avoid paying future assessments, except that the seller may require the purchaser to pay regularly scheduled assessments incurred within one year after the date of the termination and surrender.
2. If a qualifying purchaser decides to terminate the purchase agreement and surrender the purchaser's timeshare, the purchaser shall notify the seller in writing of the purchaser's intent to terminate and surrender.
3. The purchaser's notice of termination and surrender shall be sent to the seller at the seller's address. The seller's address and telephone number shall be listed in the purchase agreement.
4. Within fourteen days after receiving the notice of termination and surrender and verifying that the termination and surrender are valid, the seller shall provide the purchaser with the necessary forms to surrender the purchaser's timeshare.
5. The termination and surrender are effective when the seller receives the completed forms.
6. At the time of termination and surrender, the purchaser shall give up any timeshare interest that the purchaser may have obtained through the purchase agreement.
7. The purchaser may be liable for all regularly scheduled assessments, including maintenance fees, incurred before the effective date of the termination and surrender and for a full year following the successful termination and surrender of the purchaser's timeshare interest.
K. The denial of a purchaser's rights under this section without a good faith legal basis constitutes an unlawful practice under section 44‑1522. The attorney general may investigate and take appropriate action as prescribed by title 44, chapter 10, article 7.
B. L. This section applies to any timeshare plan approved by the commissioner pursuant to either article 4 of this chapter or this article, regardless of the date of issuance of the public report.
Sec. 2. Title 32, chapter 20, article 9, Arizona Revised Statutes, is amended by adding section 32-2197.16, to read:
32-2197.16. Separate disclosure
A. Before entering into an agreement or contract for the sale of a timeshare interest, the seller must provide the purchaser with a separate disclosure document to adequately inform the purchaser of the purchaser's actual and potential liabilities under the purchase agreement. At a minimum, this separate disclosure document must conspicuously disclose all of the following:
1. The duration of the timeshare agreement entered into by the purchaser and, if the agreement has no set duration, an affirmative statement that the purchaser's obligations under the agreement may extend throughout the course of the purchaser's lifetime.
2. A good faith estimate of the total potential financial obligation of the purchaser during the first year of ownership that includes additional charges to which the purchaser may be subject during the first year of ownership, including all potential assessments. The disclosure shall be as follows:
(a) If the maximum amount of the first year's assessments is known at the time of purchase, the disclosure must disclose the maximum amount of these assessments and the assessments levied for each of the previous three years, if available.
(b) If the maximum amount of the first year's assessments is unknown at the time of purchase, the disclosure must provide the purchaser with the following:
(i) Notice that the purchaser will be required to pay assessments in addition to the disclosed purchase payment and that the amount of those assessments is currently unknown.
(ii) A statement disclosing the assessments levied for each of the previous three years, if available, and a good faith estimate of the first year's assessments that is at least the highest amount assessed during any of the previous three years based on the timeshare interest being offered.
(iii) An affirmative statement that there is no limit on the assessments that the purchaser may be charged in the first year of ownership.
3. A good faith estimate of the maximum annual and cumulative financial obligation of the purchaser during the duration of the timeshare agreement, which includes the purchase price, assessments and any additional payments to which the purchaser may be subject during the duration of the timeshare agreement. If the amount of future assessments is known at the time of purchase, the disclosure must provide the purchaser with the following:
(a) Notice that the purchaser will be required to pay assessments in addition to the disclosed purchase price.
(b) A payment schedule disclosing the amount of assessments payable during each year of the life of the agreement and the cumulative amount of those assessments after five, ten, twenty and thirty years of ownership.
(c) All material additional payments, including estimated taxes, estimated utility fees and special assessments. If the purchase agreement does not have a cap on special assessments, the schedule shall use an estimated amount equal to $1,000 per year for special assessments.
4. If the amount of future assessments is unknown at the time of purchase, the disclosure must provide the purchaser with the following:
(a) Notice that the purchaser will be required to pay assessments in addition to the disclosed purchase price and that the amount of those assessments is currently unknown.
(b) A payment schedule disclosing estimates of the assessments payable during each year of the life of the agreement as follows:
(i) If the maximum amount of the first year's assessment is known and has been disclosed by the seller pursuant to subsection A, paragraph 2, subdivision (a) of this section, the schedule shall start with that amount for the first year. The schedule shall disclose estimates of the annual assessments, using the maximum allowable assessment for each year if specified in the purchase agreement, for the first thirty years of ownership or the duration of the timeshare agreement, whichever is less. If the purchase agreement does not specify a maximum allowable assessment for any given year, the schedule shall assume an annual assessment increase of twenty‑five percent for each year. estimates must include a statement clarifying that the amounts provided are estimates and the actual cost of ownership may be higher or lower than the amounts provided.
(ii) If the maximum amount of the first year's assessment is unknown and the seller has provided a disclosure under Subsection A, paragraph 2, subdivision (b) of this section, the schedule shall start with $650. The schedule shall disclose estimates of the annual assessments for the first thirty years of ownership or the duration of the timeshare agreement, whichever is less, assuming an annual assessment increase of twenty‑five percent for each year of ownership. The estimates must include a statement clarifying that the amounts provided are estimates and the actual cost of ownership may be higher or lower than the amounts provided.
(iii) If the purchase agreement places a cap on assessment increases, the schedule shall substitute the maximum cap on the rate of increase for the twenty‑five percent assumed rate required by items (i) and (ii) of this subdivision.
(iv) Using the appropriate percentage rate under item (ii) of this subdivision, the schedule shall also reflect the cumulative amount of all assessments to be paid by the purchaser for the duration of the timeshare agreement, as well as for the first five, ten, twenty and thirty years of ownership. If the duration of the timeshare agreement is less than five years, more than five years and less than ten years, more than ten years and less than twenty years or more than twenty years and less than thirty years, the schedule shall include all periods that occur up until the timeshare agreement's end date.
(c) in addition to regularly scheduled assessments, a list of All fees, including estimated taxes, estimated utility fees and special assessments. If the purchase agreement does not have a cap on special assessments, the schedule shall use an amount equal to $1,000 per year for special assessments.
B. The purchaser must sign the separate disclosure and verify that the purchaser has read and understands the information presented in the separate disclosure. A signed copy of the separate disclosure shall be provided to the purchaser for the purchaser's records at the time of signing, and the seller shall keep a signed copy of the separate disclosure.
C. The Commissioner may recommend or require that the separate disclosure be in a specified form. The form must contain the information required by this Section.
