This document includes House Committee Amendments incorporated into the bill on Fri, Mar 6, 2015 at 11:40 AM by jeyring.
1     
TIMESHARE AMENDMENTS

2     
2015 GENERAL SESSION

3     
STATE OF UTAH

4     
Chief Sponsor: Gage Froerer

5     
Senate Sponsor: Stephen H. Urquhart

6     

7     LONG TITLE
8     General Description:
9          This bill amends the Timeshare and Camp Resort Act.
10     Highlighted Provisions:
11          This bill:
12          ▸     defines terms;
13          ▸     addresses the process for obtaining a registration from the division for a
14     development or a salesperson;
15          ▸     modifies notice requirements related to a purchaser's right to cancel;
16          ▸     clarifies the process and standard for obtaining an exemption from the provisions of
17     this bill; and
18          ▸     makes technical and conforming changes.
19     Money Appropriated in this Bill:
20          None
21     Other Special Clauses:
22          None
23     Utah Code Sections Affected:
24     AMENDS:
25          57-8-3, as last amended by Laws of Utah 2013, Chapters 95 and 152
26          57-8-27, as last amended by Laws of Utah 2012, Chapter 166
27          57-19-2, as last amended by Laws of Utah 2012, Chapter 166
28          57-19-4, as enacted by Laws of Utah 1987, Chapter 73
29          57-19-5, as last amended by Laws of Utah 2009, Chapter 352
30          57-19-6, as last amended by Laws of Utah 2012, Chapter 166
31          57-19-7, as enacted by Laws of Utah 1987, Chapter 73
32          57-19-8, as last amended by Laws of Utah 2012, Chapter 166
33          57-19-9, as last amended by Laws of Utah 2000, Chapter 86
34          57-19-10, as enacted by Laws of Utah 1987, Chapter 73
35          57-19-11, as last amended by Laws of Utah 1991, Chapter 165
36          57-19-12, as last amended by Laws of Utah 2012, Chapter 166
37          57-19-13, as last amended by Laws of Utah 2012, Chapter 166
38          57-19-14, as last amended by Laws of Utah 2010, Chapter 379
39          57-19-15, as last amended by Laws of Utah 2009, Chapter 352
40          57-19-16, as last amended by Laws of Utah 2009, Chapter 352
41          57-19-21, as enacted by Laws of Utah 1987, Chapter 73
42          57-19-26, as last amended by Laws of Utah 2012, Chapter 166
43     

44     Be it enacted by the Legislature of the state of Utah:
45          Section 1. Section 57-8-3 is amended to read:
46          57-8-3. Definitions.
47          As used in this chapter:
48          (1) "Assessment" means any charge imposed by the association, including:
49          (a) common expenses on or against a unit owner pursuant to the provisions of the
50     declaration, bylaws, or this chapter; and
51          (b) an amount that an association of unit owners assesses to a unit owner under
52     Subsection 57-8-43(9)(g).
53          (2) "Association of unit owners" means all of the unit owners:
54          (a) acting as a group in accordance with the declaration and bylaws; or
55          (b) organized as a legal entity in accordance with the declaration.
56          (3) "Building" means a building, containing units, and comprising a part of the
57     property.
58          (4) "Commercial condominium project" means a condominium project that has no
59     residential units within the project.
60          (5) "Common areas and facilities" unless otherwise provided in the declaration or
61     lawful amendments to the declaration means:
62          (a) the land included within the condominium project, whether leasehold or in fee
63     simple;
64          (b) the foundations, columns, girders, beams, supports, main walls, roofs, halls,
65     corridors, lobbies, stairs, stairways, fire escapes, entrances, and exits of the building;
66          (c) the basements, yards, gardens, parking areas, and storage spaces;
67          (d) the premises for lodging of janitors or persons in charge of the property;
68          (e) installations of central services such as power, light, gas, hot and cold water,
69     heating, refrigeration, air conditioning, and incinerating;
70          (f) the elevators, tanks, pumps, motors, fans, compressors, ducts, and in general all
71     apparatus and installations existing for common use;
72          (g) such community and commercial facilities as may be provided for in the
73     declaration; and
74          (h) all other parts of the property necessary or convenient to its existence, maintenance,
75     and safety, or normally in common use.
76          (6) "Common expenses" means:
77          (a) all sums lawfully assessed against the unit owners;
78          (b) expenses of administration, maintenance, repair, or replacement of the common
79     areas and facilities;
80          (c) expenses agreed upon as common expenses by the association of unit owners; and
81          (d) expenses declared common expenses by this chapter, or by the declaration or the
82     bylaws.
83          (7) "Common profits," unless otherwise provided in the declaration or lawful
84     amendments to the declaration, means the balance of all income, rents, profits, and revenues
85     from the common areas and facilities remaining after the deduction of the common expenses.
86          (8) "Condominium" means the ownership of a single unit in a multiunit project
87     together with an undivided interest in common in the common areas and facilities of the
88     property.
89          (9) "Condominium plat" means a plat or plats of survey of land and units prepared in
90     accordance with Section 57-8-13.
91          (10) "Condominium project" means a real estate condominium project; a plan or
92     project whereby two or more units, whether contained in existing or proposed apartments,
93     commercial or industrial buildings or structures, or otherwise, are separately offered or
94     proposed to be offered for sale. Condominium project also means the property when the
95     context so requires.
96          (11) "Condominium unit" means a unit together with the undivided interest in the
97     common areas and facilities appertaining to that unit. Any reference in this chapter to a
98     condominium unit includes both a physical unit together with its appurtenant undivided interest
99     in the common areas and facilities and a time period unit together with its appurtenant
100     undivided interest, unless the reference is specifically limited to a time period unit.
101          (12) "Contractible condominium" means a condominium project from which one or
102     more portions of the land within the project may be withdrawn in accordance with provisions
103     of the declaration and of this chapter. If the withdrawal can occur only by the expiration or
104     termination of one or more leases, then the condominium project is not a contractible
105     condominium within the meaning of this chapter.
106          (13) "Convertible land" means a building site which is a portion of the common areas
107     and facilities, described by metes and bounds, within which additional units or limited common
108     areas and facilities may be created in accordance with this chapter.
109          (14) "Convertible space" means a portion of the structure within the condominium
110     project, which portion may be converted into one or more units or common areas and facilities,
111     including limited common areas and facilities in accordance with this chapter.
112          (15) "Declarant" means all persons who execute the declaration or on whose behalf the
113     declaration is executed. From the time of the recordation of any amendment to the declaration
114     expanding an expandable condominium, all persons who execute that amendment or on whose
115     behalf that amendment is executed shall also come within this definition. Any successors of
116     the persons referred to in this subsection who come to stand in the same relation to the
117     condominium project as their predecessors also come within this definition.
118          (16) "Declaration" means the instrument by which the property is submitted to the
119     provisions of this act, as it from time to time may be lawfully amended.
120          (17) "Expandable condominium" means a condominium project to which additional
121     land or an interest in it may be added in accordance with the declaration and this chapter.
122          (18) "Governing documents":
123          (a) means a written instrument by which an association of unit owners may:
124          (i) exercise powers; or
125          (ii) manage, maintain, or otherwise affect the property under the jurisdiction of the
126     association of unit owners; and
127          (b) includes:
128          (i) articles of incorporation;
129          (ii) bylaws;
130          (iii) a plat;
131          (iv) a declaration of covenants, conditions, and restrictions; and
132          (v) rules of the association of unit owners.
133          (19) "Independent third party" means a person that:
134          (a) is not related to the unit owner;
135          (b) shares no pecuniary interests with the unit owner; and
136          (c) purchases the unit in good faith and without the intent to defraud a current or future
137     lienholder.
138          (20) "Leasehold condominium" means a condominium project in all or any portion of
139     which each unit owner owns an estate for years in his unit, or in the land upon which that unit
140     is situated, or both, with all those leasehold interests to expire naturally at the same time. A
141     condominium project including leased land, or an interest in the land, upon which no units are
142     situated or to be situated is not a leasehold condominium within the meaning of this chapter.
143          (21) "Limited common areas and facilities" means those common areas and facilities
144     designated in the declaration as reserved for use of a certain unit or units to the exclusion of the
145     other units.
146          (22) "Majority" or "majority of the unit owners," unless otherwise provided in the
147     declaration or lawful amendments to the declaration, means the owners of more than 50% in
148     the aggregate in interest of the undivided ownership of the common areas and facilities.
149          (23) "Management committee" means the committee as provided in the declaration
150     charged with and having the responsibility and authority to make and to enforce all of the
151     reasonable rules covering the operation and maintenance of the property.
152          (24) "Mixed-use condominium project" means a condominium project that has both
153     residential and commercial units in the condominium project.
154          (25) "Par value" means a number of dollars or points assigned to each unit by the
155     declaration. Substantially identical units shall be assigned the same par value, but units located
156     at substantially different heights above the ground, or having substantially different views, or
157     having substantially different amenities or other characteristics that might result in differences
158     in market value, may be considered substantially identical within the meaning of this
159     subsection. If par value is stated in terms of dollars, that statement may not be considered to
160     reflect or control the sales price or fair market value of any unit, and no opinion, appraisal, or
161     fair market transaction at a different figure may affect the par value of any unit, or any
162     undivided interest in the common areas and facilities, voting rights in the unit owners'
163     association, liability for common expenses, or right to common profits, assigned on the basis
164     thereof.
165          (26) "Person" means an individual, corporation, partnership, association, trustee, or
166     other legal entity.
167          (27) "Property" means the land, whether leasehold or in fee simple, the building, if any,
168     all improvements and structures thereon, all easements, rights, and appurtenances belonging
169     thereto, and all articles of personal property intended for use in connection therewith.
170          (28) "Record," "recording," "recorded," and "recorder" have the meaning stated in Title
171     57, Chapter 3, Recording of Documents.
172          (29) "Size" means the number of cubic feet, or the number of square feet of ground or
173     floor space, within each unit as computed by reference to the record of survey map and rounded
174     off to a whole number. Certain spaces within the units including attic, basement, or garage
175     space may be omitted from the calculation or be partially discounted by the use of a ratio, if the
176     same basis of calculation is employed for all units in the condominium project and if that basis
177     is described in the declaration.
178          (30) "Time period unit" means an annually recurring part or parts of a year specified in
179     the declaration as a period for which a unit is separately owned and includes a timeshare estate
180     as defined in Subsection 57-19-2[(19)].
181          (31) "Unit" means either a separate physical part of the property intended for any type
182     of independent use, including one or more rooms or spaces located in one or more floors or
183     part or parts of floors in a building or a time period unit, as the context may require. A
184     convertible space shall be treated as a unit in accordance with Subsection 57-8-13.4(3). A
185     proposed condominium unit under an expandable condominium project, not constructed, is a
186     unit two years after the date the recording requirements of Section 57-8-13.6 are met.
187          (32) "Unit number" means the number, letter, or combination of numbers and letters
188     designating the unit in the declaration and in the record of survey map.
189          (33) "Unit owner" means the person or persons owning a unit in fee simple and an
190     undivided interest in the fee simple estate of the common areas and facilities in the percentage
191     specified and established in the declaration or, in the case of a leasehold condominium project,
192     the person or persons whose leasehold interest or interests in the condominium unit extend for
193     the entire balance of the unexpired term or terms.
194          Section 2. Section 57-8-27 is amended to read:
195          57-8-27. Separate taxation.
196          (1) Each unit and its percentage of undivided interest in the common or community
197     areas and facilities shall be considered to be a parcel and shall be subject to separate
198     assessment and taxation by each assessing unit, local district, and special service district for all
199     types of taxes authorized by law, including ad valorem levies and special assessments. Neither
200     the building or buildings, the property, nor any of the common areas and facilities may be
201     considered a parcel.
202          (2) In the event any of the interests in real property made subject to this chapter by the
203     declaration are leasehold interests, if the lease creating these interests is of record in the office
204     of the county recorder, if the balance of the term remaining under the lease is at least 40 years
205     at the time the leasehold interest is made subject to this chapter, if units are situated or are to be
206     situated on or within the real property covered by the lease, and if the lease provides that the
207     lessee shall pay all taxes and assessments imposed by governmental authority, then until 10
208     years prior to the date that the leasehold is to expire or until the lease is terminated, whichever
209     first occurs, all taxes and assessments on the real property covered by the lease shall be levied
210     against the owner of the lessee's interest. If the owner of the reversion under the lease has
211     executed the declaration and condominium plat, until 10 years prior to the date that the
212     leasehold is to expire, or until the lease is terminated, whichever first occurs, all taxes and
213     assessments on the real property covered by the lease shall be separately levied against the unit
214     owners having an interest in the lease, with each unit owner for taxation purposes being
215     considered the owner of a parcel consisting of his undivided condominium interest in the fee of
216     the real property affected by the lease.
217          (3) No forfeiture or sale of the improvements or the property as a whole for delinquent
218     real estate taxes, special assessments, or charges shall divest or in anywise affect the title to an
219     individual unit if the real estate taxes or duly levied share of the assessments and charges on the
220     individual unit are currently paid.
221          (4) Any exemption from taxes that may exist on real property or the ownership of the
222     property may not be denied by virtue of the submission of the property to this chapter.
223          (5) Timeshare interests and timeshare estates, as defined in Subsection 57-19-2[(19)],
224     may not be separately taxed but shall be valued, assessed, and taxed at the unit level. The
225     value of timeshare interests and timeshare estates, for purposes of ad valorem taxation, shall be
226     determined by valuing the real property interest associated with the timeshare interest or
227     timeshare estate, exclusive of the value of any intangible property and rights associated with
228     the acquisition, operation, ownership, and use of the timeshare interest or timeshare estate,
229     including the fees and costs associated with the sale of timeshare interests and timeshare estates
230     that exceed those fees and costs normally incurred in the sale of other similar properties, the
231     fees and costs associated with the operation, ownership, and use of timeshare interests and
232     timeshare estates, vacation exchange rights, vacation conveniences and services, club
233     memberships, and any other intangible rights and benefits available to a timeshare unit owner.
234     Nothing in this section shall be construed as requiring the assessment of any real property
235     interest associated with a timeshare interest or timeshare estate at less than its fair market
236     value. Notice of assessment, delinquency, sale, or any other purpose required by law is
237     considered sufficient for all purposes if the notice is given to the management committee.
238          Section 3. Section 57-19-2 is amended to read:
239          57-19-2. Definitions.
240          As used in this chapter[, unless the context clearly requires otherwise]:
241          (1) ["Accommodations" includes] "Accommodation" means:
242          (a) a hotel or motel [rooms,] room;
243          (b) a condominium or cooperative [units, cabins, lodges, apartments, and] unit;
244          (c) a cabin;
245          (d) a lodge;
246          (e) an apartment; or
247          (f) a private or commercial [structures] structure designed for overnight occupancy by
248     one or more individuals.
249          (2) "Advertisement" means a written, printed, oral, audio, electronic, or visual offer
250     that:
251          (a) is made by direct or general solicitation[.] to one or more individuals; and
252          (b) (i) contains an offer to sell an interest; or
253          (ii) contains a solicitation to visit or obtain additional information about a
254     development.
255          (3) "Amendment" means a change to an approved registration that is required under
256     Section 57-19-9 or by a division rule made under this chapter.
257          [(3)] (4) "Association" means an organized body consisting solely of owners of
258     timeshare interests in a timeshare development [that has been registered with the division],
259     including developers or purchasers.
260          [(4)] (5) "Business day" means a day other than a Saturday, Sunday, or state or federal
261     holiday.
262          [(7)] (6) "Camping site" means a space designed or promoted for the purpose of
263     locating a trailer, tent, tent trailer, recreational vehicle, pickup camper, motor home, or other
264     similar device used for land-based portable housing.
265          [(5)] (7) "Camp resort" means [any] an enterprise that has as its primary purpose the
266     offering of a camp resort interest.
267          [(6)] (8) "Camp resort interest" means the right to use and occupy a camping site.
268          (9) "Consolidation" means the registration of one or more additional sites or interests
269     in a development after the division approves the development's registration.
270          [(8)] (10) "Developer" means a person [who] that:
271          (a) establishes, [promotes,] owns, offers, sells, or operates a timeshare development or
272     camp resort; or
273          (b) engages one or more other persons to establish, [promote] own, offer, sell, or
274     operate a timeshare development or camp resort on the person's behalf.
275          (11) (a) "Development" means an enterprise with the primary purpose of offering an
276     interest in a camp resort or timeshare development.
277          (b) "Development" includes:
278          (i) a single-site development; or
279          (ii) a multiple-site development.
280          [(9)] (12) "Director" means the director of the division.
281          (13) "Direct sales presentation" means an in-person, telephonic, or Internet-based
282     communication that presents an offer to purchase an interest in a development to one or more
283     prospective purchasers.
284          [(10)] (14) "Division" means the Division of Real Estate of the Department of
285     Commerce.
286          [(11)] (15) "Executive director" means the executive director of the Department of
287     Commerce.
288          [(12)] (16) (a) "Interest" means [a camp resort interest or a timeshare interest.] a right
289     that a purchaser receives in exchange for consideration to use and occupy a camping site or an
290     accommodation in a development:
291          (i) on a recurring basis; and
292          (ii) for a period of time that is less than one year during any given year, regardless of
293     whether the time is determined in advance.
294          (b) "Interest" includes a membership agreement, sale, lease, deed, license, or
295     right-to-use agreement.
296          [(13)] (17) "Offer" means a solicitation solely intended to result in a person purchasing
297     an interest in a [project] development.
298          [(14) "Project" means a camp resort or timeshare development.]
299          (18) "Property report" means the form of a written disclosure described in Section
300     57-19-11.
301          [(15)] (19) "Purchaser" means a person who purchases an interest in a [project]
302     development.
303          (20) "Registration" means:
304          (a) for a development, an approved application for registration described in Section
305     57-19-5; or
306          (b) for a salesperson, an approved application for registration described in Section
307     57-19-15.
308          (21) "Renewal" or "renew" means extending a development's or a salesperson's
309     registration for an additional period on or before the registration's expiration date.
310          [(16)] (22) (a) "Sale" or "sell" means selling an interest in a [project] development for
311     value. [It]
312          (b) "Sale" or "sell" does not include charging a reasonable fee to offset the
313     administrative costs of transferring an interest in a [project] development.
314          [(17)] (23) (a) "Salesperson" means an individual who, for compensation and as agent
315     for another, is engaged in obtaining commitments of persons to purchase an interest in a
316     [project] development by making direct sales presentations to those persons. [It]
317          (b) "Salesperson" does not include [purchasers] a purchaser or [members] an owner of
318     a timeshare interest engaged in the referral of persons without making a direct sales
319     presentation [to them].
320          (24) (a) "Site" means a geographic location where one or more camping sites or
321     accommodations are located.
322          (b) "Site" includes a geographic location where one or more camping sites or
323     accommodations are located that is constructed in phases and is under common management.
324          [(18)] (25) "Timeshare development" means [any] an enterprise [that has as its] with
325     the primary purpose [the] of offering [of] a timeshare interest, including [a project in which the
326     purchase of] an interest that gives the purchaser the right to use and occupy an accommodation
327     at [one specific site or more than one site] a single or multiple-site development.
328          (26) "Timeshare estate" means a small, undivided fractional fee interest in real property
329     by which the purchaser does not receive any right to use an accommodation except as provided
330     by contract, declaration, or other instrument defining a legal right.
331          [(19)] (27) (a) "Timeshare interest" means a right to occupy fixed or variable
332     accommodations during three or more separate fixed or variable time periods over a period of
333     at least three years, including renewal options, whether or not coupled with an estate in land.
334     [It]
335          (b) "Timeshare interest" includes [what is commonly known as a "] a timeshare
336     estate[," which is a small undivided fractional fee interest in real property by which the
337     purchaser does not receive any right to use accommodations except as provided by contract,
338     declaration, or other instrument defining a legal right].
339          Section 4. Section 57-19-4 is amended to read:
340          57-19-4. Unregistered sales prohibited.
341          Except [for transactions exempt under] as provided in Section 57-19-26, it is unlawful
342     for [any] a person to offer or sell in this state an interest in a [project] development unless the
343     [project] development is registered under this chapter or holds a temporary permit described in
344     Section 57-19-6.
345          Section 5. Section 57-19-5 is amended to read:
346          57-19-5. Registration -- Filing application.
347          (1) A person may apply for registration of a [project] development by filing with the
348     [director] division:
349          (a) an application in the form prescribed by the director;
350          (b) the written disclosure [required to be furnished to prospective purchasers by]
351     described in Section 57-19-11; and
352          (c) financial statements and other information that the director may by rule made in
353     accordance with Title 63G, Chapter 3, Utah Administrative Rulemaking Act, require as being
354     reasonably necessary to determine whether the requirements of this chapter have been met and
355     whether any of the events specified in Subsection 57-19-13(1)(g) have occurred.
356          (2) [Interests] An interest in a [project which are] development that is encumbered by
357     [liens, mortgages, or other encumbrances] a lien, mortgage, or other encumbrance may not be
358     accepted for registration or offered [for disposition] to the public unless:
359          (a) adequate release or nondisturbance clauses are contained in the encumbering
360     instruments to reasonably assure that the purchaser's interest in the [project] development will
361     not be defeated; or
362          (b) the division [has accepted] accepts other equivalent assurances [which] that, in the
363     division's opinion [of the division], meet the purposes of this Subsection (2).
364          (3) (a) [Each application] A person who applies for a development registration [of a
365     project shall be accompanied by: (i)] shall include with the application a filing fee of $500 for
366     up to 100 interests, plus an additional $3 per interest for each interest over 100, up to a
367     maximum of $2,500 for each application[; and].
368          [(ii) subject to Subsection (3)(b), a deposit of $300 to cover all on-site inspection costs
369     and expenses incurred by the division.]
370          [(b) (i) If the $300 deposit is insufficient to meet the estimated costs and expenses of
371     the on-site inspection, the applicant shall make an additional deposit sufficient to cover the
372     estimated costs and expenses before the division will inspect the subdivided lands.]
373          [(ii) The deposit shall be refunded to the extent it is not used, together with an itemized
374     statement from the division of all amounts it has used.]
375          (b) If the division determines that an on-site inspection of the development is
376     necessary, the development shall pay the division the actual amount of the costs and expenses
377     incurred by the division in performing the on-site inspection.
378          [(4) If a person registers additional interests to be offered for disposition, the person
379     may consolidate the subsequent registration with any earlier registration offering interests for
380     disposition in the same project]
381          (4) A person may add an additional site or interest to an approved development
382     registration by:
383          (a) filing an application for consolidation accompanied by an additional fee of $200
384     plus $3 for each additional interest, up to a maximum of $1,250 for each application[, if at the
385     time the person makes the application all of]; and
386          (b) providing the information required [by] under Subsection (1) [has been brought
387     current and covers the additional interests] for each additional site or interest.
388          Section 6. Section 57-19-6 is amended to read:
389          57-19-6. Effective date of application.
390          (1) An application for registration filed pursuant to Section 57-19-5 is effective upon
391     the expiration of 30 business days following its filing with the director, unless:
392          (a) an order denying the application pursuant to Section 57-19-13 is in effect;
393          (b) a prior effective date has been ordered by the director; or
394          (c) the director has, [prior to] before that date, notified the applicant of a defect in the
395     registration application.
396          (2) An applicant [may] shall consent to the delay of effectiveness until the director by
397     order declares the registration to be effective.
398          (3) (a) Notwithstanding Section 57-19-4, the division may grant a developer a
399     temporary permit [allowing the developer to begin a sales and marketing program while the
400     registration is in process.] that allows a developer to advertise, offer, or sell an interest:
401          (i) before the developer's application for registration is approved; and
402          (ii) for a period of 30 days or less.
403          (b) To obtain a temporary permit, the developer shall:
404          (i) submit an application to the division for a temporary permit in the form required by
405     the division;
406          (ii) submit a substantially complete application for registration to the division,
407     including all appropriate fees and exhibits required under Section 57-19-5, plus a temporary
408     permit fee of $100;
409          (iii) provide evidence acceptable to the division that all funds received by the
410     developer or marketing agent will be placed into an independent escrow with instructions that
411     funds will not be released until a final registration has been granted;
412          (iv) give to each purchaser and potential purchaser a copy of the proposed property
413     report that the developer has submitted to the division with the initial application; and
414          (v) give to each purchaser the opportunity to cancel the purchase in accordance with
415     Section 57-19-12.
416          (c) [A] Upon the issuance of an approved registration, a purchaser shall have an
417     additional opportunity to cancel [upon the issuance of an approved] the
417a     Ĥ→ [registration] purchase ←Ĥ if the
418     division determines that there is a substantial difference in the disclosures contained in the final
419     property report and those given to the purchaser in the proposed property report.
420          (4) (a) Notwithstanding Section 57-19-4, a developer or a person acting on behalf of a
421     developer may market and accept a reservation and deposit from a prospective purchaser before
422     submitting to the division [a] an application for registration or a temporary permit [application
423     for a project] if:
424          (i) the deposit is placed in a non-interest bearing escrow account with a licensed real
425     estate broker, a title company, or another escrow that the division approves in advance; and
426          (ii) the deposit is guaranteed to be fully refundable at any time at the request of the
427     prospective purchaser.
428          (b) A deposit that a prospective purchaser tenders under Subsection (4)(a) may not be
429     released to the developer until after:
430          (i) the division approves the [project] development's registration; and
431          (ii) the prospective purchaser executes a written purchase contract creating a binding
432     obligation to purchase.
433          Section 7. Section 57-19-7 is amended to read:
434          57-19-7. Prior permits.
435          Any permit to market a [project] development issued by the division [prior to] before
436     April 27, 1987, is considered to be an effective registration, but is subject to the renewal
437     provisions of this chapter upon the anniversary date of the issuance of the original permit.
438          Section 8. Section 57-19-8 is amended to read:
439          57-19-8. Filing proposed documents.
440          (1) Every developer shall file with the director at least five business days [prior to]
441     before using any of the following in this state:
442          (a) the proposed form of [its] the developer's sales contracts; and
443          (b) [copies] a copy or the text of any supplements to the written disclosure required [to
444     be furnished to prospective purchasers pursuant to] under Section 57-19-11.
445          (2) If the text, rather than [copies] a copy, of the materials [specified] described in
446     Subsection (1) [are] is filed, [copies] the developer shall file the copy, including an electronic
447     version, of [these] the materials [shall be filed] with the director within five business days
448     [following the date] after the day on which the materials are first used.
449          (3) [The] A developer shall notify the division within five [working] business days if
450     [he] the developer is convicted in any court of a crime involving fraud, deception, false
451     pretenses, misrepresentation, false advertising, or dishonest dealing in real estate transactions,
452     or has been subject to any injunction or administrative order restraining a false or misleading
453     promotional plan involving land dispositions.
454          (4) The developer must notify the division within five [working] business days if the
455     developer files a petition in bankruptcy or if any other event occurs [which] that may have a
456     material adverse effect on the [subdivision] development.
457          (5) (a) If any suit by or against a developer [of a camp resort or timeshare
458     development] results in a court finding that the developer engaged in fraud, deception, false
459     pretenses, misrepresentation, false advertising, or dishonest dealing in a real estate transaction,
460     the developer shall promptly [furnish] give the division a copy of the final order, settlement
461     agreement, consent agreement, or other document evidencing resolution of the case at the trial
462     level, whether or not an appeal is anticipated.
463          (b) A developer's failure to comply with Subsection (5)(a) may, in the discretion of the
464     division, constitute grounds for the division withholding any approval [required by] under this
465     chapter.
466          Section 9. Section 57-19-9 is amended to read:
467          57-19-9. Duration of registration -- Amendment and renewal -- Supplemental
468     disclosure -- Notice of amendment.
469          (1) Registration of a [project] development is effective for a period of one year and
470     may, upon application, be renewed for successive periods of one year each.
471          (2) (a) A registration may be amended at any time, for any reason, by filing an
472     amended application for registration[, which].
473          (b) The amended registration shall become effective in [the manner provided in]
474     accordance with Section 57-19-6.
475          [(3) The written disclosure required to be furnished to prospective purchasers pursuant
476     to Section 57-19-11]
477          (3) (a) The developer shall [be supplemented] supplement the property report as often
478     as is necessary to keep the required information reasonably current. [These]
479          (b) The supplements described in Subsection (3)(a) shall be filed with the director [as
480     provided] in accordance with Section 57-19-8.
481          (4) [Every] (a) A developer shall provide timely notice [sent] to the director of any
482     event [which has occurred which] that occurs that may have a material adverse effect on the
483     conduct of the operation of the [project] development.
484          (b) In addition to [this] the notification described in Subsection (4)(a), the developer
485     shall, within 30 days [of the occurrence of that] after the day on which an event described in
486     Subsection (4)(a) occurs, file an amendment to the registration disclosing the information
487     previously provided.
488          (5) Each application for renewal of a registration and each supplementary filing [as
489     provided] described in this section shall be accompanied by a fee of $200.
490          Section 10. Section 57-19-10 is amended to read:
491          57-19-10. Effect of application or registration -- Misleading statements to
492     prospective purchasers a misdemeanor.
493          (1) Neither the fact that an application for registration or the written disclosures
494     required by this chapter have been filed, nor the fact that a [project] development has been
495     effectively registered or exempted, constitutes a finding by the director that the offering or any
496     document filed under this chapter is true, complete, and not misleading, nor does either of these
497     facts mean that the director has determined in any way the merits or qualifications of, or
498     recommended or given approval to, any person, developer, or transaction involving an interest
499     in a [project] development.
500          (2) It is a class A misdemeanor to make or cause to be made to any purchaser or
501     prospective purchaser any offering or document filed under this chapter which is untrue,
502     incomplete, or misleading.
503          Section 11. Section 57-19-11 is amended to read:
504          57-19-11. Disclosure required.
505          (1) Except [in a transaction exempt under] as provided in Section 57-19-26, any person
506     who sells or offers to sell an interest in a [project] development located in this state, or who
507     sells or offers to sell in this state an interest in a [project] development located outside of this
508     state, shall provide to [the] a prospective purchaser, before the prospective purchaser signs an
509     agreement to purchase an interest in [a project] the development or gives any item of value for
510     the purchase of an interest in [a project] the development, a written statement [which] that
511     provides a full and fair disclosure of information regarding the [project] development and the
512     purchaser's rights and obligations associated with the purchase of an interest in [a project] the
513     development.
514          (2) The written disclosure described in Subsection (1):
515          (a) may include electronic files; and
516          (b) shall:
517          (i) be on the property report form required by the division; and [shall]
518          (ii) include:
519          [(1)] (A) the name and address of the developer;
520          [(2)] (B) a statement regarding whether [or not] the developer has ever been[: (a)]
521     convicted of a felony[,] or any misdemeanor involving theft, fraud, or dishonesty[;], or [(b)]
522     enjoined from, assessed any civil penalty for, or found to have engaged in the violation of any
523     law designed to protect consumers;
524          [(3)] (C) a brief description of the developer's experience in timeshare, camp resort, or
525     any other real estate development;
526          [(4)] (D) a brief description of the interest [which] that is being offered in the [project]
527     development;
528          [(5)] (E) a description of any provisions to protect the purchaser's interest from loss
529     due to foreclosure on any underlying financial obligation of the [project] development;
530          [(6)] (F) a statement [of the maximum number of interests in the project to be
531     marketed, and a commitment that this maximum number will not be exceeded unless disclosed
532     by filing an amendment to the registration as provided in Section 57-19-9 prior to the
533     amendment becoming effective] that the development will not issue more interests during a 12
534     month period than the development can accommodate during the 12 month period;
535          [(7)] (G) any event [which] that has occurred [as of] since the date of the offer [which]
536     that may have a material adverse effect on the operation of the [project] development; and
537          [(8)] (H) any other information the director considers necessary for the protection of
538     purchasers.
539          Section 12. Section 57-19-12 is amended to read:
540          57-19-12. Purchaser's right to cancel.
541          (1) (a) An agreement to purchase an interest in a [project] development may be
542     cancelled, at the option of the purchaser, if:
543          (i) the purchaser [provides] delivers a written notice of cancellation to the developer[,]
544     at the developer's business address by:
545          (A) hand [delivery]; or
546          (B) certified mail, [written notice of the cancellation] return receipt requested, or a
547     delivery service that provides proof of delivery; and
548          (ii) the notice is delivered or postmarked not later than midnight of the fifth business
549     day [following] after the day on which the agreement is signed.
550          (b) In computing the number of business days for purposes of this section, the day on
551     which the agreement was signed is not included.
552          (c) Within 30 days after [receipt of] the day on which the developer receives a timely
553     notice of cancellation, the developer shall refund any money or other consideration paid by the
554     purchaser.
555          (2) Every agreement to purchase an interest in a [project which] development that is
556     subject to this chapter shall include the following statement in at least 10-point bold upper-case
557     type, immediately preceding the space for the purchaser's signature:
558          "PURCHASER'S RIGHT TO CANCEL: YOU MAY CANCEL THIS AGREEMENT
559     WITHOUT ANY CANCELLATION FEE OR OTHER PENALTY BY HAND DELIVERING
560     OR SENDING BY CERTIFIED MAIL, RETURN RECEIPT REQUESTED, OR A
561     DELIVERY SERVICE THAT PROVIDES PROOF OF DELIVERY, WRITTEN NOTICE OF
562     CANCELLATION TO: (NAME AND ADDRESS OF DEVELOPER). THE NOTICE MUST
563     BE DELIVERED OR POSTMARKED BY MIDNIGHT OF THE FIFTH BUSINESS DAY
564     FOLLOWING THE DAY ON WHICH THE AGREEMENT IS SIGNED. IN COMPUTING
565     THE NUMBER OF BUSINESS DAYS, THE DAY ON WHICH THE CONTRACT IS
566     SIGNED IS NOT INCLUDED."
567          Section 13. Section 57-19-13 is amended to read:
568          57-19-13. Suspension, revocation, or denial of registration -- Fine.
569          (1) Subject to Section 57-19-17, [an application for registration of a project may be
570     denied, an existing registration may be suspended or revoked, or a fine of not more than $500
571     may be imposed by the director, if the director finds that:] if the director finds that an applicant
572     or developer has engaged in an act described in Subsection (2), the director may:
573          (a) deny an application for registration of a development;
574          (b) suspend or revoke an existing registration; or
575          (c) except as provided in Subsection (3), impose a fine of not more than $500.
576          (2) Subsection (1) applies if the director finds that:
577          (a) the developer's advertising or sales techniques or trade practices have been or are
578     deceptive, false, or misleading;
579          (b) the developer [has failed] fails to file [copies] a copy of [its] the developer's sales
580     contract forms as required [by] under Section 57-19-8;
581          (c) the developer [has failed] fails to comply with any provision of this chapter or [the
582     rules] any rule adopted under this chapter that materially [affect] affects or would affect the
583     rights of [purchasers or prospective purchasers] a purchaser or prospective purchaser of an
584     interest in a [project] development, or that materially [affect] affects the administration of this
585     chapter;
586          (d) the [developer's offering] developer makes a fraudulent offer of an interest in a
587     [project has worked or would work a fraud upon purchasers or prospective purchasers of such
588     an] development to a purchaser or prospective purchaser of the interest;
589          (e) the developer's application or any amendment to an application is incomplete in any
590     material respect;
591          (f) the developer's application or any amendment to an application contains material
592     misrepresentations or omissions of material fact [which] that are necessary to make the
593     statements contained in the application or amendment not misleading;
594          (g) the developer or any officer or director of the developer has been:
595          (i) convicted of a felony, or any misdemeanor involving theft, fraud, or dishonesty;
596          (ii) enjoined from, assessed a civil penalty for, or found to have engaged in [the] a
597     violation of any law designed to protect consumers; or
598          (iii) engaged in dishonest practices in any industry involving sales to consumers;
599          (h) the developer has represented or is representing to purchasers in connection with
600     the offer or sale of an interest in a [project] development that any accommodations, related
601     facilities, or amenities are planned, without reasonable grounds to believe that they will be
602     completed within a reasonable time;
603          (i) the developer [has disposed of, concealed, or diverted] disposes, conceals, or diverts
604     any funds or assets so as to defeat the rights of purchasers;
605          (j) the developer [has failed] fails to provide to [purchasers copies] a purchaser a copy
606     of the written disclosure required by Section 57-19-11; or
607          (k) the developer, the developer's successor in interest, or a managing association
608     discloses a purchaser's name, address, or email address to an unaffiliated entity without first
609     obtaining written consent from the purchaser, unless the disclosure is in response to a subpoena
610     or an order of a court or administrative tribunal.
611          [(2)] (3) The authority to impose [fines as provided in] a fine under this section does
612     not apply to Subsection [(1)] (2)(e).
613          [(3)] (4) Notwithstanding Subsection [(1)] (2)(k), a developer shall, upon request by
614     the division, provide the division a list of [all purchasers' names, addresses, and email
615     addresses] each purchaser's name, address, and email address.
616          Section 14. Section 57-19-14 is amended to read:
617          57-19-14. Registration of salesperson.
618          [(1) Unless the transaction is exempt under] Except as provided in Section 57-19-26, it
619     is unlawful for [any] a person to act as a salesperson [marketing] and market a [project]
620     development in this state without first registering under this chapter as a salesperson.
621          [(2) The fee for registration as a salesperson is waived by the division for persons
622     licensed by the division under Title 61, Chapter 2f, Real Estate Licensing and Practices Act.]
623          Section 15. Section 57-19-15 is amended to read:
624          57-19-15. Application for registration of salesperson.
625          (1) A person may apply for registration as a salesperson under this chapter by filing
626     with the director an application in the form prescribed by the director, including:
627          (a) a statement [of] regarding whether [or not] the applicant has ever been:
628          (i) convicted of:
629          (A) a felony; or
630          (B) a misdemeanor involving theft, fraud, or dishonesty; or
631          (ii) enjoined from, assessed a civil penalty for, or found to have engaged in the
632     violation of a law designed to protect a consumer;
633          (b) (i) a statement describing the applicant's employment history for the five years
634     immediately preceding the day on which the application is filed; and
635          (ii) a statement [of] regarding whether [or not] a termination of employment during the
636     period described in Subsection (1)(b)(i) is [as] a result of theft, fraud, or an act of dishonesty;
637     [and]
638          (c) evidence of the applicant's honesty, integrity, truthfulness, and reputation; and
639          [(c)] (d) any other information that the director, by rule made in accordance with Title
640     63G, Chapter 3, Utah Administrative Rulemaking Act, considers necessary to protect [the
641     interests of a purchaser] a purchaser's interests.
642          (2) (a) Notwithstanding the requirements for a regulatory fee under Section 63J-1-504,
643     at the time an applicant files an application, the applicant shall pay to the division a fee of
644     $100.
645          (b) The fee for registration described in Subsection (2)(a) is waived for a person
646     licensed by the division under Title 61, Chapter 2f, Real Estate Licensing and Practices Act.
647          (3) (a) Registration as a salesperson is effective for [a period for] two years after the
648     day on which the registration is approved by the director, unless the director specifies
649     otherwise.
650          (b) To renew a registration, a salesperson shall:
651          (i) file a form prescribed by the director for that purpose; and
652          (ii) pay a renewal fee of $100.
653          Section 16. Section 57-19-16 is amended to read:
654          57-19-16. Denial, revocation, or suspension of registration of salesperson -- Fine.
655          (1) Subject to Section 57-19-17, if the [director] division finds that an applicant or
656     salesperson has engaged in an act described in Subsection (2), the [director] division may:
657          (a) deny an application for registration as a salesperson;
658          (b) suspend or revoke an existing registration; or
659          (c) impose a civil penalty not to exceed $500.
660          (2) Subsection (1) applies if the [director] division finds that the applicant or
661     salesperson:
662          (a) files, or causes to be filed, with the [director] division a document that contains [an]
663     untrue or misleading information;
664          (b) makes an untrue or misleading statement of material fact;
665          (c) fails to state a material fact that is necessary in order to make the statements made
666     not misleading in light of the circumstances under which the statements are made;
667          (d) employs a device, scheme, or artifice to defraud, or engages in an act, practice, or
668     course of business that operates or would operate as a fraud or deceit upon a person;
669          (e) subsequent to the effective date of registration as a salesperson, is:
670          (i) convicted of:
671          (A) a felony; or
672          (B) a misdemeanor involving theft, fraud, or dishonesty; or
673          (ii) enjoined from, assessed a civil penalty for, or found to have engaged in a violation
674     of any law designed to protect consumers;
675          (f) violates this chapter;
676          (g) engages in an activity that constitutes dishonest dealing; or
677          (h) engages in unprofessional conduct as defined by statute or rule made by the
678     director.
679          Section 17. Section 57-19-21 is amended to read:
680          57-19-21. Voidable agreements.
681          (1) Any agreement to purchase an interest in a [project entered into in violation of]
682     development that violates Section 57-19-4 or 57-19-14 may, at the option of the purchaser, be
683     voided and the purchaser's entire consideration recovered together with interest at the legal rate,
684     costs, and reasonable [attorney's] attorney fees. [However, no]
685          (2) No suit under this section may be brought more than two years after:
686          [(1)] (a) the [date] day on which the agreement is signed; or
687          [(2)] (b) the [date] day on which the purchaser knew or reasonably should have known
688     of the violation.
689          Section 18. Section 57-19-26 is amended to read:
690          57-19-26. Exemptions.
691          (1) Unless entered into for the purpose of evading the provisions of this chapter, the
692     following transactions are exempt from registration:
693          (a) an isolated [transactions] transaction by an owner of an interest in a [project]
694     development or by a person holding [such an] the owner's executed power of attorney;
695          (b) an offer or sale by a governmental entity; and
696          (c) [the] a resale of an interest that is:
697          (i) acquired:
698          (A) by the developer who initially registered the [project] development or by the
699     managing association of the [project] development; and
700          (B) through a foreclosure, quitclaim deed, deed in lieu of foreclosure, or equivalent
701     [transfer] means;
702          (ii) not offered as part of a [project] development that includes one or more interests
703     that are unregistered or have been registered by a different developer or as part of a different
704     [project] development; and
705          (iii) closed after the developer or managing association provides a purchaser the
706     disclosures required by Section 57-19-11 and the right to rescind required by Section 57-19-12.
707          (2) After a resale by a developer or managing association that is claimed to be exempt
708     under Subsection (1)(c), the division retains jurisdiction to:
709          (a) investigate a complaint regarding the resale; and
710          (b) if applicable, take an administrative action against the developer or managing
711     association on the basis of unprofessional conduct, [as provided] described in Section
712     57-19-13.
713          (3) (a) The director may, by rule made in accordance with Title 63G, Chapter 3, Utah
714     Administrative Rulemaking Act, or by order, exempt any person from any [or all requirements]
715     requirement of this chapter if the director finds that the offering of an interest in a [project]
716     development is essentially noncommercial.
717          (b) The offering of [one or more interests] an interest in a [project] development that
718     has [a maximum of] 10 or fewer interests is considered essentially noncommercial.
719          (c) A person who does not meet the requirements described in Subsection (3)(b), but
720     believes that a proposed offering of more than 10 interests in a development is essentially
721     noncommercial, may request an order of exemption from the director.
722          (d) To request an order of exemption under this section, a person shall submit to the
723     director a request for agency action in accordance with Section 63G-4-201.




Legislative Review Note
     as of 2-25-15 10:33 AM

Office of Legislative Research and General Counsel