FINAL BILL REPORT

SHB 791

                                  C 159 L 88

BYHouse Committee on Judiciary (originally sponsored by Representatives Crane, Ballard, Wineberry and P. King) 

Regulating camping clubs.

House Committe on Judiciary

Senate Committee on Law & Justice

SYNOPSIS AS ENACTED

BACKGROUND:

In 1982 the Legislature enacted a measure regulating camping clubs.  A camping club is an enterprise that has the primary purpose of providing camping or outdoor recreation.  A camping club contract that gives the purchaser an interest in camping club facilities is governed by the act.  The Department of Licensing is responsible for enforcing the camping club act.

A camping club contract may not be sold in this state unless it is registered with the department.  To apply for registration the applicant must fill out an application and include written disclosures that will be made to purchasers of the camping club contract.  The disclosures must include the identity and experience of the operator and the identity of any affiliate of the camping club; the interest of the purchaser in the camping club; the location and description of then existing and planned facilities and other facilities the purchaser will be entitled to use; the payments required under the contract; limitations on transfers by the purchaser; and, in addition to other disclosures, a copy of the contract form.  A registration is effective beginning 15 days after the date it is filed with the department unless the department issues an order suspending the registration.

The department may order funds from contract sales to be impounded if it determines there is likely to be a deficiency in the resources of the operator that will prevent it from providing the anticipated services.  The department may also order the operator to set aside in a separate account a portion of the contract sales funds to pay for property interests that are to be acquired by the purchaser.

At least five days prior to the use of any sales literature, contract forms, or disclosure supplements the operator must provide the material to the department for its review.

The department may deny, suspend or revoke an application or registration or impose a fine of up to $1,000 for violations of the act.  Violations include false or misleading advertising or sales practices or fraudulent acts, failure to file required documents, and failure to comply with rules adopted by the department.  In addition, the department may take action if the operator is not financially responsible or has insufficient capital, if the operator or any officer has been convicted of an offense involving theft, fraud or dishonesty; or if the operator has withdrawn a substantial portion of camping club property from use by the purchasers without providing alternative facilities.  An operator has a right to a hearing prior to entry of an order by the department.

A purchaser of a camping club contract may cancel the contract up to three days after entering into the agreement. The purchaser may also void a contract for up to two years after signing it if it was entered into without proper disclosures.

The department may assess a fee for registration of camping club contracts.  A registration is good for one year.  The registration may be amended.

A person selling camping club contracts must register with the department as a salesperson.  An individual with past criminal offenses is not eligible to be a camping club salesperson.  If the department determines it is necessary for the protection of purchasers, and finds that a salesperson has violated the provisions of the act, the salesperson's license may be suspended.  The salesperson has the right to a hearing on the denial of a license or its suspension or revocation.

The department has authority to conduct investigations to determine whether registrations should be granted, denied or suspended.  The department may issue subpoenas and may seek contempt orders to enforce its investigatory powers.  The department may also issue cease and desist orders and temporary orders to halt violations of the act.  A cease and desist order may be issued only after an opportunity for a hearing is provided.

It is a gross misdemeanor for a person to make false statements on an application, to engage in fraudulent activities relating to camping clubs, or to make a claim that registration with the department is a determination by the department on the merits of the club.  The consumer protection act is made applicable to the camping club act.

SUMMARY:

The camping club act is changed to the camping resort act.

The application to sell camping resort contracts must include information assuring the Department of Licensing that all required governmental permits have been complied with and a statement disclosing the potential effect on the purchaser if there is a foreclosure on any of the operator's properties.  The application must also include an affidavit of the operator's right to withdraw, replace or change the camping resort properties.  A consent to service of process on the department must also be filed.  Exempt from registration are contracts for resale.

The department has 20 days after a completed application and all required fees have been filed to conduct its examination. The department must notify the applicant within seven days that it has received the completed application and required fees.  The application must be signed by the operator or a trustee granted such power by the operator.

After the effective date of this act any new campground or campground on which underlying financial obligations are refinanced must have in place protections for purchasers of contracts.  The protections must include a non-disturbance agreement.  For campgrounds in existence prior to the effective date of the act the operator must provide financial or other assurances to the director that the campground will remain in operation.  If these protections are not provided the department may require the titles, funds or receivables to be put in escrow, trust or impounds to protect the quiet enjoyment of the resort properties for the purchasers.  No offering may be made until all required devices are put in place by the operator of the resort.

The operator of a camping resort must provide a membership list, when requested, to a purchaser of a camping resort contract.  The operator may require the purchaser to sign an affidavit that the list will not be used for commercial purposes.

Prior to offering any promotional prizes or gifts in conjunction with an offering of camping resort contracts, the person making the offering must provide security with the department that the prizes or gifts will be fulfilled.  The person entitled to a prize may sue for treble damages if the prize or gift is not made available.

In addition to existing prohibited activities that may lead to a civil penalty or revocation or denial of a registration, the following activities are prohibited:  failure to provide required security arrangements; employment of unregistered salespersons; breaching any escrow, impound or reserve account; making untrue or misleading statements; failing to provide written disclosures; failing to provide a bond when required; or selling or proposing to sell contracts in excess of the ratio of contracts to sites stated in the registration.

Instead of proceeding with a complaint alleging a violation of the act the department may enter into an agreement with a resort operator or a salesperson stating the alleged practices will cease.  The operator or salesperson shall not be required to admit any violation of law as part of the agreement.

The department may establish fees for application and renewal of registrations, as well as for other activities requiring oversight by the department.

The act is declared an emergency and goes into effect immediately.

VOTES ON FINAL PASSAGE:

      House 97   0

      Senate    49     0 (Senate amended)

      House 98   0 (House concurred)

EFFECTIVE:March 21, 1988