5492-S AMS MULL S2563.1

SSB 5492 - S AMD 248

By Senator Mulliken

ADOPTED 03/19/2003

Strike everything after the enacting clause and insert the following:

"NEW SECTION. Sec. 1. A new section is added to chapter 64.36 RCW to read as follows:

(1) An effective registration pursuant to this chapter is required for any party to offer to sell a timeshare interest. A promoter who offers to sell or sells revocable timeshare interests in incomplete projects or facilities is limited by and must comply with all of the requirements of RCW 64.36.025. If a promoter seeks to enter into irrevocable purchase agreements with purchasers for timeshare interests in incomplete projects or facilities, the promoter must meet the requirements in this section in addition to RCW 64.36.020 and the following limitations and conditions apply:

(a) The promoter is limited to offering or selling only fee simple deeded timeshare interests;

(b) Construction on the project must have begun and be at least twenty percent complete and must be completed no later than within two years of the date of the initial offer to sell the timeshare interest;

(c) The promoter must establish an escrow or trust account for the purpose of protecting the funds or other property paid, pledged, or deposited by purchasers;

(d) The promoter's solicitations, advertisements, and promotional materials must clearly and conspicuously disclose that "THE PROJECT IS NOT YET COMPLETED; IT IS STILL UNDER CONSTRUCTION"; and

(e) The promoter's solicitations, advertisements, and promotional materials and the timeshare interest purchase agreement must clearly and conspicuously provide for and disclose the last possible estimated date for completion of construction.

(2) The timeshare interest purchase agreement must contain the following language in fourteen point bold face type: "If the project is not completed by [estimated date of completion], the purchaser has the right to void the purchase agreement and is entitled to a full, unqualified refund of all moneys paid."

(3) One hundred percent of all funds or other property that is received from or on behalf of purchasers of timeshare interests prior to the occurrence of events required in this section must be deposited pursuant to an escrow or trust agreement approved by the director. Funds may be released from the escrow or trust account to the purchaser if the purchaser cancels within the cancellation period, or to the promoter only when all three of the following conditions occur:

(a) The purchaser's cancellation period has expired;

(b) Closing has occurred; and

(c) Construction is complete and the facility is ready to occupy.

(4) In lieu of depositing purchaser funds into an escrow or trust account, the promoter may post with the department a bond equal to the amount of Washington resident purchaser funds or other property. The amount of the bond must be adjusted upwards as the promoter makes additional sales and must at all times equal the amount of funds or other property that have been paid by Washington resident purchasers.

(5) Any purchaser has the right to void the timeshare purchase agreement and request a full, unqualified refund if construction of the timeshare project is not completed within two years from the date of the initial offer to sell the timeshare interest or by the last estimated date of construction contained in the timeshare purchase agreement, whichever is earlier.

(6) If the completed timeshare project is materially and adversely different from the project that was promised to purchasers at the time that the purchase agreements were signed, the director may declare any or all of the purchaser contracts void. Before declaring the contracts void, the director shall give the promoter the opportunity for a hearing in accordance with chapters 34.05 and 18.235 RCW.

(7) If the promoter intends to or does pledge or borrow against funds or properties, which are held in trust or escrow or protected by a bond, to help finance in whole or in part the construction of the timeshare project or to help pay for operating costs, this must be fully, plainly, and conspicuously disclosed in all advertising, in all written or oral solicitations for the sale of the timeshare interests, in the registration with the director, and in the purchase agreement or contract.

(8) A promoter who obtains an effective registration for a revocable timeshare interest reservation must meet the requirements of this section in order to complete an irrevocable purchase agreement."

SSB 5492 - S AMD 248

By Senator Mulliken

ADOPTED 03/19/2003

On page 1, line 1 of the title, after "timeshares;" strike the remainder of the title and insert "and adding a new section to chapter 64.36 RCW."

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