BILL REQ. #:  H-0598.1 

Read first time 01/27/2003.   Referred to Committee on Commerce & Labor.

     AN ACT Relating to timeshares; amending RCW 64.36.020; and adding new sections to chapter 64.36 RCW.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF WASHINGTON:

NEW SECTION.  Sec. 1   A new section is added to chapter 64.36 RCW to read as follows:
     (1) Before the registration of a timeshare offering, a deposit may be accepted from a prospective buyer for a timeshare interest reservation if all of the following requirements are met:
     (a) Before accepting any nonbinding timeshare interest reservation, the prospective seller shall mail or deliver, or provide in written, CD-ROM, or other electronic format as approved by the department of licensing, written notice of the seller's intention to accept nonbinding timeshare interest reservations to the department. The notice must include:
     (i) The name, address, and telephone number of the prospective seller;
     (ii) The name, address, and telephone number of any real estate broker retained by the prospective seller to promote the nonbinding timeshare interest reservation program;
     (iii) The name and location of the timeshare property for which nonbinding timeshare interest reservations are to be offered; and
     (iv) The form to be used for accepting nonbinding timeshare interest reservations, subject to approval by the department.
     (b) The reservation deposit for a single timeshare interest may not exceed twenty percent of the purchase price.
     (c) Within one business day after a reservation is accepted by the prospective seller, the reservation deposit must be delivered to an escrow or trust account in a federally insured depository. The account may be interest bearing at the direction of either the prospective seller or prospective buyer. Payment of any account fees and payment of interest moneys must be as agreed to between the prospective buyer and the prospective seller. All reservation deposits must remain in the account until cancellation or termination of the nonbinding timeshare interest reservation or execution of a purchase agreement.
     (d) Within thirty calendar days of receipt by the prospective seller of acceptance of registration by the department or as otherwise deemed effective pursuant to RCW 64.36.040, the prospective seller shall provide the prospective buyer with a copy of the disclosure documents and a copy of the proposed purchase agreement for the sale of the timeshare interest.
     (e) A prospective buyer may cancel a nonbinding timeshare interest reservation at any time before the execution of a purchase agreement by delivering written notice of termination to the prospective seller as provided in (i) of this subsection.
     (f) Within five business days after a nonbinding timeshare interest reservation has been terminated for any reason, the prospective seller shall refund to the prospective buyer all reservation deposits made by the prospective buyer including any interest moneys earned less any account fees agreed upon if applicable. The escrow account or trust account agent shall refund to the prospective buyer all reservation deposits made by the prospective buyer including any interest moneys earned less any account fees agreed upon if the prospective seller is not available. After this refund, neither the prospective buyer nor the prospective seller has any obligation to the other arising out of the nonbinding timeshare interest reservation.
     (g) A prospective buyer may not transfer rights under a reservation without the prior written consent of the prospective seller, and any purported transfer without the consent of the prospective seller is voidable at the sole discretion of the prospective seller.
     (h) If the department denies an application for registration on the timeshare offering on which nonbinding timeshare interest reservations were taken, within five business days of notification by the department, the prospective seller shall notify in writing each prospective buyer who entered into a nonbinding timeshare interest reservation agreement. The prospective seller shall return any reservation deposits previously taken.
     (i) All notices required by this section to be given to the department, the prospective buyer, or the prospective seller must be in writing and either hand delivered or sent by certified mail, return receipt requested with postage fully prepaid. Notices sent by mail are deemed delivered on the earlier of actual receipt, as evidenced by the delivery receipt, or seven calendar days after being deposited in the United States mail.
     (j) Each nonbinding timeshare interest reservation form must contain the following statement in conspicuous type:
     The Washington Department of Licensing has not inspected or approved the registration of this timeshare offering.
     (2) The department may deny authorization to accept nonbinding timeshare interest reservations under this section to any person who has violated or is in violation of any provision of this chapter.

NEW SECTION.  Sec. 2   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.
     (2) In order to obtain registration approval authorizing the sale of incomplete projects, promoters offering interests in incomplete timeshare accommodations must provide evidence that the accommodations will be completed or that purchaser's funds will be fully protected until the accommodations are complete.
     (a) Assurance for completion must be in the form of a completion bond, irrevocable letter of credit, or other assurance acceptable to the department of licensing including, without limitation, any financial assurance posted in another state or jurisdiction, which assurance covers the cost to complete the accommodations in which the timeshare interest is located.
     (b) Assurance for protection of purchaser funds are acceptable if purchaser funds are held in an escrow or trust account acceptable to the department until the timeshare accommodations are complete or upon the posting of an escrow or trust bond sufficient to cover all purchaser funds received until the timeshare accommodations are complete. An escrow or trust bond acceptable to the department may be posted at any time by a promoter, and any funds held in an escrow or trust account may be released upon the posting of such bond, provided adequate disclosures have been provided to a purchaser. For purposes of this section, the department has the discretion to approve escrow or trust accounts or escrow or trust bonds that are posted in another state or jurisdiction.
     (3) The types of documentation that are required for evidence of completion of construction include a certificate of occupancy, a certificate of substantial completion or an equivalent public safety inspection from an agency in the applicable jurisdiction, or other evidence of completion acceptable to the department or as provided by rule.

Sec. 3   RCW 64.36.020 and 1983 1st ex.s. c 22 s 2 are each amended to read as follows:
     (1) Except as provided in section 1 of this act, a timeshare offering registration must be effective before any advertisement, solicitation of an offer, or any offer or sale of a timeshare may be made in this state.
     (2) An applicant shall apply for registration by filing with the director:
     (a) A copy of the disclosure document prepared in accordance with RCW 64.36.140 and signed by the applicant;
     (b) An application for registration prepared in accordance with RCW 64.36.030;
     (c) An irrevocable consent to service of process signed by the applicant;
     (d) The prescribed registration fee; and
     (e) Any other information the director may by rule require in the protection of the public interest.
     (3) The registration requirements do not apply to:
     (a) An offer, sale, or transfer of not more than one timeshare in any twelve-month period;
     (b) A gratuitous transfer of a timeshare;
     (c) A sale under court order;
     (d) A sale by a government or governmental agency;
     (e) A sale by forfeiture, foreclosure, or deed in lieu of foreclosure; or
     (f) A sale of a timeshare property or all timeshare units therein to any one purchaser.
     (4) The director may by rule or order exempt any potential registrant from the requirements of this chapter if the director finds registration is unnecessary for the protection of the public interest.