1442-SAMSFSIHS2808.1SHB 1442S COMM AMDBy Committee on Financial Services, Insurance & HousingADOPTED 04/17/2003 Strike everything after the enacting clause and insert thefollowing:NEW SECTION.Sec. A new section is added to chapter 64.36 RCWto read as follows: (1) An effective registration pursuant to this chapter is requiredfor any party to offer to sell a timeshare interest. A promoter whooffers to sell or sells revocable timeshare interests in incompleteprojects or facilities is limited by and must comply with all of therequirements of RCW 64.36.025. If a promoter seeks to enter intoirrevocable purchase agreements with purchasers for timeshare interestsin incomplete projects or facilities, the promoter must meet therequirements in this section in addition to RCW 64.36.020 and thefollowing limitations and conditions apply: (a) The promoter is limited to offering or selling only fee simpledeeded timeshare interests; (b) Construction on the project must have begun by the time theirrevocable purchase agreement is signed and the purchaser must havethe right to occupy the unit and use all contracted for amenities nolater than within two years of the date that the irrevocable purchaseagreement is signed; (c) The promoter must establish an independent third-party escrowaccount for the purpose of protecting the funds or other property paid,pledged, or deposited by purchasers; (d) The promoter's solicitations, advertisements, and promotionalmaterials must clearly and conspicuously disclose that "THE PROJECT ISNOT YET COMPLETED; IT IS STILL UNDER CONSTRUCTION"; and (e) The promoter's solicitations, advertisements, and promotionalmaterials and the timeshare interest purchase agreement must clearlyand conspicuously provide for and disclose the last possible estimated 1 date for completion of construction of any building the promoter iscontractually obligated to the purchaser to complete. (2) The timeshare interest purchase agreement must contain thefollowing language in fourteenpoint bold face type: "If the buildingin which the timeshare interest is located and all contracted foramenities are not completed by [estimated date of completion], thepurchaser has the right to void the purchase agreement and is entitledto a full, unqualified refund of all moneys paid." (3) One hundred percent of all funds or other property that isreceived from or on behalf of purchasers of timeshare interests priorto the occurrence of events required in this section must be depositedpursuant to a third-party escrow agreement approved by the director.For purposes of this section, "purchasers" includes all personssolicited, offered, or who purchased a timeshare interest by a promoterwithin the state of Washington. An escrow agent shall maintain theaccount only in such a manner as to be under the direct supervision andcontrol of the escrow agent. The escrow agent has a fiduciary duty toeach purchaser to maintain the escrow accounts in accordance with goodaccounting practices and to release the purchaser's funds or otherproperty from escrow only in accordance with this chapter. If theescrow agent receives conflicting demands for funds or property held inescrow, the escrow agent shall immediately notify the department oflicensing of the dispute and the department shall determine if and howthe funds should be distributed. If the purchaser, promoter, or escrowagent disagrees with the department's determination, the parties havethe right to request an administrative hearing under chapter 34.05 RCW.Funds may be released from the escrow account to the purchaser if thepurchaser cancels within the cancellation period, or to the promoteronly 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 building is ready to occupy. (4) In lieu of depositing purchaser funds into an escrow account,the promoter may post with the department a bond in an amount equal toor greater than the amount that would otherwise be required to beplaced into the escrow account. 2 (5) Any purchaser has the right to void the timeshare purchaseagreement and request a full, unqualified refund if construction of thebuilding in which the timeshare interest is located or all contractedfor amenities are not completed within two years from the date that theirrevocable purchase agreement is signed or by the last estimated dateof construction contained in the irrevocable purchase agreement,whichever is earlier. (6) If the completed timeshare building or contracted for amenitiesare materially and adversely different from the building or amenitiesthat were promised to purchasers at the time that the purchaseagreements were signed, the director may declare any or all of thepurchaser contracts void. Before declaring the contracts void, thedirector shall give the promoter the opportunity for a hearing inaccordance with chapters 34.05 and 18.235 RCW. (7) If the promoter intends to or does pledge or borrow againstfunds or properties, that are held in escrow or protected by a bond, tohelp finance in whole or in part the construction of the timeshareproject or to help pay for operating costs, this must be fully,plainly, and conspicuously disclosed in all written advertising, in allwritten solicitations for the sale of the timeshare interests, in theregistration with the director, and in the purchase agreement orcontract. (8) A promoter who obtains an effective registration for arevocable timeshare interest reservation must meet the requirements ofthis section in order to complete an irrevocable purchase agreement.SHB 1442S COMM AMDBy Committee on Financial Services, Insurance & HousingADOPTED 04/17/2003 On page 1, line 1 of the title, after timeshares; strike theremainder of the title and insert and adding a new section to chapter64.36 RCW.--- END --- 3