SENATE BILL REPORT
SHB 791
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
Senate Hearing Date(s):February 26, 1988
Majority Report: Do pass as amended.
Signed by Senators Pullen, Chairman; Halsan, Hayner, Madsen, Nelson, Newhouse, Niemi, Talmadge.
Senate Staff:Dick Armstrong (786-7460)
February 29, 1988
AS REPORTED BY COMMITTEE ON LAW & JUSTICE, FEBRUARY 26, 1988
BACKGROUND:
In 1982 the Legislature enacted a measure regulating camping clubs, defined as enterprises that have the primary purpose of providing camping or outdoor recreation. A camping club contract giving the purchaser an interest in facilities is governed by the act which is enforced by the Department of Licensing.
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 fifteen days after the date it is filed unless the department issues an order suspending the registration.
The department may order funds from contract sales impounded if it determines that 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 order the operator to set aside in a separate account a portion of the contract sales funds to pay for property interests which 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 one thousand dollars for violations of the act which include false or misleading advertising or sales practices or fraudulent acts, failure to file required documents, or 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, the operator or any officer has been convicted of an offense involving theft or fraud, or 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 which was entered into without proper disclosures for up to two years after the contract was signed.
The department may assess a fee for registration of camping club contracts. A registration is good for one year. It 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. The department may suspend the salesperson's license if necessary for the protection of purchasers and the salesperson has violated the provisions of the act. 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 also may issue cease and desist orders and temporary orders to halt violations of the act. The 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 procedure for registration of camping resort contracts and the enforcement of the act is modified.
The application must include confirmation of compliance with all required government permits 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 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 be filed. Exempt from registration are contracts up for resale.
The department has twenty days after a completed application, which must include all required fees, has been filed in which 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 protections for purchasers of contracts to include a non-disturbance agreement. For campgrounds in existence prior to the effective date, 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 to a purchaser of a camping resort contract when requested. The membership list may not be used for commercial purposes unless the operator agrees.
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 started 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 that 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.
SUMMARY OF PROPOSED SENATE AMENDMENT:
A purchaser of a contract who obtains a membership list of the camping resort is required to sign an affidavit agreeing not to use the list for any commercial purpose.
Appropriation: none
Revenue: none
Fiscal Note: none requested
Effective Date:The bill contains an emergency clause and takes effect immediately.
Senate Committee - Testified: Representative Crane; Charlie Colton, American Adventure member group; Fred Mendoza, NACO West