(1) Each person holding an interest in a blanket encumbrance executes and delivers to the Real Estate Commissioner a nondisturbance agreement and records such agreement in the real estate records of the county in which the campground is located. "Nondisturbance agreement" means an instrument by which the holder of a blanket encumbrance agrees that the holder’s rights in the campground shall be subordinate to the rights of any membership camping contract purchaser. Every nondisturbance agreement must contain a covenant by the lienholder that the lienholder, its successors, and anyone who acquires the campground property through the blanket lien shall not use, or cause or permit the property to be used in a manner that prevents a membership camping contract purchaser from using, the campground property in the manner contemplated by the membership camping contract. The lienholder’s agreement not to disturb a membership camping contract purchaser may require as a continuing condition that the purchaser perform all obligations and make all payments due under any membership camping contract for the purchaser’s campground interest and, if the membership camping contract is held as a leasehold, under the lease for the purchaser’s campground interest. The nondisturbance agreement shall also contain provisions setting forth each of the following:

(a) The nondisturbance agreement may be enforced by purchasers of membership camping contracts. If the membership camping operator is not in default under its obligations to the holder of the blanket encumbrance, the agreement may be enforced by both the membership camping operator and the purchasers.

(b) The nondisturbance agreement is effective as between each purchaser and the holder of the blanket encumbrance despite any rejection or cancellation of the purchaser’s contract during bankruptcy proceedings of the membership camping operator.

(c) The agreement is binding upon the successors in interest of both the membership camping operator and the holder of the blanket encumbrance.

(d) A holder of the blanket encumbrance who obtains title or possession, or who causes a change in title or possession in a campground by foreclosure or otherwise, and who does not continue to operate the campground upon conditions no less favorable to members than existed prior to the change of title or possession shall:

(A) Offer the title or possession of the campground to an association of members to operate the campground; or

(B) Obtain a commitment from another entity that obtains title or possession to undertake the responsibility for operation of the campground.

(2) If a financial institution, acting as hypothecation lender and providing the major hypothecation loan to the membership camping operator, has a lien on, or security interest in, the membership camping operator’s interest in the campground, the financial institution shall execute and deliver to the commissioner a nondisturbance agreement and record such agreement in the real estate records of the county in which the campground is located. In addition, each person holding an interest in any blanket encumbrance superior to the interest held by the financial institution shall execute, deliver and record an instrument stating that such person shall give the financial institution notice of, and at least 30 days to cure, any default under the blanket encumbrance before such person commences any foreclosure action affecting the campground. For the purposes of this provision, a major hypothecation loan to a membership camping operator is a loan or line of credit secured by substantially all of the contracts receivable arising from the membership camping operator’s sale of membership camping contracts.

(3) There shall have been delivered to and accepted by the commissioner a surety bond or letter of credit with the commissioner as obligee for the benefit of purchasers. The bond or letter of credit must be in an amount which is not less than 105 percent of the remaining principal balance of every indebtedness secured by the blanket encumbrance affecting the campground. Any such bond must be issued by a surety authorized to do business in this state and having sufficient net worth to satisfy the indebtedness. Any such letter of credit must be irrevocable and must be drawn upon a bank, savings and loan association or other financial institution acceptable to the commissioner. The bond or letter of credit shall provide for payment of all amounts secured by the blanket encumbrance, including costs, expenses and legal fees of the lienholder, if for any reason the blanket encumbrance is enforced. The bond or letter of credit may be reduced periodically in proportion to the reduction of the amounts secured by the blanket encumbrance.

(4) There have been delivered to and accepted by the commissioner other financial assurances which the commissioner finds are acceptable to carry into effect the intent and provisions of this section. [1985 c.639 §11a; 1991 c.377 §5]