§ 34-41-4.03. Public offering statement - General provisions. (a) A public offering statement must contain or fully and accurately disclose:

(1) The name and principal address of the developer and the location of the time-share property;

(2) A general description of the time-share property and the time-share units, including without limitation the number of units in the time-share property and in any project of which it is a part, and the schedule of commencement and completion of all improvements;

(3) As to all units owned or offered by the developer in the same project:

(i) The types and number of units;

(ii) Identification of units that are time-share units;

(iii) The types and durations of the time shares;

(iv) The maximum number of units that may become part of the time-share property; and

(v) A statement of the maximum number of time shares that may be created or that there is no maximum;

(4) Copies and a brief narrative description of the significant features of the time-share instrument and any documents referred to therein (other than any plats and plans), copies of any contracts or leases to be signed by purchasers at closing, and a brief narrative description of any contracts or leases that will or may be subject to cancellation by the owners of time-share estates under § 34-41-3.05;

(5) The identity of the managing entity and the manner, if any, whereby the developer may change the managing entity or its control;

(6) A current balance sheet and a projected budget for the association, if there is an association, either within or as an exhibit to the public offering statement, for one year after the date of the first transfer to a purchaser, and thereafter the current budget, a statement of who prepared the budget, and a statement of the budgetary assumptions concerning occupancy and inflation factors. The budget must include, without limitation:

(i) A statement of the amount, or a statement that there is no amount, included in the budget as a reserve for repairs and replacement;

(ii) A statement of any other reserves;

(iii) The projected time-share expense liability by category of expenditures for the time-share units; and

(iv) The projected time-share expense liability for each time share;

(7) A description of (i) the nature and purposes of all charges, dues, maintenance fees, and other expenses that may be assessed, (ii) the current amounts assessed, and (iii) the method and formula for altering charges in the future;

(8) Any services which the developer provides or expenses he or she pays and which he or she expects may become at any subsequent time a time-share expense of the time shares, and the projected time-share expense liability attributable to each of those services or expenses for each time share;

(9) Any initial or special fee due from the purchaser at closing, together with a description of the purpose of the fee and the method of its calculation;

(10) A statement of the effect on the time-share owners of liens, defects, or encumbrances on or affecting the title to the time-share units;

(11) A description of any financing offered by the developer;

(12) The terms and significant limitations of any warranties provided by the developer, including statutory warranties and limitations on the enforcement thereof or on damages;

(13) A statement that:

(i) Within three (3) days excluding Sundays and holidays after receipt of a public offering statement a purchaser, before transfer of title, may cancel any contract for purchase of a time share from a developer, by hand delivering notice thereof to the seller or by mailing notice thereof by certified or registered mail, return receipt requested, to the developer or to his or her agent for service of process,

(ii) If a developer fails to provide a public offering statement to a purchaser before the transferring of title to a time share, the purchaser is entitled to recover from the developer ten percent (10%) of the sales price of the time share, and

(iii) If a purchaser receives the public offering statement more than three (3) days excluding Sundays and holidays before signing a contract, he or she cannot cancel the contract for failure timely to receive the public offering statement;

(14) A statement of any unsatisfied judgments against the developer or the managing entity, the status of any pending suits involving the sale or management of real estate to which the developer or an affiliate of the developer or the managing entity is a defending party, and the status of any pending suits of which the developer has actual knowledge, of significance to the time-share units;

(15) A statement that any deposit made in connection with the purchase of a time share will be held in an escrow (or trust) account until expiration of the time for rescission or any later time specified in the contract to purchase the time share and will be returned to the purchaser if the purchaser cancels the contract pursuant to § 34-41-4.06;

(16) Any restraints on transfer of time shares or portions thereof;

(17) A description of the insurance coverage provided for the benefit of time-share owners;

(18) Any current or expected fees or charges to be paid by time-share owners for the use of any facilities related to the project;

(19) The extent to which financial arrangements have been provided for completion of all promised improvements pursuant to § 34-41-4.17 (Developer's Obligation to Complete);

(20) The extent to which a time-share unit may become subject to a tax or other lien arising out of claims against other time-share owners of the same time-share unit;

(21) A description of the rights and remedies provided in the time-share instrument of a time-share owner who is prevented from enjoying exclusive occupancy of a time-share unit, or a statement that there are none provided in the instrument; and

(22) All unusual and material circumstances, features, and characteristics of the project.

(b) As used in this subsection, "exchange company" means a person operating a program of the kind described in this subsection. If the time-share owners are to be permitted or required to become members of or to participate in a program for the exchange of occupancy rights among themselves or with the time-share owners of other time-share units or both, the public offering statement or a supplement delivered therewith must contain or fully and accurately disclose:

(1) Whether membership or participation in the program by a time-share owner is voluntary or mandatory;

(2) The name and address of the exchange company and whether the exchange company is an affiliate of the developer; or whether the exchange company or any of its officers or directors has any legal or beneficial interest in any developer or manager for any time-share property participating in the exchange program;

(3) The names of all officers, directors, and shareholders owning five percent (5%) or more of the outstanding stock of the exchange company;

(4) The terms and conditions of the contractual relationship between the time-share owner and the exchange company;

(5) The procedures whereby that contractual relationship can be changed or terminated, and whether it can be terminated or otherwise affected by action or inaction of the developer or the managing entity or by other factors beyond the control of the time-share owner;

(6) A complete and accurate description of all limitations, restrictions, or priorities employed in the operation of the exchange program, including, but not limited to, limitations on exchanges based on seasonality, unit size, or levels of occupancy, expressed in boldfaced type, and, in the event that such limitations, restrictions, or priorities are not uniformly applied by the program, a clear description of the manner in which they are applied;

(7) The procedures to qualify for and effectuate exchanges, and the manner in which exchanges are arranged by the exchange company;

(8) Whether exchanges are arranged on a space-available basis and whether any guarantees of fulfillment of specific requests for exchanges are made by the program;

(9) Whether and under what circumstances a time-share owner, in dealing with the exchange company, may lose the use and occupancy of his or her time share in any properly applied for exchange without his or her being provided with substitute accommodations by the exchange company;

(10) The fees or range of fees for participation by time-share owners in the program, a statement whether the fees may be altered by the exchange company, and the circumstances under which alterations may be made;

(11) The name and address of the site of each time-share property, accommodation or facility that is participating in the program;

(12) The number of units in each time-share property participating in the program that are available for occupancy and that qualify for participation in the program, expressed within the following numerical groupings: 1-5; 6-10; 11-20; 21-50; and 51 and over; and a statement of the criteria used to determine those units that are available for occupancy;

(13) The number of owners with respect to each time-share property who are eligible to participate in the program expressed within the following numerical groupings: 1-100; 101-249; 250-499; 500-999; and 1,000 and over; and a statement of the criteria used to determine those time-share owners who are currently eligible to participate in the program;

(14) The disposition made by the exchange company of time shares deposited with the program by time-share owners eligible to participate in the program and not used by the exchange company in effecting exchanges;

(15) The following information which shall be independently audited by a certified public accountant or accounting firm in accordance with the standards of the accounting standards board of the American institute of certified public accountants;

(i) The number of time-share owners eligible to participate in the program. The numbers shall disclose the relationship between the exchange company and time-share owners as being either fee paying or gratuitous in nature;

(ii) The number of time-share properties, accommodations or facilities eligible to participate in the exchange program categorized by those having a contractual relationship between the developer or the managing entity and the exchange company and those having solely a contractual relationship between the exchange company and owners directly;

(iii) The percentage of confirmed exchanges, which shall be the number of exchanges confirmed by the exchange company divided by the number of exchanges properly applied for, together with a complete and accurate statement of the criteria used to determine whether an exchange request was properly applied for;

(iv) The number of time shares for which the exchange company has an outstanding obligation to provide an exchange to a time-share owner who relinquished a time share during the year in exchange for a time share in any future year; and

(v) The number of exchanges confirmed by the exchange company during the year.

(16) A statement in boldfaced type to the effect that the percentage described in subsection (b)(15)(iii) is a summary of the exchange requests entered with the exchange company in the period reported and that the percentage does not indicate a purchaser's probabilities of being confirmed to any specific choice or range of choices, since availability at individual locations may vary.

(c) In the event an exchange company offers a program directly to the purchaser or time-share owner without any contract between a time-share developer and the exchange company, the exchange company shall deliver to each purchaser or time-share owner the information set forth in subsection (b) above. The requirements of this paragraph shall not apply to any renewal of the contract between a time-share owner and an exchange company, unless there are significant changes in the information required by subsection (b) adversely affecting the interests of the time share owner that have not been delivered in any appropriate form before renewal. An exchange company subject to this subsection for the purposes of delivering the information set forth in subsection (b) is subject to § 34-41-4.02 for the purposes of determining liability.

(d) Each exchange company offering a program to purchasers in this state must include the statement set forth in subsection (b)(16) on all promotional brochures, pamphlets, advertisements, or other materials disseminated by the exchange company which also contain the percentage of confirmed exchanges described in subsection (b)(15)(iii).

(e) As used in this subsection, "multi-location developer" means a developer creating or selling its own time shares in more than one time-share property under a program permitting time-share owners, by reservation or other similar procedure, to occupy time-share units in more than one time-share property. If time-share owners are to be permitted or required to participate in a multi-location program, the public offering statement or a supplement delivered therewith must contain or fully and accurately disclose:

(1) A complete and accurate description of the procedure to qualify for and effectuate use rights in time-share units in the multi-location program;

(2) A complete and accurate description of all limitations, restrictions, or priorities employed in the operation of the multi-location program, including, but not limited to, limitations on reservations, use or entitlement rights based on seasonality, unit size, levels of occupancy or class of owner, expressed boldfaced type, and, in the event that such limitations, restrictions, or priorities are not uniformly applied by the multi-location program, a clear description of the manner in which they are applied;

(3) Whether use is arranged on a space-available basis and whether any guarantees of fulfillment of specific requests for use are made by the multi-location developer;

(4) The name and address of the site of each time-share property included in the multi-location program;

(5) The number of time-share units in each time-share property which are available for occupancy; with respect to each time-share unit, the interest which the multi-location developer has therein (e.g. fee ownership, leasehold, option to purchase), and if less than fee ownership a statement of all relevant terms of the multi-location developer's interest therein; and with respect to each such time-share unit, whether it may be withdrawn from the multi-location program;

(6) The following information which shall be independently audited by a certified public accountant or accounting firm in accordance with the standards of the accounting standards board of the American institute of certified public accountants:

(i) The number of time-share owners in the multi-location program;

(ii) For each time-share property in the multi-location program, the number of properly made requests for use of time-share units in the time-share property; and

(iii) For each time-share property, the number of owners who received the right to use a unit in the time-share property as a percentage of the time-share owners who properly requested use in the time-share property.

(7) A statement in boldfaced type to the effect that the percentages described in subsection (e)(6) do not indicate a purchaser's probabilities of being able to use any time-share unit since availability at individual locations may vary.

(f) A developer shall promptly amend:

(1) The public offering statement to report any material change in the information required by subsection (a) of this section and § 34-41-4.04, and

(2) The public offering statement or any supplement thereto to report any material change known to him or her in the information required by subsection (b), except that:

(i) Any significant change in information required by subsections (b)(2), (3) and (11) that adversely affect purchasers' interests shall be reported to purchasers within 30 days after the change occurs. No liability shall be attributed to any person if the change is reported within the 30-day period; and

(ii) The information required by subsections (b)(13), (14) and (15) shall be calculated, at the minimum, from the records of the exchange company for each calendar year, and need be available no later than July 1 of the succeeding year.

(3) The public offering statement or any supplement thereto to report any material change in the information required by subsection (e), except that the information required by subsections (e)(4), (5), and (6) shall be calculated, at the minimum, from the records of the multi-location developer for the preceding calendar year, and need be available no later than July 1, of the succeeding year.

(4) Insofar as the developer relies in good faith on information provided by others in making disclosures required by subsection (b), he or she is responsible for a misrepresentation only if he or she has knowledge of its falsity.

History of Section. (P.L. 1984, ch. 141, § 2.)