BILL NUMBER: AB 905	CHAPTERED
	BILL TEXT

	CHAPTER  88
	FILED WITH SECRETARY OF STATE  JULY 14, 2015
	APPROVED BY GOVERNOR  JULY 14, 2015
	PASSED THE SENATE  JUNE 25, 2015
	PASSED THE ASSEMBLY  APRIL 30, 2015

INTRODUCED BY   Assembly Member Beth Gaines

                        FEBRUARY 26, 2015

   An act to amend Sections 11216 and 11234 of the Business and
Professions Code, and to amend Section 2079.6 of the Civil Code,
relating to time-shares.



	LEGISLATIVE COUNSEL'S DIGEST


   AB 905, Beth Gaines. Time-shares: public report: real property
inspection.
   Existing law, the Vacation Ownership and Time-share Act of 2004,
requires a developer, defined as a person who creates a time-share
plan or is in the business of selling time-share interests, to
prepare, for issuance by the Real Estate Commissioner, a public
report that discloses certain facts concerning the developer and
time-share plan and to provide a copy of the public report in writing
to each purchaser of a time-share interest in a time-share plan at
the time of purchase. Existing law requires a developer who offers a
purchaser the opportunity to subscribe or become a member of an
exchange program to provide the purchaser with specified disclosures
in writing. Existing law makes a violation of the public report
disclosure requirement a public offense.
   This bill would require the developer to provide the purchaser
with the public report or other disclosures in writing or in a
digital format at the discretion of the purchaser. By changing the
definition of a crime, this bill would impose a state-mandated local
program.
   Existing law provides that it is the duty of a real estate broker
or salesperson to a prospective purchaser of residential real
property comprising one to 4 inclusive, residential dwelling units or
a manufactured home, to make a reasonably competent and diligent
visual inspection of, and disclosure regarding, the property, as
specified, except for transfers that are required to be preceded by
the furnishing of a copy of a specified public report and to
transfers that can be made without a specified public report, unless
the property has been previously occupied.
   This bill would also create an exception for a transfer that is
required to be preceded by the furnishing of a copy of the public
report required pursuant to the above-described act, unless the
property has been previously occupied.
   The California Constitution requires the state to reimburse local
agencies and school districts for certain costs mandated by the
state. Statutory provisions establish procedures for making that
reimbursement.
   This bill would provide that no reimbursement is required by this
act for a specified reason.



THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS:

  SECTION 1.  Section 11216 of the Business and Professions Code is
amended to read:
   11216.  (a) An exchange program is not a part of a time-share plan
offering and, except as provided in this section and Section 11238,
shall not be subject to either this chapter or the regulations of the
commissioner adopted pursuant to this chapter.
   (b) If a developer offers a purchaser the opportunity to subscribe
to or to become a member of an exchange program, the developer shall
provide to the purchaser in writing or in a digital format at the
discretion of the purchaser all of the information set forth in
paragraphs (1) to (17), inclusive. If the exchange company is
offering directly to the purchaser the opportunity to subscribe to or
become a member of an exchange company, the exchange company shall
provide to the purchaser in writing all of the information set forth
in paragraphs (1) to (17), inclusive. In either case, the written
information shall be provided prior to or concurrently with the
execution of any contract or subscription for membership in the
exchange program.
   (1) The name and address of the exchange company.
   (2) The names of all officers, directors, and shareholders of the
exchange company.
   (3) Whether the exchange company or any of its officers or
directors have any legal or beneficial interest in any developer or
managing entity for any time-share plan participating in the exchange
program and, if so, the identity of the time-share plan and the
nature of the interest.
   (4) A copy of the form of the contract between the purchaser and
the exchange company, along with a statement that the purchaser's
contract with the exchange company is a contract separate and
distinct from the purchaser's contract with the seller of time-share
interests.
   (5) Whether the purchaser's participation in the exchange program
is dependent upon the continued affiliation of the applicable
time-share plan with the exchange program.
   (6) Whether the purchaser's participation in the exchange program
is voluntary.
   (7) A fair and accurate description of the terms and conditions of
the purchaser's contractual relationship with the exchange program
and the procedure by which changes thereto may be made.
   (8) A fair and accurate description of the procedures necessary to
qualify for and effectuate exchanges.
   (9) A fair and accurate description of all limitations,
restrictions, and priorities employed in the operation of the
exchange program, including, but not limited to, limitations on
exchanges based on seasonality, accommodation size, or levels of
occupancy, expressed in conspicuous type. If those limitations,
restrictions, or priorities are not uniformly applied by the exchange
company, the information shall include a clear description of the
manner in which they are applied.
   (10) Whether exchanges are arranged on a space available basis and
whether any guarantees of fulfillment of specific requests for
exchanges are made by the exchange company.
   (11) Whether and under what circumstances an owner, in dealing
with the exchange program, may lose the right to use and occupy an
accommodation of the time-share plan during a reserved use period
with respect to any properly applied for exchange without being
provided with substitute accommodations by the exchange program.
   (12) The fees or range of fees for participation by owners in the
exchange program, a statement of whether any such fees may be altered
by the exchange company and the circumstances under which
alterations may be made.
   (13) The name and address of the site of each accommodation
included within a time-share plan participating in the exchange
program.
   (14) The number of accommodations in each time-share plan that are
available for occupancy and that qualify for participation in the
exchange program, expressed within the following numerical groups:
1-5; 6-10; 11-20; 21-50; and 51 and over.
   (15) The number of currently enrolled owners for each time-share
plan participating in the exchange program, expressed within the
following numerical groups: 1-100; 101-249; 250-499; 500-999; and
1,000 and over; and a statement of the criteria used to determine
those owners who are currently enrolled with the exchange program.
   (16) The disposition made by the exchange company of use periods
deposited with the exchange program by owners enrolled in the
exchange program and not used by the exchange company in effecting
exchanges.
   (17) The following information for the preceding calendar year,
which shall be independently audited by a certified public accountant
in accordance with the standards of the Accounting Standards Board
of the American Institute of Certified Public Accountants and
reported annually no later than August 1 of each year:
   (A) The number of owners currently enrolled in the exchange
program.
   (B) The number of time-share plans that have current affiliation
agreements with the exchange program.
   (C) The percentage of confirmed exchanges, which is the number of
exchanges confirmed by the exchange program 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.
   (D) The number of use periods for which the exchange program has
an outstanding obligation to provide an exchange to an owner who
relinquished a use period during a particular year in exchange for a
use period in any future year.
   (E) The number of exchanges confirmed by the exchange program
during the year.
   (F) A statement in conspicuous type to the effect that the
percentage described in subparagraph (C) is a summary of the exchange
requests entered with the exchange program in the period reported
and that the percentage does not indicate the probabilities of an
owner's being confirmed to any specific choice or range of choices.
   (c) All written, visual, and electronic communications relating to
an exchange company or an exchange program shall be filed with the
commissioner upon its request.
   (d) The failure of an exchange company to observe the requirements
of this section, and the use of any unfair or deceptive act or
practice in connection with the operation of an exchange program, is
a violation of this chapter.
   (e) An exchange company may elect to deny exchange privileges to
any owner whose use of the accommodations of the owner's time-share
plan is denied, and no exchange program or exchange company shall be
liable to any of its members or any third parties on account of any
such denial of exchange privileges.
  SEC. 2.  Section 11234 of the Business and Professions Code is
amended to read:
   11234.  A developer shall prepare, for issuance by the
commissioner, a public report that shall fully and accurately
disclose those facts concerning the time-share developer and
time-share plan that are required by this chapter or by regulation.
The developer shall provide the public report to each purchaser of a
time-share interest in a time-share plan at the time of purchase. The
public report shall be in writing or in a digital format at the
discretion of the purchaser and dated and shall require the purchaser
to certify in writing the receipt thereof. The public report for a
single site time-share plan is subject to the requirements of
subdivision (a). The public report for a specific time-share interest
multisite time-share plan is subject to the requirements of both
subdivisions (a) and (b). The public report for a nonspecific
time-share interest multisite time-share plan is subject to the
requirements of subdivision (c). For time-share plans located outside
of the state, a public report that has been authorized for use by
the situs state regulatory agency and that contains disclosures as
determined by the commissioner upon review to be substantially
equivalent to or greater than the information required to be
disclosed pursuant to this section may be used by the developer to
meet the requirements of this section. A developer may, upon approval
by the commissioner, submit a public report that combines, in a
manner prescribed by the commissioner, the information required to be
disclosed by the applicable subdivisions of this section and the
information required to be disclosed in a public report issued by a
regulatory agency in one or more other states.
   (a) Public reports for a single site and those component sites of
a specific time-share interest multisite time-share plan that are
offered in this state shall include the following:
   (1) The name and address of the developer and the type of
time-share plan being offered and the name and address of the
time-share project.
   (2) A description of the existing or proposed accommodations,
including the type and number of time-share interests in the
accommodations, and if the accommodations are proposed or not yet
complete or fully functional, an estimated date of completion.
   (3) The number of accommodations and time-share interests,
expressed in periods of seven-day use availability or other time
increments applicable to the time-share plan, committed to the
multisite time-share plan, and available for use by purchasers and a
representation about the percentage of useable time authorized for
sale, and if that percentage is 100 percent, then a statement
describing how adequate periods of time for maintenance and repair
will be provided.
   (4) A description of any existing or proposed amenities of the
time-share plan and, if the amenities are proposed or not yet
complete or fully functional, the estimated date of completion.
   (5) The extent to which financial arrangements have been made for
the completion of any incomplete, promised improvements.
   (6) A description of the duration, phases, and operation of the
time-share plan.
   (7) The name and principal address of the managing entity and a
description of the procedures, if any, for altering the powers and
responsibilities of the managing entity and for removing or replacing
it.
   (8) The current annual budget as required by Section 11240, along
with the projected assessments and a description of the method for
calculating and apportioning the assessments among purchasers, all of
which shall be attached as an exhibit to the public report.
   (9) Any initial or special fee due from the purchaser at closing
together with a description of the purpose and the method of
calculating the fee.
   (10) A description of any financing offered by or available
through the developer.
   (11) A description of any liens, defects, or encumbrances on or
affecting the title to the time-share interests.
   (12) A description of any bankruptcies, pending civil or criminal
suits, adjudications, or disciplinary actions of which the developer
has knowledge, that would have a material effect on the developer's
ability to perform its obligations.
   (13) Any current or expected fees or charges to be paid by
time-share purchasers for the use of any amenities related to the
time-share plan.
   (14) A description and amount of insurance coverage provided for
the protection of the purchaser.
   (15) The extent to which a time-share interest may become subject
to a tax lien or other lien arising out of claims against purchasers
of different time-share interests.
   (16) A statement disclosing any right of first refusal or other
restraint on the transfer of all or any portion of a time-share
interest.
   (17) A statement disclosing that a deposit made in connection with
the purchase of a time-share interest shall be held by an escrow
agent until expiration of any right to cancel the contract and that a
deposit shall be returned to the purchaser if he or she elects to
exercise his or her right of cancellation. Alternatively, if the
commissioner has accepted from the developer a surety bond,
irrevocable letter of credit, or other financial assurance, each of
which shall be enforceable by the association, in lieu of placing
deposits in an escrow account: (A) a statement disclosing that the
developer has provided a surety bond, irrevocable letter of credit,
or other financial assurance in an amount equal to or in excess of
the funds that would otherwise be placed in an escrow account, (B) a
description of the type of financial assurance that has been
obtained, (C) a statement that if the purchaser elects to exercise
his or her right of cancellation as provided in the contract, the
developer shall return the deposit, and (D) a description of the
person or entity to whom the purchaser should apply for payment.
   (18) A statement that the assessments collected from the
purchasers will be kept in a segregated account separate from the
assessments collected from the purchasers of other time-share plans
managed by the same managing entity, along with a statement
identifying the location of the account and a disclosure of the
rights of owners to inspect the records pertaining to their accounts.

   (19) If the time-share plan provides purchasers with the
opportunity to participate in an exchange program, a description of
the name and address of the exchange company and the method by which
a purchaser accesses the exchange program.
   (20) Any other information that the developer, with the approval
of the commissioner, desires to include in the public report.
   (21) Any other information reasonably requested by the
commissioner.
   (b) Public reports for specific time-share interest multisite
time-share plans shall include the following additional disclosures:
   (1) A description of each component site, including the name and
address of each component site.
   (2) The number of accommodations and time-share interests,
expressed in periods of seven-day use availability or other time
increments applicable to each component site of the time-share plan,
committed to the multisite time-share plan and available for use by
purchasers and a representation about the percentage of useable time
authorized for sale, and if that percentage is 100 percent, then a
statement describing how adequate periods of time for maintenance and
repair will be provided.
   (3) Each type of accommodation in terms of the number of bedrooms,
bathrooms, and sleeping capacity, and a statement of whether or not
the accommodation contains a full kitchen. For purposes of this
description, a "full kitchen" means a kitchen having a minimum of a
dishwasher, range, sink, oven, and refrigerator.
   (4) A description of amenities available for use by the purchaser
at each component site.
   (5) A description of the reservation system, which shall include
the following:
   (A) The entity responsible for operating the reservation system,
its relationship to the developer, and the duration of any agreement
for operation of the reservation system.
   (B) A summary of the rules and regulations governing access to and
use of the reservation system.
   (C) The existence of and an explanation regarding any priority
reservation features that affect a purchaser's ability to make
reservations for the use of a given accommodation on a
first-come-first-served basis.
   (6) The name and principal address of the managing entity for the
multisite time-share plan and a description of the procedures, if
any, for altering the powers and responsibilities of the managing
entity and for removing or replacing it.
   (7) A description of any right to make any additions,
substitutions, or deletions of accommodations, amenities, or
component sites, and a description of the basis upon which
accommodations, amenities, or component sites may be added to,
substituted in, or deleted from the multisite time-share plan.
   (8) A description of the purchaser's liability for any fees
associated with the multisite time-share plan.
   (9) The location of each component site of the multisite
time-share plan, the historical occupancy of each component site for
the prior 12-month period, if the component site was part of the
multisite time-share plan during the 12-month time period, as well as
any periodic adjustment or amendment to the reservation system that
may be needed in order to respond to actual purchaser use patterns
and changes in purchaser use demand for the accommodations existing
at that time within the multisite time-share plan.
   (10) Any other information that the developer, with the approval
of the commissioner, desires to include in the time-share disclosure
statement.
   (c) Public reports for nonspecific time-share interest multisite
time-share plans shall include the following:
   (1) The name and address of the developer.
   (2) A description of the type of interest and usage rights the
purchaser will receive.
   (3) A description of the duration and operation of the time-share
plan.
   (4) A description of the type of insurance coverage provided for
each component site.
   (5) An explanation of who holds title to the accommodations of
each component site.
   (6) A description of each component site, including the name and
address of each component site.
   (7) The number of accommodations and time-share interests,
expressed in periods of seven-day use availability or other time
increments applicable to the multisite time-share plan for each
component site committed to the multisite time-share plan and
available for use by purchasers and a representation about the
percentage of useable time authorized for sale, and if that
percentage is 100 percent, then a statement describing how adequate
periods of time for maintenance and repair will be provided.
   (8) Each type of accommodation in terms of the number of bedrooms,
bathrooms, and sleeping capacity, and a statement of whether or not
the accommodation contains a full kitchen. For purposes of this
description, a "full kitchen" means a kitchen having a minimum of a
dishwasher, range, sink, oven, and refrigerator.
   (9) A description of amenities available for use by the purchaser
at each component site.
   (10) A description of any incomplete amenities at any of the
component sites along with a statement as to any assurance for
completion and the estimated date the amenities will be available.
   (11) The location of each component site of the multisite
time-share plan, the historical occupancy of each component site for
the prior 12-month period, if the component site was part of the
multisite time-share plan during such 12-month time period, as well
as any periodic adjustment or amendment to the reservation system
that may be needed in order to respond to actual purchaser use
patterns and changes in purchaser use demand for the accommodations
existing at that time within the multisite time-share plan.
   (12) A description of any right to make any additions,
substitutions, or deletions of accommodations, amenities, or
component sites, and a description of the basis upon which
accommodations, amenities, or component sites may be added to,
substituted in, or deleted from the multisite time-share plan.
   (13) A description of the reservation system that shall include
all of the following:
   (A) The entity responsible for operating the reservation system,
its relationship to the developer, and the duration of any agreement
for operation of the reservation system.
   (B) A summary of the rules and regulations governing access to and
use of the reservation system.
   (C) The existence of and an explanation regarding any priority
reservation features that affect a purchaser's ability to make
reservations for the use of a given accommodation on a
first-come-first-served basis.
   (14) A description of any liens, defects, or encumbrances that
materially affect the purchaser's use rights.
   (15) The name and principal address of the managing entity for the
multisite time-share plan and a description of the procedures, if
any, for altering the powers and responsibilities of the managing
entity and for removing or replacing it, and a description of the
relationship between a multisite time-share plan managing entity and
the managing entity of the component sites of a multisite time-share
plan, if different from the multisite time-share plan managing
entity.
   (16) The current annual budget as provided in Section 11240, along
with the projected assessments and a description of the method for
calculating and apportioning the assessments among purchasers, all of
which shall be attached as an exhibit to the public report.
   (17) Any current fees or charges to be paid by time-share
purchasers for the use of any amenities related to the time-share
plan and a statement that the fees or charges are subject to change.
   (18) Any initial or special fee due from the purchaser at closing,
together with a description of the purpose and method of calculating
the fee.
   (19) A description of any financing offered by or available
through the developer.
   (20) A description of any bankruptcies, pending civil or criminal
suits, adjudications, or disciplinary actions of which the developer
has knowledge, which would have a material effect on the developer's
ability to perform its obligations.
   (21) A statement disclosing any right of first refusal or other
restraint on the transfer of all or any portion of a time-share
interest.
   (22) A statement disclosing that a deposit made in connection with
the purchase of a time-share interest shall be held by an escrow
agent until expiration of any right to cancel the contract and that a
deposit shall be returned to the purchaser if he or she elects to
exercise his or her right of cancellation. Alternatively, if the
commissioner has accepted from the developer a surety bond,
irrevocable letter of credit, or other financial assurance in lieu of
placing deposits in an escrow account: (A) a statement disclosing
that the developer has provided a surety bond, irrevocable letter of
credit, or other financial assurance in an amount equal to or in
excess of the funds that would otherwise be placed in an escrow
account, (B) a description of the type of financial assurance that
has been arranged, (C) a statement that if the purchaser elects to
exercise his or her right of cancellation as provided in the
contract, the developer shall return the deposit, and (D) a
description of the person or entity to whom the purchaser should
apply for payment.
   (23) If the time-share plan provides purchasers with the
opportunity to participate in an exchange program, a description of
the name and address of the exchange company and the method by which
a purchaser accesses the exchange program.
   (24) Any other information that the developer, with the approval
of the commissioner, desires to include in the time-share disclosure
statement.
   (d) The commissioner may establish by regulation provisions
regarding the delivery of the public report and other required
information through alternative media forms.
   (e) The commissioner may, upon finding that the subject matter is
otherwise adequately covered or the information is unnecessary or
inapplicable, waive any requirement set forth in this section.
  SEC. 3.  Section 2079.6 of the Civil Code is amended to read:
   2079.6.  This article does not apply to transfers which are
required to be preceded by the furnishing, to a prospective
transferee, of a copy of a public report pursuant to Section 11018.1
or Section 11234 of the Business and Professions Code and transfers
that can be made without a public report pursuant to Section 11010.4
of the Business and Professions Code, unless the property has been
previously occupied.
  SEC. 4.  No reimbursement is required by this act pursuant to
Section 6 of Article XIII B of the California Constitution because
the only costs that may be incurred by a local agency or school
district will be incurred because this act creates a new crime or
infraction, eliminates a crime or infraction, or changes the penalty
for a crime or infraction, within the meaning of Section 17556 of the
Government Code, or changes the definition of a crime within the
meaning of Section 6 of Article XIII B of the California
Constitution.