Part 24 of Title 13 NYCRR
Regulations Governing
Timeshare Offering Plans
Effective January 29, 1985
As Amended Through June 1997
State of New York
Office of the Attorney General
Real Estate Finance Bureau
120 Broadway, 23 rd floor
New York, N.Y. 10271
(212) 416-8121
http://www.oag.state.ny.us/realestate/realestate.html
Part 24
Index
Section 24.1 General 1
(a) Applicability. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
(b) Standard of compliance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. 2
(c) Definitions. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. 2
(d) Time of review 3
(e) Revisions , 4
(f) Statutory compliance. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. 4
(g) Out-of-state timesharing plans 4
(h) Exemptions. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. 5
(i) Exemptions from GBL Section 359-e . . . . . . . . . . . . . . . . . . . . .. 5
U) Effectiveness of regulations 5
(k) Abandonments, terminations and withdrawals. . . . . . . . . . . . . .. 6
(1) Disclaimers. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. 6
Section 24.2 Procedure for Submission. . . . . . . . . . . . . . . . . . . . . . . . . . 7
(a) Submission address . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
(b) Exhibits - originals 7
(c) Components of submission . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. 7
(d) Additional Components . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. 13
(e) Date of filing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. 13
Section 24.3 Format and Content 14
(a) Cover................................................ 14
(b) Table of contents. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. 15
(c) Right of cancellation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. 17
(d) Special risks. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. 17
(e) Introduction........................................... 21
(f) Definitions............................................ 23
(g) Description of property and improvements . . . . . . . . . . . . . . . . . .. 23
(h) Location and area information 24
(i) Purchase prices and common interest
or share allocation (Schedule A) . . . . . . . . . . . . . . . . . . . . . . . . . .. 25
U) Projected budget for timesharing plan. . . . . . . . . . . . . . . . . . . . . .. 26
(k) Changes in prices and facilities . . . . . . . . . . . . . . . . . . . . . . . . . . .. 32
(1) Accountant's certified statements of operation 33
(m) Procedure to purchase . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. 33
(n) Financing offered (arranged) by sponsor 53
(0) State of title 55
(p) Closing of title . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. 58
(q) Acquisition costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. 58
(r) Rights and obligations of the sponsor. . . . . . . . . . . . . . . . . . . . . .. 59
(s) Rights and obligations of timeshare owners 61
(t) Rights and obligations of the Board
of Managers (Board of Directors) 62
(u) Resort exchange program 63
(v) Management 63
(w) Reservation and check-in/check-out procedures. . . . . . . . . . . . .. 64
(x) Identity of parties. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. 64
(y) Documents on file . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. 65
(z) General 66
Section 24.4 Transmittal Letter and Certifications . . . . . . . . . . . . . . . .. 67
(a) Transmittal letter . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. 67
(b) Certification by sponsor 67
(c) Certification by engineer or architect 68
(d) Certification by expert on adequacy of budget .. . . . . . . . . . . . . .. 76
Section 24.5 Amendments................................... 78
(a) General 78
(b) Procedure for submission of amendments 78
(c) Amendments extending term of offering plan 79
(d) Price change amendments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. 80
Section 24.6 Advertisements " 81
Section 24.7 Description of Property
(and Specifications) (and Building Condition) 83
Part 24
TIMESHARE OFFERING PLANS
Section 24.1 General
Section 24.2 Procedure for Submission
Section 24.3 Format and Content
Section 24.4 Transmittal Letter and Certifications
Section 24.5 Amendments
Section 24.6 Advertisements
Section 24.7 Description of Property and Building Condition
Section 24.1 General.
(a) Applicability. The offering statement or "Offering Plan" required by Section 352-e of
the General Business Law ("GBL") for a time sharing plan is subject to this Part 24,
Timesharing Offering Plans. Offerings subject to this Part are not subject to any other
Part. Resales by individual purchasers of individual timeshare units are not subject to
the filing requirements of Section 352-e of the GBL. In projects which are otherwise
fully sold out, resales by sponsor of units upon which the sponsor has foreclosed are
not subject to the filing requirements of Section 352-e of the GBL
(b) Standard of compliance. An offering plan must, at a minimum:
(1) contain in detail the terms of the transaction and be complete, current and
accurate;
(2) afford potential investors, purchasers and participants an adequate basis upon
which to found their judgment;
(3) not omit any material fact;
(4) not contain any untrue statement of a material fact;
(5) not contain any fraud, deception, concealment, suppression, false pretense
or fictitious or pretended purchase or sale;
(6) not contain any promise or representation as to the future which is beyond
reasonable expectation or unwarranted by existing circumstances; and
24.1 (b)
(7) not contain any representation or statement which is false, where the sponsor
or the person who made such representation or statement: (i) knew the truth or
(ii) with reasonable effort could have known the truth; or (iii) made no
reasonable effort to ascertain the truth; or (iv) did not have knowledge
concerning the representation or statement made.
(c) Definitions.
(I) As used in this Part, "sponsor" means any person, partnership, joint venture,
corporation, company, trust, association or other entity which makes or takes
part in a public offering or sale in or from the State of New York of securities
consisting primarily of shares or participation interests or investments in real
estate including cooperative interests in realty. "Sponsor" shall not be deemed
to include a selling agent who has complied with Section 359-e of the General
Business Law or an attorney or other expert retained by the sponsor solely to
render professional advice or opinions in connection with this offering.
(2) As used in this Part, "principal" means all individual sponsors, all general
partners of sponsors that are partnerships, all officers, directors and
shareholders of a corporate sponsor that are actively involved in the planning
or consummation ofthe offering or who have decision-making authority to act,
and all other individuals who both (i) own an interest in or control the sponsor
and (ii) actively participate in the planning or consummation of the offering
regardless of the form of organization of the sponsor.
(3) As used in this Part, "timesharing plan" means any arrangement, excluding
exchange programs, the primary purpose of which is to provide each of three
or more purchasers with the right to use and occupy a unit or units for a period
of time which is less than a full year in any particular year at any particular
location and which continues for a period of more than three years or which,
for nominal consideration, may be renewed to continue for a period of more
than three years.
(4) As used in this Part, "timeshare" means the interest acquired by a purchaser
under a timesharing plan.
(5) As used in this Part, "interval" means that period of time during which a
timeshare owner is entitled to the possession and use of a unit.
24.1(c)
2
(6) As used in this Part, "unit" means that portion of the real property of a
timesharing plan designated for the exclusive use and occupancy ofa timeshare
owner during his or her interval including, but not limited to, condominium
units, cooperative apartments, campsites, lots, homes and townhouses.
(7) As used in this Part, "fee timesharing plan" means a timesharing plan in which
purchasers receive
(~) a recordable undivided fee simple interest in a unit, and any appurtenant
interest in common areas, as tenant in common with the other purchasers
of timeshares in that unit; or
(b.) a recordable estate-for-years in a unit, and any appurtenant common
areas, with a vested undivided fee simple interest in the remainder as
tenant in common with the other purchasers of timeshares in that unit;
or
(~) a recordable fee simple interest in a unit, and any appurtenant common
areas, for a particular interval.
(8) As used in this Part, "leasehold timesharing plan" means any timesharing plan
in which purchasers receive a recordable leasehold interest in a unit and any
appurtenant interest in common areas.
(9) As used in this Part, "cooperative timesharing plan" means a timesharing plan
in which purchasers receive shares in a cooperative corporation which owns or
leases the timeshare property.
(10) As used in this Part, "right-to-use timesharing plan" means any timesharing
plan which is not a fee timesharing plan, a leasehold timesharing plan or a
cooperative timesharing plan.
(11) "Filing" means the issuance of a letter from the Attorney General stating that
an offering plan or amendment has been accepted for filing.
(d) Time of review.
After submission of the proposed offering plan for filing, the Department ofLaw shall issue
a letter to the sponsor or sponsor's attorney stating that the plan is filed or indicating
deficiencies. The Department of Law shall issue such letter for an offering plan subject to
this Part no later than thirty (30) days after the date of submission of the proposed offering
plan. In instances where an amendment to an offering plan is submitted for filing for an out
24.1(d)
3
of-state timesharing public offering which amendment has been approved or accepted for
filing in the situs state, the Department of Law shall issue such letter no later than five (5)
business days after the date ofsubmission ofthe proposed amended offering plan along with
evidence ofthe approval or acceptance ofthe amendment by the situs state. The Department
of Law may issue a deficiency letter whenever it appears: (I) that the Department cannot
make any finding mandated by law, or (2) that the proposed offering plan is deficient in one
or more respects. The Department of Law may, in its discretion, deem an offering plan or
amendment not submitted if the proposed offering plan, amendment and/or Exhibits are
incomplete and therefore do not meet the requirements of Section 24.2, Procedure for
Submission, or Section 24.5(b), Procedure for submission of amendments.
(e) Revisions. Following submission of a proposed offering plan, revisions must be
made to reflect any material change of fact or circumstances pertaining to the
proposed offering, the offerors, the property involved, the condition of the premises,
or the costs of ownership and operation of the property, so that the offering plan may
continue to comply with Section 24.1 (b). Such revisions shall be submitted to the
attorney assigned by the Department of Law to review the proposed offering plan.
The Department of Law may issue a deficiency letter and/or require resubmission of
a new offering plan ifthe revisions reflect matters offact or circumstances which were
known or should have been known to the sponsor at the time of original submission,
or substantially change the nature or terms of the offering, or if the plan as revised
comes within the ground stated in Section 24.1 (d). After the offering plan is filed the
plan must be amended periodically as required by Section 24.5.
(t) Statutory compliance. Unless expressly provided herein, nothing contained in this
Part shall be construed as limiting the requirements set forth in Article 23-A of the
GBL.
(g) Out-of-state timesharing plans. A sponsor of a timesharing plan for property located
outside ofNew York State which makes or takes part in a public offering or sale in or
from the State ofNew York ofcooperative interests in realty must file an offering plan
with the Department of Law that provides the full and fair disclosure required by law
including this Part. To comply with this requirement, the sponsor of an out-of-state
plan may tile a complete offering plan drafted in accordance with New York law and
this Part. In the alternative, the Department of Law may allow the sponsor to file the
offering plan approved by or filed with the state or jurisdiction in which the timeshare
property is located or the offering plan for another state where the timeshare is
registered, together with an addendum, containing such additional disclosure as is
required by this Part. The sponsor must represent that the plan complies with all
applicable local laws.
24.1(g)
4
(h) Exemptions. Upon written application of the sponsor or sponsor's attorney, the
Department ofLaw in its discretion may by ruling exempt a plan from the application
of any provision of this Part where it is found that enforcement of the provision is not
necessary to effectuate the purposes of the GBL or to protect the public interest. The
application shall:
(i) be annexed to and be submitted with the attorney's transmittal letter;
(ii) set forth the provisions from which the exemption is sought and the grounds
for the exemption; and
(iii) be signed by the sponsor or the sponsor's attorney.
The transmittal letter and certifications required by Section 24.4 of this Part shall be
in the form required by this Part, without modification, and shall be based on the
assumption that any exemption sought pursuant to this section has been granted. In
the event that the Department of Law denies the application for exemption, the
Department of Law shall issue a deficiency letter as provided in Section 24.1 (d). No
additional fee is required for an exemption application.
(i) Exemption from GBL Section 359-e. A cooperative corporation whose shares are to
be sold pursuant to an offering plan filed with the Department of Law is deemed
exempted from the registration requirements ofGBL Section 359-e, provided that all
offering activities are engaged in exclusively by persons duly registered under the
filing requirements ofGBL Section 359-e. No application for exemption need be filed
by a cooperative corporation exempted under this paragraph.
U) Effectiveness of regulations.
(1) Part 24 is effective immediately for timeshare offering plans submitted to
the Department of Law after the effective date of these regulations.
(2) Part 24 is effective immediately for timeshare offering plans submitted to the
Department of Law but not accepted for filing on the effective date of these
regulations.
(3) Section 24.5 of these regulations is effective immediately for amendments (to
timeshare offering plans which were accepted for filing by the Department of
Law before or after the effective date of these regulations) submitted to the
Department of Law after the effective date of these regulations or submitted
to the Department of Law but not accepted for filing on the effective date of
these regulations.
24.1 (j)
5
(4) Section 24.6 is effective immediately for advertisements of timeshare offering
plans which were accepted for filing by the Department of Law before the
effective date of these regulations.
(k) Abandonments, terminations and withdrawals. If the offering plan is withdrawn or
terminated prior to filing, or is abandoned after filing, the sponsor shall execute and
file Form RS-3 promulgated by the attorney general within five (5) business days
thereafter. If payments have been received, an accounting of the disposition of all
funds received shall be included in Form RS-3. The sponsor shall concurrently send
written notice of abandonment to all purchasers, along with a full refund, and to all
offerees who have arranged with the sponsor to visit the timeshare property in
response to any advertising or promotional program.
(1) Disclaimers. The requirements set forth in Section 24.3 apply to the offering plan
generally and shall not be negated or contradicted by inconsistent provisions in other
portions of the offering plan, or by provisions purporting to discharge liability or to
terminate the continuing effect of representations in the offering plan upon an event
such as the closing or the delivery of shares with the proprietary lease. Disclaimer
provisions, either direct, or indirect through stated reliance on an expert with respect
to factual matters required to be represented or set forth in the offering plan, may not
be included except as and to the extent permitted in these regulations.
24.1(1)
6
Section 24.2 Procedure for Submission.
(a) The proposed offering plan and the Exhibits described below shall be submitted
to the Real Estate Financing Bureau, Department ofLaw, 120 Broadway, New York,
NY 10271.
(b) The Exhibits shall accompany the proposed offering plan submitted to the Department
of Law, and shall be subject to the sanctions of Article 23-A of the GBL. Whenever
an Exhibit document is marked "Orig." on the list set forth below, it means that at least
one document must be a duly executed, original document. If a document is not so
marked on the list set forth below, it means that a true and complete copy of the
document must be included.
(c) The following are to be included when submitting a proposed offering plan pursuant
to this Part.
(1) A transmittal letter addressed to the Department of Law that is signed and
affirmed by the attorney who prepared the plan, containing the statements
required by Section 24.4(a) without qualification or alteration in substance. As
specified in Section 24.2(c)(4), the transmittal letter must expressly indicate
any Exhibit that is not included (apart from those noted) and set forth the
reasons for the omission. Exemption applications submitted pursuant to
Section 24.I(h) must be annexed to and submitted with the transmittal letter.
Omissions and additions to the table of contents must be noted and
explained.
(2) Staple or clip to the transmittal letter a check (certified or uncertified) for one
half of the filing fee under GBL Section 352-e 7(a) (a non-refundable deposit)
payable to "New York State Department of Law." The filing fee is based on
the maximum total amount of the offering.
(3) Three (3) copies of a typed or printed, bound offering plan.
(4) Two (2) Sets of Exhibits. Each set is to be in binders from which documents
can be removed easily, and the binders must be indexed with tabs. The cover
of each binder must be labeled with the name and location of the timesharing
plan and the name, address and telephone number ofthe attorney who prepared
the plan. One of the binders must be marked "Original" and contain the
original documents required below. Each binder must contain an index of the
documents. The transmittal letter required by Section 24.2(c)(1) must note the
omission of any Exhibit that is not included and the reason for the omission.
24.2(c)
7
(9:) Part A of the Exhibits (Certifications) shall consist of the following
documents. Photocopies or conformed copies of the Certification shall
appear in the offering plan:
(A-I) Certification by the sponsor and the sponsor's principals signed
by "sponsors" and "principals" as defined in Section 24.I(c)
(Orig.); see Section 24.4(b).
(A-2) Certification by sponsor's engineer or architect concerning the
property description in Part II of the plan and at Exhibit C-I
(Orig.); see Section 24.4(c).
(A-3) Certification by expert as to adequacy of projected income and
expenses for the timesharing plan (Orig.) see Section 24.4(d).
(b) Part B of the Exhibits (General) shall consist of the following
documents:
(B-1) A projection by a qualified expert or local supplier of the
consumption, rate and total cost of furnishing heat, hot water,
electricity and other utilities to timeshare property.
(B-2) Title company report for all property subject to use and
occupancy of purchasers under and as part of the timesharing
plan, including property outside the immediate timeshare regime,
dated within thirty (30) days of submission (Orig.).
(B-3) Proposed management agreement (Orig.)
(B-4) Letter from an insurance company or its authorized agent, stating
proposed insurance coverage and amounts. and the annual
. .
premIUm or premIUms.
(B-5) An opinion from an independent licensed insurance broker,
insurance appraiser or real estate appraiser representing that the
fire insurance coverage budgeted in the plan is adequate (i) so
that the insured shall not be a co-insurer if the policy contains a
co-insurance provision, or (ii) to cover replacement cost ifpolicy
is for an agreed amount which waives co-insurance.
24.2(c)
8
(B-6) §352-al§352-b Designation of Secretary of State as agent
(applicable only to out-of-state issuers, sponsors, principals
and/or selling agents).
(B-7) For a timesharing plan located outside ofNew York, submit any
statutes and regulations governing the registration and formation
of the timesharing plan. A timesharing plan located outside of
New York must include evidence of compliance with any local
laws and regulations concerning registration and formation ofthe
timesharing plan.
(B-8) If a homeowner's association or cooperative corporation is part
ofthe offering, submit the Certificate ofIncorporation and receipt
from the New York Secretary of State (or equivalent proof of
organizational of such entity for out-of-state plans), by-laws and
other relevant organizational documents.
(B-9) If the plan offers financing, submit all financing documents,
including, but not limited to, the promissory note and mortgage
or other security instrument.
(B-IO) If applicable, submit an estimate of the assessed valuation after
completion of construction or rehabilitation from the local tax
assessor. If not available, submit an estimate of the assessed
valuation after completion of construction or rehabilitation from
a real estate broker, appraiser, attorney or other professional
familiar with the tax assessment practices in the locality in which
the timeshare property is located.
(B-1 1) If, as part of the timesharing plan, timeshare owners have the
right to use and occupy property outside the immediate timeshare
regime (at no additional charge or at a discount from rates
charged to the general public), submit an easement which
establishes this right, along with evidence that it has been
recorded against the servient estate in accordance with the
recording act of the jurisdiction in which the servient estate is
located.
24.2(c)
9
(B-12)
If, as part of the timesharing plan, timeshare owners have the
right to use and occupy property outside the immediate timeshare
regime (at no additional charge or at a discount from rates
charged to the general public), submit a covenant (running with
the land) that such property will be used only as set forth in the
offering plan, along with evidence that the covenant has been
recorded against the other property in accordance with the
recording act of the jurisdiction in which the other property is
located.
(B-13) Any mortgage and note or bond that presently encumbers any
property subject to the use and occupancy of purchasers under
and as part ofthe timesharing plan, including property outside the
immediate timeshare regime.
(B-14) Any instrument which establishes a trust to hold title to timeshare
property pending the full satisfaction of a purchaser's financing
obligation.
(B-15) For timesharing plans located outside New York, submit an
opinion from independent counsel admitted to practice in the
jurisdiction in which the timeshare property is located
(i) that an escrow account for purchaser's funds established
in a bank located outside the State of New York is not
subject to attachment, garnishment, foreclosure, levy or
other legal seizure by the creditors or bankruptcy trustee of
the sponsor, selling agent, the owner of the timeshare
property or the principals of any of them.
(ii) that any property (both real and personal) held in a trust
pending the satisfaction of a purchaser's purchase-money
financing obligation is not subject to attachment,
garnishment, foreclosure, levy or other legal seizure by the
creditors or bankruptcy trustee of the sponsor, the selling
agent, the owner ofthe timeshare property or the principals
of any of them.
(iii) that the timesharing plan complies with all applicable
statutes, regulations and ordinances of the jurisdiction in
which the timeshare property is located.
24.2(c)
10
The opinion should discuss the foregoing issues in detail and
include citations to relevant statutory and decisional law. The
Department ofLaw may require an opinion from local counsel on
other issues as well.
(B-16) The sponsor's or present owner's deed to the property and copy
ofthe contract of sale between owner and sponsor if the sponsor
is a contract vendee.
(B-17) An affidavit from the sponsor setting forth the total number of
timeshares in the timesharing plan, the jurisdictions in which
sales are authorized, the total number of timeshares sold and the
number of timeshares in the timesharing plan which have been
sold to residents of the State of New York, if any.
(B-18) Any other material document(s), each of which should be
described in the transmittal letter.
(B-19) Copy of the Escrow Agreement between the sponsor and the
attorney(s) acting as escrow agent. If the model form is not
used, so indicate. Copy of bank forms to be used to open the
escrow account.
(B-20) Copy of surety bonds or letter of credit proposed to secure down
payments and any underlying agreement or related agreement,
and any undertaking called for in the Regulations or proposed to
be furnished.
(.Q) Part C of the Exhibits (Engineering) shall consist of the following
documents:
(C-l) Architect's or engineer's detailed description of the property with
the architect's or engineer's seal and original signature. The
description must be dated within ninety (90) days of submission
to the Department of Law and conform to the requirements of
Section 24.7 of these regulations; see Exhibit
A- 2.
24.2(c)
11
(C-2) Copies of currently valid temporary, partial or permanent
certificates of occupancy, if available and if required. If a
certificate of occupancy for any building or buildings has not
been issued, so indicate and forward to the Department of Law
when issued.
(g) Part D of the Exhibits (Other Information) shall consist of the following
documents:
(D-I) Signed M-lO form(s), broker-dealer statement, for the selling
agents (Orig), unless exempted by GBL Section 359-e, and
signed M-2 form(s), salespersons' statements, for all individual
employees who act as salespersons (Orig), unless exempted by
GBL Section 359-e. Forms do not have to be submitted if
currently valid registration forms are on file with the Department
of Law from prior offerings and a copy of the form is submitted
as Exhibit D-l.
(D-2) Signed M-lO form(s), for the sponsoring entity, which shall
include all officers, directors, partners or principals who are
"dealers" for purposes ofGBL Section 359-e (Orig.). Forms do
not have to be submitted if currently valid registration forms are
on file with the Department of Law from prior offerings and a
representation to that effect is made in Exhibit D-2 (Orig.).
(D-3) Signed RI-I form(s), registrant information form(s), concerning
prior convictions,judgments, administrative actions, bankruptcy,
employment and business affiliations for all principals of the
sponsor (Orig.).
(D-4) Sponsor's affidavit that the sponsor's net worth, together with the
proceeds offirmly committed construction financing, is sufficient
to meet the requirements of GBL Section 352-k and all of the
unsecured obligations assumed by the sponsor under the offering
plan, including the sponsor's obligation to complete all work and
the sponsor's obligations for unsold timeshares.
24.2(c)
12
(D-5) Sponsor's audited financial statements for the last two fiscal
years ending prior to the date of submission. Timeshare sales
financed by the sponsor must be presented in the sponsor's
financial statements on an installment sale basis unless the
purchase-money notes executed by timeshare purchasers are
negotiated to an unaffiliated third party or parties without direct
or indirect recourse to the sponsor.
(D-6) An affidavit from the sponsor and principals of the sponsor, as
defined in Section 24.1 (c), stating whether the sponsor and
principals of the sponsor have taken part in public offerings of
cooperative interests in realty, including timesharing plans, in or
from New York, which were initially offered during the
preceding five years. State the addresses of the realty and
approximate date the offering plan was filed (Orig.).
(D-7) Completed statistical information card (available from the
Department of Law).
(d) Upon preliminary advice from the Department of Law that the proposed offering
plan may be filed, sponsor must submit the following:
(1) Checks (certified or uncertified) for the balance of the filing fee under GBL
Section 352-e(7)(a) and the filing fees under GBL Section 359-e(5), payable
to "New York State Department of Law"; and
(2) Six (6) copies of the typed or printed, bound offering plan.
(e) The plan is filed on the date indicated in the letter from the Department ofLaw stating
that the plan is filed.
24.2(e)
13
Section 24.3 Format and Content.
Plans subject to this Part shall comply with the format and minimal disclosure requirements
set forth in subsections (a) through (z) of this Section, in addition to the requirements ofthe
provisions of Article 23-A of the GBL.
(a) Cover. The outside front cover of the offering plan shall contain the following
information in the following order:
(I) The following statement must be printed in capital letters in bold face roman type
at least as large as eight (8) point modem type and at least two (2) points leaded:
CONTRACTS TO PURCHASE TIMESHARES UNDER THIS OFFERING PLAN
MAY BE CANCELLED BY THE PURCHASER WITHIN SEVEN (7) BUSINESS
DAYS OF EXECUTION. SEE PAGE 1.
If the law of the jurisdiction in which the timeshare property is located requires
a rescission period of longer than seven (7) business days from the date of
execution of the contract, substitute the appropriate time period in the above
legend.
(2) The title in capital letters and bold face type: TIMESHARE OFFERING PLAN
followed by the name and location of the timesharing plan.
(3) The amount of the offering, which shall be based on the maximum aggregate
price at which the timeshares are initially offered. State the number of units
and the number of intervals involved in the offering. If the initial offering is
for one phase of a multi-phase development, so state and indicate the
anticipated maximum number of units and intervals to be offered in other
phases.
(4) The name and principal business address of the sponsor and selling agent.
Telephone numbers may also be included. The address ofthe sponsor must not
be in care of the sponsor's attorney.
(5) The statement: "Date ofthe offering plan: _
This plan may not be used after unless extended by
amendment." The date ofthe offering plan shall not be earlier than the date the
Department of Law files the plan. The term of the initial offer is twelve (12)
months commencing on the date indicated in the letter from the Department of
Law stating that the plan is filed. The date of the plan should be left blank at
submission to the Department of Law and completed when the plan is filed.
24.3(a)
14
(6) The following statement must be printed in capital letters apart from the other
print in bold face roman type at least as large as eight (8) point modern type
and at least two (2) points leaded: THIS OFFERING INVOLVES A HIGH
DEGREE OF RISK. SEE PAGE 2 FOR A DISCUSSION OF RISK FACTORS.
(7) The following statement must be printed in capital letters in bold face roman
type at least as large as eight (8) point modem type and at least two (2) points
leaded: THIS OFFERING PLAN IS THE ENTIRE OFFER TO SELL THESE
TIMESHARE INTERESTS. NEW YORK LAW REQUIRES THE SPONSOR TO
DISCLOSE ALL MATERIAL INFORMATION IN THIS PLAN AND TO FILE THIS
PLAN WITH THE NEW YORK STATE DEPARTMENT OF LAW PRIOR TO
SELLING OR OFFERING TO SELL ANY TIMESHARE INTERESTS. FILING WITH
THE DEPARTMENT OF LAW DOES NOT MEAN THAT THE DEPARTMENT OR
ANY OTHER GOVERNMENT AGENCY HAS APPROVED THIS OFFERING.
(b) Table of contents. The format and order set forth below must be followed in the table
of contents. Include headings for the subjects not marked with an asterisk. In
addition, a limited number of headings or subheadings may be added to the plan.
Headings for subjects that are marked with an asterisk may be omitted if the subject
matter is not applicable to the offering. Omissions, other than headings marked with
an asterisk in the table of contents, and additions should be expressly noted and
explained in the transmittal letter. Alternative wording for headings to meet particular
facts are set forth in parentheses.
24.3(b)
15
Table of Contents
RIGHT OF CANCELLATION .
SPECIAL RISK FACTORS .
INTRODUCTION .
DEFINITIONS .
DESCRIPTION OF PROPERTY AND IMPROVEMENTS .
LOCATION AND AREA INFORMATION .
SCHEDULE A - PRICES OF INTERVALS .
SCHEDULE B - PROJECTED BUDGET FOR TIMESHARING PLAN .
*SCHEDULE C - PROJECTED BUDGET FOR
HOMEOWNERS ASSOCIATION .
CHANGES IN PRICES OR UNITS .
*ACCOUNTANT'S CERTIFIED STATEMENTS OF OPERATION .
PROCEDURE TO PURCHASE .
*FINANCING OFFERED (ARRANGED) BY SPONSOR .
STATE OF TITLE .
*CLOSING OF TITLE .
*CLOSING COSTS .
RIGHTS AND OBLIGATIONS OF SPONSOR .
RIGHTS AND OBLIGATIONS OF TIMESHARE OWNERS .
*RIGHTS AND OBLIGATIONS OF BOARD OF MANAGERS
(BOARD OF DIRECTORS) .
RESORT EXCHANGE PROGRAM .
MANAGEMENT .
RESERVATION AND CHECK-IN/CHECK-OUT PROCEDURES .
IDENTITY OF PARTIES .
DOCUMENTS ON FILE .
GENERAL .
PART II
DESCRIPTION OF PROPERTY AND SPECIFICATIONS
(AND BUILDING CONDITION) .
LOCATIONI AREA MAP .
SITE MAP .
*FLOOR PLANS .
PURCHASE (SUBSCRIPTION) AGREEMENT .
*POWER OF ATTORNEY .
*FORM OF DEED .
*FORM OF SECURITY INSTRUMENT, NOTE AND RELATED
FINANCING DOCUMENTS .
*DECLARATION OF CONDOMINIUM .
*DECLARATION OF COVENANTS AND RESTRICTIONS .
*BY-LAWS .
*PROPRIETARY LEASE .
HOUSE RULES .
*FACILITIES USE AGREEMENT .
*TITLE TRUST AGREEMENT .
TAX OPINION .
FINANCIAL STATEMENTS OF SPONSOR .
LIST OF PERSONAL PROPERTY INCLUDED IN UNITS .
*FIVE-YEAR CALENDAR OF INTERVALS .
CERTIFICATIONS .
SPONSOR AND PRINCIPALS
SPONSOR'S ENGINEER (OR ARCHITECT)
SPONSOR'S EXPERT CONCERNING ADEQUACY OF BUDGET
16
(c) Right of cancellation. This section must be on a separate right-hand page
immediately following the table of contents and must provide, at a minimum that:
(I) the purchaser may cancel his or her contract by mailing written notice of
cancellation, postmarked within seven (7) business days of the date on
which the contract was executed, to the sponsor or selling agent at the
address indicated on the cover of the offering plan;
(2) the right to cancel may not be waived under any circumstances and any
instrument executed by a purchaser which purports to waive such right shall
be deemed void and of no effect;
(3) a purchaser may exercise the right to cancel at will and without explanation;
(4) a purchaser may cancel his or her contract without penalty or obligation and
all payments made by the purchaser prior to cancellation shall be refunded
within thirty (30) days after the sponsor or selling agent receives notice of
cancellation.
(5) any note or other negotiable debt instrument executed by the purchaser in
connection with financing provided or arranged by the sponsor shall be
returned to the purchaser within thirty (30) days after the sponsor or selling
agent receives notice of cancellation.
If the law of the jurisdiction in which the property subject to the timesharing plan
is located requires a rescission period of more than seven (7) business days from
the date of execution of the contract, substitute the appropriate time period in this
section of the offering plan.
(d) Special risks. This section must begin on a separate right-hand page immediately
following the section on purchaser's right of cancellation. All features of a plan
which involve significant risk or will disproportionately or unusually affect
maintenance charges or obligations of timeshare owners in future years of
timeshare operation must be conspicuously disclosed and highlighted in
consecutively numbered paragraphs in order of decreasing significance. A brief
description should be given in this section and a more thorough description should
be given in a referenced later section. Questions highlighted in this section should
be resolved in favor of inclusion. To the extent applicable, this section should
include the following special risk factors in the following order:
24.3(d)
17
(1) In a right-to-use timesharing plan, state that if the sponsor or other fee
owner of the timeshare property declares bankruptcy, the rights of all
purchasers (even purchasers who have paid for their timeshares in full) may
be terminated. State that in such event, purchasers will not be entitled to
use their units or other timeshare facilities and that the sponsor may sell the
timeshare property to a third party who will be under no obligation to honor
the contracts of timeshare purchasers. State that timeshare purchasers may
be treated as general unsecured creditors in bankruptcy and, in such event,
will receive little or no refund.
(2) In a right-to-use timesharing plan, state that all mortgages or other liens
presently encumbering the timeshare property contain, and any consensual
liens placed on the timeshare property in the future will contain, non
disturbance clauses to protect the possession and use rights of timeshare
owners from foreclosure of such liens. State that involuntary liens filed
against the property in the future (such as judgment liens or mechanic's
liens filed against the property by the sponsor's creditors) will cut off the
rights of timeshare owners in foreclosure.
(3) In a campground timesharing plan, disclose the number of timeshares sold
and offered for sale for each campsite in the campground or multi-site
campground network and include a reference to the discussion of the
reservation policy. State whether or not and under what conditions the
sponsor may permanently or temporarily close campgrounds which are part
of the timesharing plan. If the sponsor offers trailer, or other equipment
rentals, state that availability is limited and include a reference to a more
detailed discussion of equipment rentals.
(4) If, as part of the timesharing plan, timeshare owners have the right to use
and occupy property outside the immediate timeshare regime (at no
additional charge or at a discount from rates charged to the general public),
describe the easement of the timeshare regime over the other property and
specify those mortgages and other liens, if any, to which the easement is
subordinate. Discuss the possibility that such easement (and the right of
timeshare owners to use and occupy the other property) may be cut off by
the foreclosure of such mortgages or other liens on the other property or by
the bankruptcy of the owner of the other property.
14.3(d)
18
(5) If, as part of the timesharing plan, timeshare owners have the right to use
and occupy property outside the immediate timeshare regime (at no
additional charge or at a discount from rates charged to the general public),
describe the covenant (running with the land) that such other property will
be used only for the purposes set forth in the offering plan. Specify any
mortgages or other liens to which the covenant is subordinate and discuss
the possibility that such covenant may be cut offby the foreclosure of such
mortgages or other liens on the other property and that, in such event, the
use of the other property may be changed from its use at the time that the
purchaser acquired his or her timeshare.
(6) State that timeshares should be purchased for personal recreational use and
not for profit or investment. State that no resale market exists for
timeshares and that the resale value oftimeshares, ifany, is uncertain. State
that most real estate brokers will not list timeshares and that an owner's
efforts to sell his or her timeshare will bring him or her into direct
competition with the sponsor who may have a large inventory of unsold
intervals. Discuss any restrictions or fees imposed on the resale of
timeshares.
(7) State which resort exchange network, if any, the sponsor has joined. State,
if applicable, that the exchange network is independent of the sponsor and
that timeshare owners will be entitled to use this network only as long as the
sponsor and the timeshare property continue as a member of the exchange
company. State that the availability of exchange privileges for any
timeshare owner will be contingent upon meeting the terms and conditions
ofthe exchange company, including payment ofconditions ofthe exchange
company, including payment of membership and exchange fees. If
applicable, state that a timeshare owner must release his or her timeshare to
the exchange network in order to participate in the exchange program
before being informed ofthe specific resorts or locations available for trade.
State in capital letters that there can be no assurance that a particular
interval can be exchanged, that an exchange for a particular interval or a
particular resort can be arranged, that this timeshare resort will continue to
qualify with the exchange company or that this interval program or any
other will continue to exist. If the timesharing plan is not affiliated with an
exchange network, so state.
24.3(d)
19
(8) In a right-to-use timesharing plan, state that a timeshare purchaser acquires
no recordable interest in real property. In a right-to-use or leasehold
timesharing plan, state that a timeshare purchaser receives no voting rights
or right to control the policies or decisions of the sponsor with regard to the
use or maintenance ofthe timeshare property. State also that full control for
the adequate operation and maintenance ofthe timeshare property lies with
the sponsor and that the facilities and services of the timesharing plan will
be available only as long as the sponsor is able to provide them. State that
no bond or other security has been provided for the sponsor's undertakings
in this regard.
(9) In a fee or cooperative timesharing plan, state that the successful operation
and maintenance of the timeshare property depends upon the ability of the
sponsor to meet its financial obligations with respect to unsold timeshares.
State that during the early years of the project, the failure of the sponsor to
meet its obligations in this regard will require a small number of timeshare
owners to cover the costs of operating and maintaining the entire project.
State that the sponsor has provided no bond or other security for its
undertaking in this regard.
(10) In a fee or cooperative timesharing plan, state that while timeshare owners
do have certain voting rights, it is expected that most timeshare owners will
not participate in the management of the timeshare regime since each
timeshare owner has a relatively small interest in the timesharing plan and
is away from the timeshare property for most of the year and it is unlikely
that the many timeshare owners could be effectively organized into a voting
block. State that the governing body of the timeshare regime will be
controlled by the sponsor and that the daily affairs of the timeshare regime
will be handled by the sponsor and managing agent.
(11) State the number of additional units that the sponsor plans to construct in
subsequent phases of the project and the number of timeshares which will
be offered for sale in those units. State the sponsor's obligation to add to
recreational areas and resort facilities in the event of such expansion and,
if the sponsor has no such obligation, state that the recreational areas and
resort facilities may be inadequate to meet the needs of all future timeshare
owners.
(12) In a mixed-use project, state that the larger project of which the timesharing
plan is a part includes whole ownership units and that the interests of
timeshare owners and whole unit owners may conflict.
24.3(d)
20
(13) State that the units and the furnishings therein will be subject to
extraordinary wear and tear. State that the projected budget for the
timeshare regime (set forth in Schedule B) includes estimates for unit
repairs and the replacement of furnishings, but that no assurances can be
given that these reserves will be adequate or that they will not need to be
increased in the future.
(14) In a fee timesharing plan, describe the risk of partition of a timeshare unit
and its appurtenant interest in common elements under the law of the
jurisdiction in which the timeshare property is located. Describe the effect
that a successful partition action would have on the timeshare owners
involved.
(15) In a fee timesharing plan, describe the risk that federal and state authorities
will foreclose on an entire timeshare unit and its appurtenant interest in the
common elements in order to satisfy tax liens against less than all co
owners of that unit. Describe the effect that such a foreclosure would have
on the timeshare owners involved.
(16) State which facilities may be used by other than timeshare owners (e.g.,
members ofthe public, hotel guests), including any limitations on such use.
(e) Introduction. The introduction must:
(1) Explain that the purpose of the offering is to set forth all the terms of the
offer. Explain that the offering plan may be amended from time to time
when an amendment is filed with the New York State Department of Law.
(2) Identify the sponsor and state when the sponsor acquired title to the
timeshare property or an interest as contract vendee in the timeshare
property.
(3) Describe the structure of the timesharing plan and the interests acquired by
purchasers.
(4) State the number and type ofunits in each phase ofthe development and the
number and type oftimeshares being offered under this offering plan. Refer
to the Description of Property and Improvements required by Section
24.3(g) of this Part for a description of the land, buildings, units, grounds,
parking facilities, recreational facilities and other amenities which are part
of the timeshare regime.
24.3(e)
21
(5) State that the prices were set by the sponsor alone and are not subject to
review or approval by the Department of Law or any other government
agency. State also that prices are negotiable and that different purchasers
may pay different prices for identical interests.
(6) State that the plan including all Schedules and Parts A, Band C of the
Exhibits constitute the entire offer ofthe sponsor and that copies ofthe plan
and Parts A, Band C of the Exhibits will be available for inspection by
prospective purchasers without charge at the site whenever the on-site sales
office is open and at the office of the selling agent or sponsor.
(7) State any lawful limitations on who may purchase units.
(8) Outline the basic aspects of timeshare ownership under the offering plan,
including the following:
(i) That each purchaser is entitled to the exclusive possession and use
of a specific unit or type of unit with the non-exclusive right to use
common facilities during his or her interval.
(ii) That each timeshare owner must pay maintenance fees set by the
sponsor (in a right-to-use timesharing plan) or by the governing body
of the timeshare regime (in a fee timesharing plan or a cooperative
timesharing plan).
(iii) Any restrictions on use, resale, leasing or mortgaging of timeshare
interests.
(iv) The authority of the sponsor and/or the governing body of the
timeshare regime to manage the timeshare property and the
timeshare owner's right to vote for members of the governing body.
(v) How each unit or interval will be assessed and taxed.
(vi) The responsibility of the sponsor and/or the governing body of the
timeshare regime for maintenance and repairs and for casualty and
liability insurance.
24.3(e)
22
(9) Include the following paragraph printed in bold face roman type at least as
large as eight (8) point modern type and at least two (2) points leaded:
THE PURCHASE OF A TIMESHARE HAS MANY SIGNIFICANT
LEGAL AND FINANCIAL CONSEQUENCES. THE ATTORNEY
GENERAL STRONGLY URGES YOU TO READ THIS OFFERING
PLAN CAREFULLY BEFORE THE EXPIRATION OF THE SEVEN
(7) BUSINESS-DAY CANCELLATION PERIOD (SEE PAGE 1).
If the Law of the jurisdiction in which the property subject to the
timesharing plan is located requires a rescission period of more than seven
(7) business days from the date of execution of the contract, substitute the
appropriate time period in the legend above.
(f) Definitions. Important terms, terms that are not likely to be understood by the
general public and terms that have a special meaning or are used as proper nouns
should be defined and explained. Such terms include, but are not limited to, the
following: timeshare interval, exchange network, condominium, association,
cooperative corporation, common elements, limited common elements,
maintenance charges, declaration, board of directors, board of managers, by-laws,
common expenses, offering plan, unit.
(g) Description of property and improvements.
(1) Generally describe the type or types of units in each phase; the number and
type oftimeshare interests being offered; and the approximate number and
type built to date. Include floor plans for each unit. A floor plan for every
variation of a typical unit is not required.
(2) Generally describe the property. Include a reduced size copy of the site
plan.
(3) Generally describe the facilities, amenities and buildings, both existing and
to be built, which are part of the timeshare regime. Include floor plans for
buildings. The Department of Law may require a detailed engineer's or
architect's report for existing structures.
(4) Generally describe the parking facilities.
(5) Generally describe other facilities, amenities and buildings which are
outside the timeshare regime but are available to owners at no additional
charge or at a discount and which timeshare owners have a right to use.
Include details of charges.
24.3(g)
23
(6) Generally describe the furnishings contained within each unit, including
furniture, kitchen and dining equipment, laundry facilities, refuse disposal
systems, television and television reception devices and floor coverings.
Inclusion in Part II of the offering plan or in an out-of-state offering plan
accepted pursuant to Section 24.1(g) of an exhibit which sets forth the
standard furnishings for units shall satisfY this requirement.
(7) State whether buildings, facilities, dwelling units, including kitchens and
bathrooms, are accessible to the handicapped. If not fully accessible,
provide details.
(8) Provide a certification pursuant to Section 24.4(c)(4) of this Part.
(9) State that copies offiled plans and specifications have been furnished to the
Department of Law and are available for inspection at the sales office.
State also that copies of the filed plans and specifications and copies of as
built plans will be delivered to the board of whatever entity will govern the
timeshare facility within sixty (60) days after the first closing or after each
phase is completed.
(10) State that the construction of all aspects of the buildings, facilities and
grounds is or will be performed in accordance with the filed plans and
specifications, applicable laws, codes and regulations (including
environmental laws, codes and regulations) and locally accepted
construction practices.
(11) Disclose the existence of any applicable federal, state or local laws
concerning lead-based paint and whether the sponsor will comply with such
laws and the Oregulations promulgated thereunder.
(h) Location and area information. This section should:
(1) Describe the location ofthe property and surrounding areas. Ifthe property
is not located in a major urban area, describe the transportation, shopping,
recreational, medical and religious facilities available.
(2) Describe the police, fire, water, sanitation, snow removal and road
maintenance services. If all such services are provided by the local taxing
authority, it is sufficient to refer to the services provided by it. If any such
services are not provided by the local taxing authority, such fact must be
conspicuously disclosed together with the method of funding and securing
such services.
24.3(h)
24
(3) Describe the zoning of the site and what uses are permitted as of right. If
any adjoining areas are undeveloped, disclose the permitted uses of the
adjoining areas.
(4) If the sponsor or any principals of the sponsor own, in whole or part, or
have an option or right to acquire in whole or part, any adjoining areas
which are not fully developed, disclose such facts and the present intention
of the sponsor and principals with respect to the development of such areas.
(i) Purchase prices and common interest or share allocation (Schedule A).
(1) Schedule A must appear on a separate page entitled "Schedule A" and must
provide the following information, to the extent applicable, for each interval
unit:
(i) Unit and interval identification.
(ii) Number of rooms (usable space in square feet) and bathrooms.
(iii) Allocation of shares or interests in common elements.
(iv) Purchase price.
(v) Projected annual maintenance charges.
(vi) Annual charges (excluding fees for membership in an exchange
network) for any items which are not included in annual maintenance
charges.
(vii) Total annual carrying charges (annual maintenance charges plus other
annual charges).
(viii) Maximum amount of sponsor financing available and the monthly
payment due.
(2) Detailed footnotes must support and explain the information in Schedule A.
These footnotes must include, but are not limited to, the following:
(i) Indicate that the projected maintenance charges are based on
estimated expenses for a stated twelve-month period (e.g. January 1,
1985 to December 31, 1985).
24.3(i)
25
(ii) State the method of calculating the number of rooms in each unit. If
the number of rooms is calculated in accordance with an industry
standard, it is sufficient to refer to the industry standard employed.
(iii) State which intervals are devoted to maintenance of the units.
(iv) Explain the basis for the allocation of shares or interests in common
elements.
(v) Refer to the portion of the offering plan that explains price changes.
Ifapplicable, state in capital letters that prices are negotiable and that
different purchasers may pay different prices for identical interests.
(vi) Refer to the portion of the offering plan that discloses and explains
any closing costs or adjustments that a purchaser may have to pay
and project the approximate amount due for each timeshare
purchased.
(vii) Explain that the projected maintenance charges are separate and
distinct from the payments due on any financing obtained by the
purchaser.
(viii) If applicable, refer to the section of the offering plan that fully
explains the terms and conditions on which sponsor will extend
financing for the purchase of timeshares.
(ix) Explain how the projected annual maintenance charges were derived
from Schedule B. If the number of units and intervals in the
timesharing plan is not firm, incorporate in Schedule A the
maximum amount that a timeshare owner could be charged for
maintenance fees. Describe fully and completely the obligation of
the sponsor to pay the maintenance fees allocable to unsold intervals
and describe fully and completely any sponsor guarantee of
maintenance fees.
U) Projected budget for the timesharing plan. The offering plan must include a
current or projected budget for timesharing operation in Schedule B.
(1) The budget shall be based upon a specified twelve-month period and shall
be either the current budget under which the timesharing plan is operating
24.30)
26
or, if timeshare operations have not yet begun, a projected budget starting
on a date when it can reasonably be expected that timeshare operations will
begin.
(2) If the number of units or intervals that will be included in the timesharing
plan is not firm and the assessment of timeshare owners may vary with the
number of units or intervals (e.g., recreational facilities may be added if
membership increases), include alternative budget tables sowing how the
income and expenses change with the size of the membership.
(3) The budget for the timesharing plan shall be in the following format.
Headings marked with an asterisk may be omitted if not applicable to the
offering. Additional income, expenses or cost items unique to a timesharing
plan should be added whenever appropriate to renect additional sources of
income, expenses, costs or unique circumstances.
24.3U)
27
SCHEDULE B
Budget for Timeshare Operation
_____,19_ to ,19_
Income
Maintenance charges $_ _
*Sponsor guaranty , $_ _
*Other (explain) $_ _
TOTAL $_ _
Expenses
Labor $_ _
Heating $_ _
Utilities (electricity and gas) $_ _
Water charges and sewer rents , $_ _
Repairs, maintenance and supplies $_ _
*Service contracts $- -
Insurance $_ _
Management fees $_ _
Legal fees and audit fees $_ _
Franchise and corporate taxes $_ _
Real estate taxes $_ _
Replacementreserve $_ _
*Association fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. $_ _
Other $_ _
*Contingency , $_ _
TOTAL $_ _
28
(4) Detailed footnotes must support and explain the figures set forth in
Schedule B. The footnotes must set forth the basis or assumptions for each
figure.
(i) Set forth the annual maintenance charges assessed against the
various intervals and show how the figure in Schedule B for total
income from maintenance charges was calculated. State that the
maintenance charges are not fixed and will rise over time as the costs
of operating the resort increase.
(ii) Sponsor guaranty. Describe the sponsor's commitment to offset the
expenses of the timesharing plan (in addition to the sponsor's
obligation to pay maintenance fees assessed against unsold intervals)
in order to keep maintenance fees low. Explain the method for
calculating this subsidy in the future and disclose how long and
under what conditions sponsor is obligated to subsidize timeshare
expenses. If applicable, state in capital letters that no bond or other
security has been provided to assure performance of the sponsor's
undertaking in this regard and that the sponsor's ability to perform
will depend on its financial condition at the time.
(iii) Other. Discuss any sources of revenue other than maintenance
charges or a guaranty by the sponsor, such as guest fees or fees for
maid and linen service. Set forth the individual charges for such
services or privileges. The cost associated with providing such
services must be itemized as an expense below.
(iv) Labor costs. State the number offull and part-time staffand whether
the staff will be union members. The labor budget must include
benefits required by local, state or federal law or required by contract
such as worker's compensation, disability insurance, welfare and
pension contributions by employers, unemployment insurance and
payroll taxes. Specify the wages, and the cost of each applicable
benefit. The budget must reflect current wage rates and reasonably
anticipated increases or increases mandated by contract. If
applicable, state the expiration date of all union contracts. If there
are non-union employees, discuss whether their wages meet state
minimum wage laws.
24.3(j)
29
(v) Heating, cooling and hot water costs. State the type and quantity of
energy estimated to be used during the budget year and the cost per
gallon or other measure, inclusive of sales tax, for all energy costs
for providing heating, cooling and hot water for the timeshare
property, including recreational facilities. Cost figures should be
based on current rates plus a reasonably anticipated increase.
(vi) Utilities (electricity and gas). State the basis for the projected
consumption and projected unit cost for utilities. Unit cost should be
based on the current tariff plus a reasonably anticipated increase.
(vii) Water and Sewer. State the present rents and charges and base the
projection on reasonably anticipated increases.
(viii) Repairs, maintenance and supplies. Describe the material
components of the expense for repairs and maintenance, such as
interior repairs, roofing, exterior repairs (including walls,
foundations, windows, doors and locks), heating system (fuel burner,
boiler, pipes, radiators), plumbing, electrical work, exterminating,
grounds maintenance (snow removal, gardening and landscaping,
where applicable), janitor supplies, painting of common areas, and
such building services and maintenance items not included under
"service contracts" or "other expenses."
(ix) Service contracts. State the name of the contractor, the service, the
annual cost and the expiration ofthe contract for each contract where
the cost exceeds $5000.00 per year.
(x) Insurance.
(9:) The budget for insurance must provide, and the sponsor must
have in place prior to the sale of any timeshares, fire and
casualty insurance (covering all timeshare property, including
the units, furnishings and recreational facilities) under an
agreed replacement cost policy or under a policy including at
least an eighty percent (80%) coinsurance provision so that
the insured will not be a coinsurer. Discuss the adequacy of
the insurance to replace the buildings in the event of a total
loss. Disclose the items covered, the coverage limits, the
deductibles and the hazards insured against. Disclose whether
insurance proceeds may be applied by the mortgagee to
reduce the outstanding mortgage indebtedness instead of
restoring the property.
24.3U)
30
(n) The budget for insurance must provide, and the sponsor must
have in place prior to the sale of any timeshares, public
liability insurance in such amounts as are reasonable and
adequate to cover any foreseeable liability arising out of
operation of the timeshare property. Disclose the coverage
limits.
(f) The offering plan must provide that each unit owner is an
additional insured under the fire and casualty and general
liability policies on the project.
(Q) The offering plan must provide that the fire and casualty and
general liability insurers waive their subrogation rights against
timeshare owners; that no act or omission by any timeshare
owner will void the fire and casualty or general liability
policies; and that there will be no pro-rata reduction in
coverage under such policies in the event a timeshare owner
has an individual policy which provides overlapping
coverage.
(~) State that insurance coverage meeting the requirements set
forth in this Part will be maintained at all times by the
governing body of a fee or cooperative timesharing plan
(during such time as the governing body is directly or
indirectly controlled by the sponsor) or by the sponsor in a
right-to-use or leasehold timesharing plan.
(xi) Management contract. State the basis for the projected management
fee. The projected cost must include any costs required by the terms
of the management agreement, such as bonding.
(xii) Real estate taxes. For the current or projected budget year, and for
the two years prior to submission (ifsuch figures are available), state
the assessing authority and its fiscal year, the assessed valuation for
the timeshare property, the tax rates and the amounts payable. Data
for the projected budget year should be estimated ifactual figures are
not currently available.
(xiii) Replacement reserve. Disclose which items of personal property this
reserve fund will be used to replace. Discuss the cost and useful life
of the property covered by this fund and state when and under what
24.3(j)
31
circumstances funds will be withdrawn from this reserve. State
whether the fund will be adequate to replace all furnishings and other
personal property in the units.
(xiv) Association fees. In the case of a condominium fee timesharing
plan, expenses generated by an umbrella homeowner association
must be included as an item in the condominium budget and passed
through to timeshare owners in a single maintenance charge. Include
a reference to Schedule C.
(xv) Contingency fund. State that the contingency fund (if any) is
intended to provide for any unanticipated expenses or unanticipated
increases in the projected expenses. Distinguish between the
contingency fund and the replacement reserve fund.
(5) In the case ofa condominium fee timesharing plan, if title to property will
be held in a corporation or other entity functioning as a homeowner's
association, or if membership in a homeowner's association is an integral
part ofthe offering, include a separate budget ofincome and expense for the
homeowner's association as Schedule C. Ifthe number of units that will be
members of the homeowners association is not firm, and the assessment by
the homeowner's association of unit owners may vary with the size of
membership, (e.g., recreational facilities may be added if membership
increases) include alternative budget tables showing how the income and
expenses change as the size of membership increases. Detailed footnotes
that are consistent with the footnotes described in this Part for Schedules A
and B must support and explain the information in Schedule C.
(k) Changes in prices and facilities.
(1) The offering prices set forth in Schedule A may be changed only by a duly
filed amendment to the plan; provided, however, that the sponsor may enter
into an agreement with an individual purchaser to sell one or more
timeshares at prices no more than ten percent (10%) below those set forth
in Schedule A (including rebates, gifts, first-day discounts and other
incentives) without filing an amendment if this section of the plan includes
the following legend in capital letters:
THE PRICES SET FORTH IN SCHEDULE A ARE NEGOTIABLE.
DIFFERENT PURCHASERS MAY PAY DIFFERENT PRICES FOR
IDENTICAL INTERESTS.
24.3(k)
32
(2) State that no change will be made in the size or number of units or intervals,
the allocation of shares or common interests, the amount or quality of the
common elements and public areas or in the size or quality of recreational
facilities except by amendment to the plan.
(3) State that no material change will be made in unit size, layout or the
allocation of shares or common interest if a purchase agreement has been
executed and delivered for a timeshare in that unit and the purchaser is not
in default.
(4) State that no material change will be made in the size or quality of common
elements if a purchase agreement has been executed and delivered for a
timeshare and the purchaser is not in default.
(1) Accountant's certified statements of operation. If the timesharing plan is in
operation at the time the proposed offering plan is submitted to the Department of
Law, include certified statements of income and expenses for the two most recent
fiscal years of operation prepared by an independent certified public accountant.
If the timesharing plan has been in operation for less than two years, include a
statement for the period since operations began.
(1) The accountant's certification must:
(i) State that the examination was made in accordance with generally
accepted auditing standards and included such tests ofthe accounting
records and other auditing procedures as are generally considered
necessary in the circumstances.
(ii) State that, in the accountant's opinion, the statement of income and
expenses presents fairly the income and expenses of the project for
the periods specified in conformity with generally accepted
accounting principles applied on a consistent basis.
(iii) Be signed by a duly authorized signatory or by the firm.
(2) The statement ofincome and expenses should conform as nearly as possible
to the order of presentation and categories presented in Schedule B.
(m) Procedure to purchase. Describe the essential terms of the purchase or
subscription agreement, which must comply with this Part.
(1) State the amount and/or the percentage of the minimum down payment.
24.3(m)
33
(2) Statutory requirement. The sponsor shall comply with the escrow and trust
fund requirements of GBL Sections 352-e(2-b) and 352-h and these
regulations, and all funds paid by purchasers shall be handled in accordance
with these statutes and regulations.
(3) Escrow, Trust Fund. The following requirements shall apply to all offerings
and shall be fully disclosed in all offering plans subject to this Part:
(i) The account. All deposits, down payments, or advances made by
subscribers or purchasers prior to closing of each individual
transaction, whether received before or after the date of
consummation of the plan, must be placed within five (5) business
days after the agreement is signed by all necessary parties, in an
attorney's segregated special escrow account in a bank doing
business in the State of New York which account is covered by
federal bank deposit insurance. Sponsor shall include as a special
risk that deposits in excess of $1 00,000 will not be federally insured
in excess of $100,000. An attorney shall open and maintain such
account in his or her own name, or in the name of a firm of attorneys
of which he or she is a member, or in the name of the attorney or
firm ofattorneys by whom he or she is employed, separate from such
attorney's personal accounts or from any accounts in which assets
belonging to the firm are deposited, and separate from any accounts
maintained in the capacity of executor, guardian, trustee or receiver.
A master escrow account with a sub-account for each subscriber or
purchaser is acceptable. The name of the account, the bank, and the
bank address must be stated in the plan. The word "escrow" must be
included as part ofthe name ofthe account. Funds from this account
may be released only by signature of the attorney who is named as
Escrow Agent. Neither the sponsor nor any principal ofthe sponsor
may be a signatory on the account. Funds must be placed in an
interest-bearing account, with all interest credited to the purchaser or
subscriber, unless either the purchaser or subscriber defaults and the
plan is consummated, or the sponsor elects to place the funds in a
separate Interest-On-Lawyer's-Account ("lOLA") for each offering
plan pursuant to Judiciary Law Section 497. The plan shall indicate
whether the interest rate to be earned will be the prevailing rate for
such accounts. State the current prevailing rate and when interest
will begin to accrue. No fees of any kind may be deducted from the
account principal or any interest earned thereon. Sponsor shall bear
any administrative cost for maintenance of the account.
24.3(m)
34
(ii) Payments. All funds received from purchasers or subscribers
whether in the form of checks, drafts, money orders, wire transfers,
or other instruments which identitY the payor, shall be made payable
to or endorsed by the purchaser or subscriber to the order of the
attorney or law firm as escrow agent.
(iii) The escrow agent. The escrow agent must be an attorney admitted
to practice in the State of New York or an attorney admitted in a
foreign jurisdiction who submits to the jurisdiction of the State of
New York for any cause of action arising out of the escrow
agreement or a firm of such attorneys. The escrow agent shall be
independent of the sponsor. Attorneys admitted or practicing in the
State of New York must comply with the Appellate Division rules
for the preservation of client funds ofthe Judicial Department having
jurisdiction over the attorney. A law firm which has a member who
is a principal of the sponsor, shall not be the escrow agent, but one
or more members of the firm other than the principal may act as
escrow agent. Only an attorney acting as escrow agent shall be a
signatory on the account and only such attorney shall be authorized
to release funds. The name, address and telephone number of the
escrow agent and of each attorney who is a signatory must be stated
in the plan.
(iv) Escrow agreement. The material terms of the escrow agreement
shall be disclosed in the plan and a copy of the full agreement must
be contained as an exhibit to the plan and a copy of the full
agreement must be contained as an exhibit to the plan in Part II.
Include, without limitation, any indemnity by the sponsor in favor of
the escrow agent, provision for discharge of the escrow agent's
obligations by the sponsor upon payment of the deposit and interest
in accordance with these regulations, any right of the escrow agent
to represent the sponsor in any lawsuit, any compensation by the
sponsor to the depository bank, any provision for payments by the
sponsor under an indemnity in favor of the escrow agent and
whether the sponsor will compensate the escrow agent for acting as
such. A model form for the escrow agreement is available from the
Department of Law; if such form is not used the attorney's
transmittal letter should so indicate. If a different form of escrow
agreement is used, all material terms of the Department of Law's
model must be included in the agreement, and the agreement should
be red-lined to indicate changes from or additions to the model form.
24.3(m)
35
(v) Notification to purchaser. Within ten (l 0) business days after tender
of the deposit submitted with the subscription or purchase
agreement, the escrow agent shall notify the subscriber or purchaser
that such funds have been deposited in the bank indicated in the
offering plan, and shall provide the account number and the initial
interest rate. If the subscriber or purchaser does not receive notice
of such deposit within fifteen (15) business days after tender of the
deposit, he or she may cancel the subscription or purchase and
rescind within ninety (90) days after tender of the deposit, or may
apply to the Attorney General for relief. Rescission may not be
afforded where proof satisfactory to the Attorney General is
submitted establishing that the escrowed funds were timely deposited
in accordance with these regulations and requisite notice was timely
mailed to the subscriber or purchaser.
(vi) Escrow revisions. Before funds are transferred to a new escrow
account, or ifthe escrow agent is replaced, the plan must be amended
to provide the same full disclosure with respect to the new account,
the escrow agent and the escrow agreement as was originally
provided. A bond, letter of credit or other security may be
substituted for the escrow account only after the Department of Law
approves in writing the use of such alternate form of security,
pursuant to the provisions of 13 NYCRR Section 24.3(m)(4) et seq..
(vii) Release offunds. The escrow agreement and the plan must set forth
the requirements and procedures for the release of the escrowed
funds. These shall include:
(f!) Under no circumstances shall sponsor apply for release ofthe
escrowed funds of a defaulting subscriber or purchaser until
after consummation of the plan. Consummation of the plan
does not relieve the sponsor of its obligations pursuant to
GBL Section 352-h.
(12) The escrow agent shall hold the funds in escrow until
otherwise directed in (1) a writing signed by both sponsor and
purchaser or subscriber or Cli) a determination ofthe Attorney
General pursuant to subsection (viii) below or (iii) ajudgment
or order of a court of competent jurisdiction, or until released
pursuant to subsection (g) hereinafter.
24.3(m)
36
(~) The sponsor shall not object to the release of the escrowed
funds to (1) a purchaser or subscriber who timely rescinds in
accordance with an offer ofrescission contained in the plan or
an amendment to the plan or (li) all purchasers or subscribers
after an amendment abandoning the plan is accepted for filing
by the Department of Law.
(4) If there is no written agreement between the parties to release
the escrowed funds, the escrow agent shall not pay the funds
to the sponsor until the escrow agent has given the subscriber
or purchaser written notice ofnot fewer than ten (1 0) business
days. Thereafter, the funds may be paid to the sponsor unless
the purchaser or subscriber has already made application to
the Department of Law pursuant to the dispute resolution
provisions contained in these regulations and has so notified
the escrow agent in accordance with such provisions.
(viii) Disputes.
(g) In the event of a dispute, the sponsor shall apply and the
purchaser or subscriber or the escrow agent holding the down
payments in escrow may apply to the Attorney General for a
determination on the disposition ofthe down payment and any
interest earned thereon. Forms for this purpose will be
available from the Department of Law. The party applying
shall contemporaneously send to all other parties a copy of
such application.
(.h) Pending the determination ofthe Attorney General to grant or
deny the application, the sponsor, the purchaser or subscriber
and the escrow agent shall abide by any interim directive
issued by the Attorney General.
(~) If the application permitting release of funds is granted, the
deposit and any interest earned thereon shall be disposed of in
accordance with the determination of the Attorney General,
subject to any court action in which preliminary relief is
granted.
24.3(m)
37
(4) The Attorney General shall act upon the application within
thirty (30) days after its submission to the Department ofLaw,
by either making a determination or notifying the parties than
an extension of time in which to do so is necessary for stated
reasons.
C~) If the application seeking release of funds is denied, the
escrow agent shall continue to hold the deposit and any
interest earned thereon until (i) both the sponsor and
subscriber or purchaser direct payment to a specified party in
accordance with a written direction signed by both the
sponsor and purchaser or subscriber or (ii) a judgment or
order of a court of competent jurisdiction is served on the
escrow agent or (iii) the escrow agent deposits the disputed
amount into court.
CD In no event shall the escrow agent release funds in dispute,
other than a payment of such funds into court, until such
dispute is finally resolved either by determination of the
Attorney General or by order or judgment of a court of
competent jurisdiction or by written agreement ofthe sponsor
and the purchaser or subscriber.
(ix) Exhibits to plan. Copies of the forms provided by the bank for
opening the escrow account and the escrow agreement as proposed
must be included as Exhibit B-19 of the submission. Up 0 n fi r s t
deposit, a copy of the escrow agreement as executed and a copy of
the bank forms as executed must be submitted as supplements to
Exhibit B-19 of the submission.
(x) Records on file. The escrow agent shall maintain all records
concerning the escrow account for seven years after release of the
funds. Upon the dissolution of any law firm which was the escrow
agent, the former partners or members of the firm shall make
appropriate arrangements for the maintenance of these records by
one ofthem or by the successor firm and shall notify the Department
of Law of such transfer.
(xi) Review and audit. The Department of Law may perform random
reviews and audits of any records involving escrow accounts to
determine compliance with statute and regulation.
24.3(m)
38
(xii) Waiver void. Any provision of any contract or agreement, whether
oral or in writing, by which a subscriber or purchaser purports to
waive or indemnify any obligation of the escrow agent holding trust
funds is absolutely void. The provisions of this section of the
regulations shall prevail over any conflicting or inconsistent
provision in the offering plan or in a purchase or subscription
agreement.
(xiii) Trust 0 bligation ofsponsor. Nothing contained herein shall diminish
or impair the sponsor's statutory obligation to each purchaser or
subscriber pursuant to GBL Section 352-h to hold in trust all
deposits, advances or payments made in connection with the offer
until consummation of the transaction with such purchaser or
subscriber. Consummation of the plan does not relieve sponsor of
its obligations pursuant to GBL Section 352-h. Funds from the
escrow account remain the property of the purchaser or subscriber
until employed in connection with the consummation of the
transaction. Such funds shall not be a part of the estate of the
sponsor or the escrow agent upon any bankruptcy, incapacity or
death.
(xiv) Transition. All funds required to be held pursuant to GBL sections
352-e(2-b) and 352-h on the effective date of this section shall be
transferred into escrow accounts in compliance with this regulation
within sixty (60) days thereafter.
(4) Alternatives to escrow account. A sponsor may apply to the Attorney
General to use security in the form of surety bonds or a letter of credit in
lieu of escrow of such funds for use in newly constructed or gut
rehabilitated developments upon showing of adequate insurance of such
funds to the satisfaction of the Attorney General.
(i) Application for alternate security. Sponsor must submit an affidavit
which contains full information as to the proposed usage of such
funds, the sponsor's financing ofconstruction or rehabilitation work,
expected completed date, the terms and conditions of the proposed
surety bonds or letter of credit and required undertakings and
covenants.
24.3(m)
39
(ii) Documentation. The proposed form of surety bond or letter of
credit, any underlying agreement or related agreement, and any
undertaking or covenant required hereunder, shall be appended to the
application and also filed as Exhibits to the plan in Exhibits Part B
Section 24.2(c)(4)(h)(B-20) or as exhibits to an amendment to the
plan.
(iii) Change from escrow account. Where surety bonds are or a letter of
credit is to be provided under an amendment to the plan calling for
release of funds already deposited in escrow, the amendment shall
provide for, and annex a form for, the written consent of each
affected purchaser or subscriber and shall provide for continuation
of escrow of funds of any purchaser or subscriber who does not
execute and deliver such written consent to the sponsor.
(iv) Disclosure. If an application for alternate security is approved, the
terms of such alternate security shall be disclosed in the plan or in an
amendment to the plan promptly submitted.
(5) Surety Bonds. A sponsor whose application to use alternate security is
approved by the Attorney General, may meet its obligation to insure the
availability of such funds to purchasers or subscribers by effectuating the
issuance of surety bonds to such purchasers or subscribers by a licensed
insurance company which agrees to act as surety for the amount of such
down payments or deposits.
(i) Deposits into escrow account. All down payments and deposits,
received after the Attorney General's approval of the use of surety
bonds as alternate security, shall be placed, within five (5) business
days after the purchase or subscription agreement is signed by all
necessary parties, in an attorney's segregated special escrow account,
established pursuant to and in compliance with subsection (3) above.
Such funds shall be released by the escrow agent to the sponsor upon
receipt by the escrow agent of a copy ofthe surety bond issued to the
purchaser or subscriber whose funds are being released.
(ii) Payments. All funds received from purchasers or subscribers
whether in the form of checks, drafts, money orders, wire transfers,
or other instruments which identifY the payor, shall be made payable
to or endorsed by the purchaser or subscriber to the order of the
attorney or law firm as escrow agent.
24.3(m)
40
(iii) Requirements to act as surety. The surety company must be licensed
to write insurance in the State of New York by the New York State
Department of Insurance, whether or not the property which is the
subject of the plan is located in the State of New York, unless the
law of the state where the property is located requires otherwise. If
the property is located outside New York State and the sponsor
claims that the law of such state conflicts and is controlling, the
sponsor's application must specify the conflicting law. In order for
the application for alternate security to be approved by the Attorney
General, the applicant must show that the surety company with
which the sponsor proposes to contract has a current rating for debt
securities no lower than the third highest grade conferred by at least
two ofthe national reporting services regularly evaluating insurance
compames.
(iv) Agreement between sponsor and surety. The plan must fully
disclose the material terms of the agreement between the insurance
company as surety and the sponsor, including the premium to be paid
by the sponsor, any agreement by which sponsor provides collateral
to secure its obligations to the surety and any agreement by the
sponsor indemnifying the surety. The agreement must provide that
the surety will abide by directives in conformity with these
regulations.
(v) Provisions of the bond. The surety bond must specify the name and
address of the sponsor as principal; the name and address of the
surety company to which claims for payment may be made;
provision for the name and address ofthe purchaser or subscriber as
obligee on the bond; provision for the amount of the down payment
or deposit secured and the rate of interest, if any, to accrue on such
funds; the term of the bond, and, if the bond is for a finite period, a
guarantee by the surety that it will pay the amount secured to the
purchaser-obligee or subscriber-obligee prior to expiration of the
bond or a guarantee by the sponsor that the bond will be renewed
before expiration.
(vi) Terms and continuation. Each surety bond and any accompanying
agreement shall provide that it will continue in effect or that it will
be renewed periodically until consummation and closing of the sale
of the respective unit or shares the down payment for which is
24.3(m)
41
secured by such surety bond or until the secured funds ofa purchaser
or subscriber have been returned in full, or until the funds secured by
the surety bond have been placed in the escrow account pursuant to
subsection (7) hereinafter or until there is an undisputed purchaser or
subscriber default or a determination by the Attorney General or
order or judgment of a court of competent jurisdiction that the
purchaser or subscriber has defaulted and that the sponsor is entitled
to the secured funds.
(vii) Delivery of the surety bond. The sponsor shall cause the surety to
mail or personally deliver the surety bond to the purchaser-obligee
before the funds are released to the sponsor from the escrow account.
The sponsor, the escrow agent and the surety company shall each
retain a copy of the surety bond.
(viii) Invoking the bond. The purchaser-obligee or subscriber-obligee
shall have the right to demand payment ofthe amount secured by the
surety bond directly from the surety, without first requesting
payment from the sponsor.
The surety shall be obligated to pay the amount secured by the bond
to the purchaser-obligee or subscriber-obligee without the consent or
despite the objection of the sponsor, upon the following events or
circumstances:
(g) Timely rescission of a purchase or subscription agreement by
a purchaser or subscriber pursuant to an offer of rescission
contained in the plan or an amendment to the plan;
(12) Acceptance for filing by the Department of Law of an
amendment abandoning the plan;
(~) Determinations by the Attorney General pursuant to
subsection (x) below that rescission or the return of funds is
required.
(90) Failure by the sponsor to obtain a commitment by the surety
company to renew the surety bond sixty (60) days prior to its
expiration.
(~) Direction by the sponsor upon request by the purchaser or
subscriber.
24.3(m)
42
(ix) Failure by purchaser-obligee or subscriber-obligee to produce a copy
ofthe bond. A purchaser's or subscriber's inability to produce a copy
of the surety bond shall not be a basis for the surety to reject the
purchaser's or subscriber's claim. The surety shall retain a copy of
the bond and shall pay the secured funds to the purchaser-obligee or
subscriber-obligee without a copy of the bond as long as the
purchaser or subscriber is able to provide proof of identity as the
obligee on the bond.
(x) Disputes.
(~) In the event of a dispute, the sponsor shall apply and the
purchaser or subscriber or the surety issuing the bond may
apply to the Attorney General for a determination on the
disposition ofthe down payment secured by the bond and any
interest earned thereon. Forms for this purpose will be
available from the Department of Law. The party applying
shall contemporaneously send to all other parties a copy of
such application.
(b) Pending the determination ofthe Attorney General to grant or
deny the application, the sponsor, the purchaser or subscriber
and the surety shall abide by any interim directive issued by
the Attorney General.
(~.) If the Attorney General determines:
(D that the purchaser or subscriber is entitled to the
disputed funds secured by the surety bond, the
surety shall pay the funds to the subscriber or
purchaser in accordance with the determination
of the Attorney General.
eli) that the purchaser or subscriber is not entitled to
the disputed funds secured by the surety bond,
such determination may provide either that the
surety bond shall be continued in effect or that
the surety bond may be cancelled.
24.3(m)
43
(g) The Attorney General shall act upon the application within
thirty (30) days after its submission to the Department ofLaw,
by either making a determination or notifYing the parties than
an extension of time in which to do so is necessary for stated
reasons.
(~) In no event shall the funds secured by the bond be paid to the
purchaser or subscriber nor shall the surety bond be
discharged until any dispute is finally resolved either by
written agreement of the parties directing payment of the
funds or discharge of the surety bond, or by a determination
ofthe Attorney General or by order or judgment of a court of
competent jurisdiction.
(6) Letters of credit. A sponsor whose application to use alternate security is
approved by the Attorney General, may meet its obligation to insure the
availability of such funds to purchasers or subscribers by effectuating the
issuance of a letter of credit for the benefit of the purchasers or subscribers
by an issuer qualifYing hereunder.
(i) Amount. The amount of the letter of credit shall be at least 125%
of the aggregate of all down payments or subscription deposits or
payments expected to be received from purchasers or subscribers,
and not retained in escrow, during such period of time as the letter of
credit will be needed, as estimated by the sponsor in the application
to the Department ofLaw. The amount of the letter of credit may be
reduced or increased as warranted by circumstances and pursuant to
a filed amendment to the offering plan.
(ii) Irrevocability. The letter of credit must be irrevocable during the
stated term and any renewal term.
(iii) Beneficiary. The beneficiary must be an attorney, or firm of
attorneys, acting as or qualified under subsection (3)(iii) to act as
escrow agent under the plan, who shall act as a fiduciary for the
benefit of purchasers and subscribers under the plan.
(iv) Authority to draw. The letter of credit must provide that the
beneficiary shall have sole power to draw upon the letter of credit
without the consent or despite the objection of the sponsor or of any
provider of underlying credit, at such times or upon such events as
are set forth in subsection (ix) hereinafter.
24.3(m)
44
(v) Issuer. The issuer must be a bank authorized to act as a commercial
bank or savings institution under supervision of the New York State
Banking Department or a federally supervised banking institution
located in the State of New York, unless the property is located in
another state and the letter of credit is issued by a bank located
within such state. In order for the application for alternate security
to be approved by the Attorney General the applicant must show that
the issuer bank has surplus funds and net worth of at least ten times
the amount ofthe letter of credit, and must have a current rating with
respect to its debt securities that is within "investment grade" by one
of the generally accepted national reporting services regularly rating
the debt securities of banking institutions and that the provisions of
the letter of credit include the right of the beneficiary to draw down
the letter of credit in conformity with these regulations.
(vi) Term and continuation. The letter of credit and related agreement
and any accompanying undertaking shall provide that it shall be
periodically renewed until consummation and closings ofsales ofall
units or shares referred to in the application for alternate security
pursuant to subsection (4)(i) or until the covered funds ofpurchasers
and subscribers have been returned to them in full.
(vii) Undertaking. If the letter of credit will expire prior to the latest date
of closings of sales of all such units or shares, provision for renewal
of the letter of credit without loss of irrevocability and without any
change ofterms shall be afforded by (a) an "evergreen" or automatic
renewal clause, ifobtainable, and (b) the irrevocable undertaking and
covenant of the sponsor and by any other provider of underlying
credit to provide successive renewals thereof until consummation
and closings of sales of all units or shares or until the covered funds
of purchasers and subscribers have been returned in full.
(viii) Operative provisions. Upon approval of a sponsor's application
for use of a letter of credit as alternate security:
(~) Deposits into escrow account. All down payments and
deposits received shall be placed, within five (5) business
days after the purchase or subscription agreement is signed by
all necessary parties, in an attorney's segregated special
escrow account established pursuant to and in compliance
24.3(m)
45
with subsection (3) hereinabove. The escrow agent shall
release such funds to the sponsor provided that the escrow
agent has documentation showing that the letter of credit or a
renewal or replacement letter of credit has been issued and is
in effect. Such escrow agent shall no longer release funds
from escrow if the escrow agent receives notice or
information warranting draw-down of the letter of credit
under subsection (6)(ix) hereinafter.
(12) Payments. All funds received from purchasers or subscribers
whether in the form of checks, drafts, money orders, wire
transfers or other instruments which identifY the payor, shall
be made payable to or endorsed by the purchaser or subscriber
to the order of the attorney or law firm as escrow agent.
(ix) Right to draw upon letter of credit. The escrow agent as the beneficiary of
the letter of credit, acting as a fiduciary for the benefit of purchasers and
subscribers under the plan whose funds were released from escrow by
reason ofthe grant ofsponsor's application, shall have the duty and the right
to draw upon and collect the proceeds of the letter of credit, ten (10)
business days after notice to the sponsor and sponsor's failure or refusal to
restore such funds to the escrow agent, without the consent or despite the
objection of the sponsor or the provider of the credit, upon the following
events or circumstances:
(i!) Timely rescission of a purchase or subscription agreement by
a purchaser or subscriber pursuant to an offer of rescission
contained in the plan or an amendment to the plan;
(h) Acceptance for filing by the Department of Law of an
amendment abandoning the plan;
(~) Determinations by the Attorney General pursuant to
subsection (x) below mandating that rescission or the return
of funds is required;
(g) Failure by the sponsor to obtain a renewal or replacement
letter of credit no later than sixty (60) days prior to the
expiration of the existing letter of credit;
(~) Direction by the sponsor upon request of the purchaser or
subscriber;
24.3(m)
46
(n Notice of impending cancellation of the letter of credit has
been given or received, or the issuer has filed a bankruptcy or
insolvency petition or has been taken over by a federal or state
authority, and no proper replacement ofthe letter ofcredit has
been furnished although continuation of the same in effect is
required under subsection 4(i) or subsection (6)(vi)
hereinabove.
(x) Disputes.
(~) In the event of a dispute, the sponsor shall apply and the
purchaser or subscriber, the escrow agent or the bank issuing
the letter of credit may apply to the Attorney General for a
determination on the disposition offunds secured by the letter
of credit, the deposit and any interest earned thereon. Forms
for this purpose shall be available from the Department of
Law. The party making such application shall
contemporaneously send to the other three parties a copy of
such application.
(b.) Pending the determination ofthe Attorney General to grant or
deny the application, the sponsor, the purchaser or subscriber,
the escrow agent and the bank shall abide by any interim
directive issued by the Attorney General.
(~) If the application permitting release of funds is granted, such
funds secured by the letter of credit, and any interest earned
thereon shall be disposed of in accordance with the
determination of the Attorney General, subject to any court
action in which preliminary relief is granted.
Cd) The Attorney General shall act upon the application within
thirty (30) days after its submission to the Department ofLaw,
by either making a determination or notifying the parties than
an extension of time in which to do so is necessary for stated
reasons.
24.3(m)
47
(~) In no event shall the disputed funds secured by the letter of
credit be paid to the purchaser or subscriber nor shall the letter
of credit be terminated until any dispute is finally resolved
either by written agreement of the parties directing payment
of the funds, or by a determination of the Attorney General or
by order of judgment of a court of competent jurisdiction.
(7) Change to escrow account. Where alternate security as provided under a
filed offering plan is no longer needed by the sponsor, or new or additional
alternate security cannot be obtained by a sponsor or its successor, sponsor
shall submit an amendment for filing which provides that any future
purchase or subscription down payments or deposits shall be held in the
escrow account in accordance with subsection (3) hereinabove. Such
amendment shall not affect the sponsor's obligations to account for funds
previously released to the sponsor unless the funds representing all such
down payments or deposits are restored to the escrow account.
(8) Alternate Security for Funds Received Out-of State. Purchaser funds paid
in another jurisdiction by a purchaser who is solicited within or from the
State ofNew York in connection with the purchase of a cooperative interest
in realty involving timeshare property located outside New York State shall
be handled in accordance with the applicable laws and regulations of the
jurisdiction in which the funds are received, provided that such jurisdiction
requires funds to be held in trust or in escrow until title in the timeshare
interest is conveyed to the purchaser and that interest earned, ifany, on such
deposit is credited to the purchaser on closing. Where not inconsistent with
the law and regulations of such other jurisdiction, the sponsor may comply
with the requirements set forth in sections (3) through (7) above, or may
apply to the Department ofLaw for permission to comply with the alternate
requirements set forth below. The granting of such application shall be in
the discretion of the Attorney General.
(i) Sponsor shall establish a supplementary escrow account within the
State of New York;
(ii) The supplementary escrow account shall be funded by the sponsor
in the amount of one-tenth of one percent (.1%) of the gross offering
amount of the public offering, with a minimum of five thousand
dollars ($5,000) and a maximum of twenty-five thousand dollars
($25,000).
24.3(m)
48
(iii) The escrow agent for the supplementary account shall be pennitted
to withdraw and pay over to the sponsor the interest earned on the
supplemental escrow account provided that such withdrawal does not
reduce the balance of the account below the minimum principal
balance required to be held in escrow by the sponsor. Funds shall
not otherwise be released from the supplemental escrow account
until the sponsor has withdrawn its public offering and a closing of
the sale with the last New York purchaser in New York State shall
have occurred unless otherwise directed by the Department of Law.
All other provisions for the handling ofescrowed amounts, including
dispute resolution, shall remain as set forth in Section 24.3(m)(3)
above, except that the escrow agent shall be exempted from the
notification requirements of Section 24.3(m)(v) and no right of
rescission shall arise as a result offailing to give notice to purchasers
as required in Section 24.3(m)(v).
(iv) As an alternative to the funding of a supplemental escrow account,
a sponsor may apply to the Attorney General to use supplemental
security in the fonn of surety bonds or a letter of credit. The funding
amount of the alternative security shall be in the same amount as
required to establish a supplementary escrow account. The
provisions of Section 24.3(m)(4), (5), (6), and (7), including dispute
resolution, shall otherwise remain fully in effect.
(v) The sponsor shall appoint an attorney licensed to practice in the
State of New York who maintains an office within New York State
as the supplementary escrow agent. The sponsor and the
supplementary escrow agent shall enter into a written escrow
agreement which shall govern the operation of the supplemental
escrow account. The agreement shall conform to the requirements
of Section 24.3(m)(3)(iv).
(vi) The sponsor shall have a continuing obligation to maintain the
supplemental escrow account or supplemental alternate security at
the minimum funding amount for such security, and within five (5)
business days of a payment to a New York purchaser from the
supplemental escrow account or by bond or letter of credit, the
sponsor shall be required to replenish the supplemental security to
the full required amount. Each sponsor providing security in
24.3(m)
49
accordance with Section 24.3(m)(8) shall agree that the
determinations of the Attorney General with regard to the return of
purchasers' moneys pursuant to dispute resolution under Section
24.3(m) shall be an obligation of the sponsor who shall cause its
escrow agents holding the moneys ofNew York purchasers in other
jurisdictions to comply with such determinations regardless of the
value or amount of the supplemental security held by the
supplemental escrow agent.
(9) Describe in detail the timing and manner of payment of the purchase price
and refer to the section of the offering plan which sets forth the terms ofany
financing offered or arranged by the sponsor.
(10) State (in capital letters) that a purchaser may cancel his or her contract
within seven (7) business days (or longer if required by the law of the
jurisdiction in which the timeshare property is located) and receive a full
refund of moneys paid in connection with the timeshare purchase. Refer
readers to page 1 of the offering plan for a detailed discussion of this
cancellation right.
(11) If the sponsor is offering financing, describe any existing arrangements or
future plans for the pledge, hypothecation, sale or other negotiation of notes
executed by timeshare purchasers. Discuss the applicability and effect of
the "holder-in-due-course" doctrine, including appropriate references to
Federal Trade Commission rules (16 CFR Part 433) on this subject.
(12) State that no document executed by a purchaser will contain a cognovit or
confession-of-judgment clause.
(13) State that the funds of a purchaser who is not in default under the purchase
agreement (including payments made by the purchaser directly to the
sponsor or funds received by the sponsor upon the negotiation of notes
executed by the purchaser) will be disbursed from escrow to the sponsor
only when the following conditions have been met:
(i) At least five days have passed following the expiration of the
purchaser's cancellation period~
24.3(m)
50
(ii) Bona fide purchasers for value have executed purchase agreements
(which are no longer subject to rescission by the purchasers) for
fifteen percent (15%) of the total number of timeshares offered in
those phases of the project in which any purchase agreements have
been executed;
(iii) In a fee timesharing plan, title to the timeshare has been conveyed
(and recorded in accordance with the recording act ofthe jurisdiction
in which the timeshare property is located) to the purchaser or to a
trust and is not subject to attachment, garnishment, foreclosure, levy
or other legal seizure by the creditors or bankruptcy trustee of the
sponsor, the selling agent, the owner ofthe timeshare property, or the
principals of any ofthem;
(iv) In a fee cooperative timesharing plan, title to the timeshare property
has been conveyed (and recorded in accordance with the recording
act of the jurisdiction in which the timeshare property is located) to
the cooperative corporation and the shares allocated to the timeshare
have been transferred to the purchaser;
(v) In a leasehold cooperative timesharing plan, the leasehold estate in
the timeshare property has been conveyed (and recorded in
accordance with the recording act of the jurisdiction in which the
timeshare property is located) to the cooperative corporation and the
shares allocated to the timeshare have been transferred to the
purchaser;
(vi) Any real or personal property to be held by an owner's association
under the timesharing plan has been conveyed (and recorded in
accordance with the recording act of the jurisdiction in which the
timeshare property is located) to the association;
(vii) In a timesharing plan with fixed units, construction ofthe purchaser's
unit and the common facilities (including property and facilities
outside the immediate timeshare regime which timeshare owners
have the right to use and occupy as part of the timesharing plan at no
additional charge or at a discount from rates charged to the general
public) has been completed (and a permanent or temporary
certificate ofoccupancy has been issued, ifrequired) and the unit and
common facilities have been furnished as set forth in the offering
plan, or a bond or other security has been provided in an amount and
form satisfactory to the Department of Law;
24.3(m)
51
(viii) In a timesharing plan with floating units, construction of the common
facilities has been completed (and a permanent or temporary
certificate of occupancy has been issued, if required) and the total
number of
timeshare purchasers is less than the number of intervals available in
those units on which construction has been completed (and a
permanent or temporary certificate of occupancy has been issued, if
required) and said units and common facilities have been furnished
as set forth in the offering plan, or a bond or other security has been
provided in an amount and form satisfactory to the Department of
Law;
(ix) If, as part of the timesharing plan, timeshare owners have the right
to use and occupy property outside the immediate timeshare regime
(at no additional charge or at a discount from rates charged to the
general public), an easement establishing this right has been recorded
against the servient estate in accordance with the recording act ofthe
jurisdiction in which the servient estate is located;
(x) If, as part of the timesharing plan, timeshare owners have the right
to use and occupy property outside the immediate timeshare regime
(at no additional charge or at a discount from rates charged to the
general public), a covenant (running with the land) that such property
will be used only for the purposes set forth in the offering plan has
been recorded against the other property in accordance with the
recording act of the jurisdiction in which the other property is
located;
(xi) In a leasehold timesharing plan, the leasehold estate in the timeshare
unit has been conveyed (and recorded in accordance with the
recording act of the jurisdiction in which the timeshare property is
located) to the purchaser.
(14) Describe what happens in the event a purchaser defaults on his or her
obligations under the purchase or subscription agreement or purchase
money note. Include a discussion of any applicable grace period and notice
requirements. Discuss acceleration of indebtedness and liquidated
damages.
(15) A complete copy of the subscription or purchase agreement and financing
documentation (if sponsor is offering or has arranged for financing) must
be included in Part II of the offering plan.
24.3(m)
52
(16) The plan and subscription agreement must provide that any conflict
between the plan and the subscription agreement will be resolved according
to the terms of the plan.
(17) The subscription agreement and plan may not contain, or be modified to
contain, a provision waiving purchaser's rights or abrogating sponsor's
obligations under Article 23-A of the GBL.
(18) The following legend must appear in capital letters just above the signature
line in the purchase or subscription agreement.
YOU MAY CANCEL THIS CONTRACT AT WILL AND WITHOUT
EXPLANATION WITHIN SEVEN (7) BUSINESS DAYS AFTER YOU
SIGN IT, IN WHICH EVENT YOU WILL RECEIVE A FULL
REFUND. SEE PAGE 1 OF THE OFFERING PLAN.
If the law of the jurisdiction in which the timeshare property is located
requires a rescission period of more than seven (7) business days from the
date of execution of the contract, substitute the appropriate time period in
the above legend.
(19) If the sponsor requires a purchaser to sign or initial an acknowledgement
form, such form must include a separate item (to be initialed by the
purchaser) informing the purchaser that he or she may cancel the purchase
agreement within seven (7) business days ofthe date ofexecution (or longer
if required by the law of the jurisdiction in which the timeshare property is
located) and receive a full refund.
(n) Financing offered (arranged) by sponsor. Disclose the terms of any commitment
by the sponsor or a lender procured by the sponsor to finance the purchase of
timeshares. The following information should be included in this discussion:
(l) Name and address of lender.
(2) Amount and term. State the maximum amount (which may be expressed
as a percentage of the purchase price) available for a timeshare and the
minimum term of the loan. If the financing offered is not self-liquidating
over the term, state how the amount of the balance or "balloon" due on
24.3(n)
53
maturity will be calculated and explain the risk that refinancing may not be
available on the same or better terms. If the sponsor is providing the
financing, state whether the sponsor will refinance or extend the loan at
maturity. State the maximum amount of financing available to purchasers
generally through a bulk commitment.
(3) Availability. Sponsor must discuss whether financing is available to all
purchasers. If not, discuss the method of allocation of such financing.
(4) Interest rate. State the annual percentage rate over the term of the loan. If
the loan has a variable or adjustable rate, indicate the initial interest rate or
(if not a fixed rate) explain how it will be established, the method of
calculating adjustments, any limits on increases or decreases, when
adjustments may be made, and the impact that adjustments will have on
debt service payments and the principal balance. If the sponsor procures
financing at an interest rate that is below the prevailing rate offered by the
lender, disclose the prevailing interest rate and the interest rate offered to
purchasers. If the loan is not self-liquidating, also disclose any limitation
on the ability of the purchasers to refinance on the same or better terms.
(5) Payments. State when payments are due, and how payments are applied to
interest and principal. For variable rate or adjustable rate loans, disclose
how initial payments are allocated to interest and principal, disclose the
impact that interest rate changes will have on the allocation of payments to
interest and principal and on itemized deductions available to timeshare
owners.
(6) Prepayment. State whether and when the unpaid principal balance may be
prepaid in whole or in part, the number of days of prior notice that must be
given, and any charges for prepayment. Disclose any restrictions on the
ability of a purchaser to prepay the entire unpaid principal at any time.
(7) Term of commitment. State when the financing commitment expires.
(8) Late charges. Describe the amount of late charges and how they are
assessed.
(9) Additional financing costs. Disclose the amount of additional costs or
charges to purchasers in connection with such financing including, for
example, points, origination fees, lender's or any other legal fees, processing
fees, application fees, insurance and appraisal fees.
24.3(n)
54
(10) Restrictions. Describe major restrictions on a timeshare owner's right to
alter, improve, sell, sublease, purchase, own, occupy. finance or otherwise
acquire, use or dispose of a unit.
(11) Events of default. Describe the material events of default entitling the
lender to accelerate the principal indebtedness and describe grace periods
granted to purchasers.
(0) State of title.
(1) Describe in detail the present state of title to the timeshare property and
property outside the immediate timeshare regime which timeshare owners
have the right to use and occupy as part of the timesharing plan (at no
additional charge or at a discount from rates charged to the general public).
(2) In a fee cooperative timesharing plan:
(i) State that the timeshare property will be conveyed to the cooperative
corporation free and clear of liens, encumbrances and title
exceptions other than those described in the offering plan. Describe
any mortgages or other liens, encumbrances and title exceptions
which will affect the property after closing. Title exceptions may
include the state of facts shown on a stated survey, and any
additional state of facts a subsequent accurate survey would show,
provided that such additional state of facts does not render title
unmarketable.
(ii) State that the shares allocated to the purchaser's timeshare will be
transferred to the purchaser free and clear of all liens and
encumbrances.
(iii) State that the holders of all mortgages and other liens which will
encumber the timeshare property after closing have agreed not to
disturb the rights of timeshare owners to use and occupy the
timeshare property and that an instrument incorporating such
agreement will be recorded in accordance with the recording act of
the jurisdiction in which the timeshare property is located prior to or
at the closing of title to the cooperative corporation.
24.3(0)
55
(iv) State that, after closing of title to the cooperative corporation, the
sponsor will not place or cause to be placed on the timeshare
property a mortgage or other consensual lien unless and until the
lienholder agrees (in a recorded instrument) not to disturb the rights
of timeshare owners to use and occupy the timeshare property.
(3) In a leasehold cooperative timesharing plan:
(i) State that the leasehold interest in the timeshare property will be
conveyed to the cooperative corporation free and clear of liens,
encumbrances and title exceptions other than those described in the
offering plan. Describe any mortgages or other liens, encumbrances
and
title exceptions which will affect either the leasehold estate or the
underlying fee simple estate. Title exceptions may include the state
of facts shown on a stated survey, and any additional state of facts a
subsequent accurate survey would show, provided that such
additional state of facts does not render title unmarketable.
(ii) State that the shares allocated to the purchaser's timeshare will be
transferred to the purchaser free and clear of all liens and
encumbrances.
(iii) State that the holders of all mortgages and other liens which will
encumber the leasehold estate after conveyance to the cooperative
corporation have agreed not to disturb the rights oftimeshare owners
to use and occupy the timeshare property and that an instrument
incorporating such agreement will be recorded in accordance with
the recording act of the jurisdiction in which the timeshare property
is located prior to or at the conveyance of the leasehold estate to the
cooperative corporation.
(iv) State that the holders of all mortgages and other liens which
encumber the underlying fee simple estate in the timeshare property
(at the time that the leasehold estate is conveyed to the cooperative
corporation) have agreed either to subordinate their lien to the
leasehold estate or not to disturb the rights of timeshare owners to
use and occupy the timeshare property. State also that an instrument
incorporating such agreement will be recorded in accordance with
the recording act of the jurisdiction in which the timeshare property
is located prior to or at the conveyance of the leasehold estate to the
cooperative corporation.
24.3(0)
56
(v) State that the leasehold estate of the cooperative corporation will not
be subordinated to any future mortgage or other lien recorded
against the underlying fee simple estate in the timeshare property.
(vi) State that, after the conveyance ofthe leasehold estate to the coopera
tive corporation, the sponsor will not place or cause to be placed on
the leasehold estate a mortgage or other consensual lien unless and
until the lienholder agrees (in a recorded instrument) not to disturb
the rights of timeshare owners to use and occupy the timeshare
property.
(4) In a leasehold timesharing plan:
(i) State that the leasehold interest in the unit and any appurtenant
interest in common elements will be conveyed to the purchaser free
and clear of encumbrances and title exceptions other than those
described in the offering plan. Describe any encumbrances and title
exceptions which will affect the timeshare after closing. Title
exceptions may include the state of facts shown on a stated survey,
and any additional state of facts a subsequent accurate survey would
show, provided that such additional state offacts does not render title
unmarketable. Prior to or at the conveyance ofthe leasehold interest
to the purchaser, a discharge or partial release of all mortgages and
other liens on the leasehold interest must be recorded in accordance
with the recording act of the jurisdiction in which the timeshare
property is located.
(ii) State that the holders of all mortgages and other liens which
encumber the underlying fee simple estate in the timeshare property
(at the time that the leasehold interest is conveyed to the purchaser)
have agreed either to subordinate their lien to the leasehold interest
or not to disturb the rights oftimeshare owners to use and occupy the
timeshare property. State also that an instrument incorporating such
agreement will be recorded in accordance with the recording act of
the jurisdiction in which the timeshare property is located prior to or
at the conveyance of the leasehold interest to the purchaser.
(5) In a fee timesharing plan, state that the purchaser will receive title to his or
her timeshare (including any appurtenant undivided common interest) free
and clear of encumbrances and title exceptions other than those described
in the offering plan. Describe any encumbrances and title exceptions
24.3( 0)
57
which will affect the timeshare after closing. Title exceptions may include
the state of facts shown on a stated survey, and any additional state of facts
a subsequent accurate survey would show, provided that such additional
state of facts does not render title unmarketable. Prior to or at closing of
title to the purchaser, a discharge or partial release of all mortgages and
other liens atfecting the timeshare or its appurtenant common interest must
be recorded in accordance with the recording act ofthe jurisdiction in which
the timeshare property is located.
(6) State that any timeshare property to be held by an owner's association will
be conveyed to the association free and clear of encumbrances and title
exceptions other than those described in the offering plan. Describe any
encumbrances and title exceptions which will affect association property
after closing. Title exceptions may include the state of facts shown on a
stated survey, and any additional state offacts a subsequent accurate survey
would show, provided that such additional state offacts does not render title
unmarketable. Prior to or at closing of title to the owner's association, a
discharge or partial release of all mortgages and other liens encumbering
association property must be recorded in accordance with the recording act
of the jurisdiction in which the timeshare property is located.
(7) In a right-to-use timesharing plan, state that the holders of all mortgages or
other liens encumbering the timeshare property have agreed not to disturb
the rights oftimeshare owners to use and occupy the timeshare property and
that an instrument incorporating such agreement has been recorded in
accordance with the recording act of the jurisdiction in which the timeshare
property is located. State that the sponsor will not place or cause to be placed
on the timeshare property a mortgage or other consensual lien unless and
until the lienholder agrees (in a recorded instrument) not to disturb the rights
of timeshare owners to use and occupy the timeshare property.
(p) Closing of title. Describe what "closing" means, when closing can take place and
what prior notice is required. In a fee or cooperative timesharing plan, state what
type of deed the sponsor will deliver. State that the sponsor is responsible for the
proper recordation of all deeds, leases, easements, mortgages or other instruments
of land conveyance.
(q) Acquisition costs. Describe fully all estimated costs, fees, and charges to be paid
or apportioned in connection with acquiring a timeshare and specify whether they
will be paid by purchaser or sponsor. Include fee and mortgage title insurance
24.3(q)
58
charges, state and local transfer taxes, mortgage recording taxes, recording fees for
the deed and any mortgage, power of attorney and any other documents,
apportionment of taxes, water and sewer charges, and all other costs or
adjustments. For all items to be apportioned, set forth the basis for apportionment.
(r) Rights and obligations of the sponsor. Describe the rights and obligations of the
sponsor under the offering plan and applicable law, including (but not necessarily
limited to) the following:
(I) For timesharing plans involving new construction or rehabilitation, state the
sponsor's obligation to build and complete the timeshare units and common
facilities in accordance with the building plans and specifications identified
in the plan and the sponsor's right to substitute equipment or materials and
make modifications oflayout or design; provided however, that the sponsor
may not
(i) substitute equipment or materials of lesser quality or design; or
(ii) change the size or location of buildings. units, common facilities or
other improvements if such changes have a substantial and adverse
effect on the interest of any timeshare owner or contract vendee
under a timeshare purchase agreement.
(2) State whether the sponsor agrees to warrant the materials or workmanship
of the units and common facilities. Fully disclose the terms of the
warranties.
(3) State that the sponsor agrees to pay for the authorized and proper work
involved in the construction of the timeshare units and common facilities
and that the sponsor will cause all mechanics liens with respect to such
construction to be promptly discharged or bonded.
(4) State whether the sponsor has an obligation to defend any suits or
proceedings arising out ofthe sponsor's acts or omissions and to indemnify
the Board of Managers, Board of Directors, or timeshare owners.
(5) In a fee or cooperative timesharing plan involving new construction or
rehabilitation, the sponsor must agree to deliver a set of "as-built" plans to
the Board of Managers or Board of Directors.
24.3(r)
59
(6) The sponsor must disclose whether any bond or other security other than
those required by this Part has been furnished to secure the sponsor's
obligations including the sponsor's obligations to complete construction of
timeshare property.
(7) The sponsor must agree to pay all common charges and special assessments
with respect to unsold timeshares. Describe any guarantee or subsidy of
maintenance charges by the sponsor.
(8) The sponsor must agree to initially procure, and the budget must reflect, fire
and casualty insurance pursuant to an agreed amount replacement value
policy or in an amount sufficient to avoid co-insurance. In addition, the
sponsor must agree to initially procure, and the budget must reflect, public
liability insurance in such amounts as are reasonable and adequate to cover
any foreseeable liability arising out of operation of the timeshare property.
In a right-to-use or leasehold timesharing plan, sponsor must further agree to
maintain insurance coverage at this level.
(9) The sponsor must agree to keep copies of the offering plan, amendments,
exhibits and documents referred to in the plan on file at a specified location
for six years from the date the offering plan was accepted for filing.
(10) Disclose when the sponsor can dissolve or liquidate and whether dissolution
or liquidation will have an effect on the sponsor's obligations under the
plan.
(11) If the sponsor has a right of access in order to complete construction,
describe the sponsor's obligation to repair damages and the extent to which
sponsor can interfere with the timeshare owners' use.
(12) State that the sponsor will not voluntarily convey the timeshare property or
property outside the immediate timeshare regime which timeshare owners
have the right to use and occupy as part of the timesharing plan (at no
additional charge or at a discount from rates charged to the general public)
or any portion of it to a third party unless and until the third party agrees in
writing to assume all obligations of the sponsor under the timesharing plan.
(13) In a fee or cooperative timesharing plan, state that all representations under
the offering plan, all obligations pursuant to the General Business Law, and
such additional obligations under the offering plan which are to be
performed subsequent to closing, will survive delivery of the deed.
24.3(r)
60
(14) State that the terms ofthe offering plan will govern in the event of a conflict
between the offering plan and any other document or advertisement used in
connection with the timeshare offering.
(15) Describe whether and to what extent the sponsor is obligated to repair any
damage from a casualty or other cause that occurs before the closing, and
the rights and obligations of purchasers of timeshares in damaged units.
(s) Rights and obligations of timeshare owners. Describe the rights and obligations
of timeshare owners, including (but not necessarily limited to) the following:
(1) The sale and lease of timeshares, including restrictions and limitations in
the Declaration ofCondominium, By-laws, Proprietary Lease, House Rules
or other relevant document or law and the right of the Board of Directors,
sponsor or others to impose further or different restrictions or limitations in
the future.
(2) Whether and under what conditions a timeshare owner may use the
timeshare property and facilities at times other than his or her designated
interval.
(3) Restrictions and limitations on occupancy and use including (but not
necessarily limited to) rules regarding pets or children; aesthetic controls;
limitations on business or professional uses; restrictions on occupancy of
units owned by corporations, partnerships or fiduciaries; restrictions on
illegal or offensive uses; limitations on guest privileges; limitations on
utilization of common elements and parking facilities and limitations or
restrictions on use and enjoyment ofareas and facilities owned or controlled
by any related homeowner's association.
(4) The obligation to pay maintenance charges, including how maintenance
charges are determined; when and how they will be billed and collected;
and the right of the sponsor, Board of Managers or Board of Directors to
place liens against timeshares for unpaid maintenance charges or to prohibit
the use of the timeshare and facilities by a timeshare owner who has not
paid the maintenance fee. Refer to Schedule B and Schedule C and the
accompanying footnotes for more
detail.
(5) The obligation to pay for individual goods or services not included in the
annual maintenance fee, such as telephone calls, guest fees, maid and linen
service or damage to units.
24.3(s)
61
(6) State that the timeshare owner is not permitted to alter the unit in any way
under any circumstances.
(7) Explain the insurance coverage provided by the Board of Managers for the
benefit of each timeshare owner and a timeshare owner's right to obtain
supplemental or additional insurance.
(8) The obligation to grant access to the managing entity to make emergency
repairs.
(9) The obligation to comply with the Declaration of Condominium,
Declaration of Covenants and Restrictions, By-laws, House Rules and any
other authorized requirements ofthe Board ofDirectors, Board ofManagers
or sponsor and the remedies for non-compliance.
(t) Rights and obligations of the Board of Managers (Board of Directors). Describe
how the affairs of a fee or cooperative timesharing plan will be governed and
summarize the important provisions of the Declaration of Condominium,
Declaration of Covenants and Restrictions, Certificate of Incorporation and By
laws. Include a discussion of the following topics:
(1) The composition ofthe Board ofManagers or Board ofDirectors, eligibility
requirements, elections and removal of members.
(2) The powers, duties and liability of the Board of Managers or Board of
Directors.
(3) The powers, duties and liability of officers.
(4) Repairs, replacement and maintenance of units and common facilities.
(5) Repairs or restoration after fire or other casualty and whether insurance
proceeds are dedicated to repair or renovation and, if not, under what
circumstances they may be used for other purposes.
(6) Insurance provided and maintained by the Board of Directors or Board of
Managers.
(7) The liability of board members.
(8) The extent to which the sponsor will or may control the board of Directors
or Board of Managers.
24.3(t)
62
(9) Reports to unit owners including notice of meetings and availability of
books and records.
(10) Amendments to condominium, cooperative or homeowners association
documents.
State that copies of the Declaration of Condominium, Declaration of Covenants
and Restrictions and By-laws are included in Part II of the offering plan.
(u) Resort exchange program.
(1) If the timesharing plan is not a member of an exchange network, so state
and explain that a purchaser will be unable therefore to trade his or her
timeshare for a timeshare at another resort. Explain why the timesharing
plan is not a member of an exchange network.
(2) State which exchange network, if any, the timesharing plan has joined and
describe its operation in detail. Include a discussion of fees and exchange
requests. If applicable, state that a timeshare owner must release his or her
timeshare to the exchange network in order to participate in the exchange
program before being informed ofthe specific resorts or locations available
for trade.
(3) State, ifapplicable, that the exchange network is independent ofthe sponsor
and that timeshare owners will be entitled to use this network only as long
as the sponsor and the timeshare property continue as a member of the
exchange company. State that the availability of exchange privileges for
any timeshare owner will be contingent upon meeting the terms and
conditions of the exchange company, including payment of membership
and exchange fees. State in capital letters that there can be no assurance
that a particular interval can be exchanged, that an exchange for a particular
interval or a particular resort can be arranged, that this timeshare resort will
continue to qualifY with the exchange company or that this interval
exchange program or any other will continue to exist.
(v) Management. Summarize the important terms of any management agreement,
including (but no necessarily limited to) the following:
(1) The name and address of the managing agent.
(2) The term of the management agreement and the right, if any, of the agent
or timeshare regime to cancel the agreement.
24.3(v)
63
(3) All fees and other compensation for services.
(4) The major duties and services to be performed by the managing agent,
including whether bookkeeping, payroll, income tax deduction calculation
and maintenance collection are provided.
(5) The obligations (if any) of the timeshare regime to reimburse the agent for
expenses incurred or to indemnify the agent against liability for acts
properly performed by it pursuant to the agreement.
(6) Whether the management agreement is assignable by the agent and what
restrictions are imposed on assignability.
(w) Reservation and check-in/check-out procedure.
(1) In a timesharing plan which "floats" as to unit or interval or both, describe
in detail the procedure for reserving the use of an interval or unit.
(2) Describe in detail the check-in and check-out procedures.
(x) Identity of parties.
(1) State the names, business addresses, backgrounds and experience of the
sponsor, and principals of the sponsor as defined in Section 24.1(c). If the
sponsor is a contract vendee, such information must also be provided with
respect to the owner of the timeshare property and principals of the present
owner, and any relationship between the owner of the property and the
contract vendee must also be disclosed. Describe (i) all prior felony
convictions of the sponsor and/or any principals of the sponsor; and (ii) all
prior convictions, injunctions and judgments against the sponsor and!or any
principals ofsponsor that may be material to the offering plan or an offering
of securities generally and that occurred within the fifteen (15) years prior
to the submission of the proposed offering plan.
(2) List all cooperatives, condominiums, planned unit development homes,
subdivided vacant land, or timesharing plans offered for sale by the sponsor
or affiliates of the sponsor's principals within the past five (5) years by
address and the year they first became available. If the number of such
properties or projects exceeds five (5) for the sponsor or a principal, the five
(5) most recent offerings may be listed.
24.3(x)
64
(3) State the name and address of the sponsor's attorney, and identify which
attorney prepared the offering plan. Also, disclose any relationship or
affiliation between the sponsor and its attorney other than that of
attorney/client.
(4) If there is or will be a managing agent or manager for the property, include
the name, address and experience of the managing agent or manager and a
representative list ofother properties being managed by the managing agent
or
manager. Ifthe managing agent or manager has no comparable experience,
so state. Describe (i) all prior felony convictions of the managing agent or
any principals of the managing agent; and (ii) all prior convictions,
injunctions and judgments against the managing agent or any principals of
the managing agent that may be material to the offering plan or an offering
of securities generally, that occurred within the fifteen (15) years prior to
the submission of the proposed offering plan.
(5) State the name, address and experience ofthe selling agent. Describe (i) all
prior felony convictions of the selling agent, or any principals ofthe selling
agent; and (ii) all prior convictions, injunctions and judgments against the
selling agent, or any principals of the selling agent that may be material to
the offering plan or an offering of securities generally, that occurred within
the fifteen (15) years prior to the submission of the proposed offering plan.
(6) State the name, address and experience of the sponsor's professional
engineer or registered architect.
(7) State the relationships (if any) between the sponsor or its principals and (i)
the selling agent, (ii) the managing agent, (iii) the engineer or architect, and
(iv) any person or firm who will provide any services to the timeshare
regime subsequent to the commencement of timeshare operation.
(8) If applicable, state that the Secretary of State is designated to receive
service of process for an out-of-state sponsor, or for out-of-state principals
of the sponsor, or for an out-of-state selling agent and its principals.
(y) Documents on file. State that the sponsor shall keep copies of the plan, all
documents referred to in the plan and all Exhibits submitted to the Department of
Law in connection with the filing of the plan, on file and available for inspection
without charge and copying at a reasonable charge at a specified location for six
years from the date of closing.
24.3(y)
65
(z) General. Describe any other material facts concerning the sponsor, the selling
agent, the managing agent, any of their principals, the property, the offering, and
prospective purchasers' rights and obligations, including the following:
(1) Disclose whether there are any lawsuits, administrative proceedings or other
proceedings the outcome of which may materially affect the offering, the
property, the sponsor's capacity to perform all of its obligations under the
plan, or the operation of the timesharing plan.
(2) Disclose whether the property was the subject of any prior public offerings.
Disclose whether any preliminary binding agreements have been entered
into or whether money has been collected from prospective purchasers.
(3) Represent that the sponsor, its agents and sponsor as holder of unsold
timeshares will not discriminate against any person on any basis prohibited
by civil rights laws.
(4) Disclose any circumstances which may affect use or enjoyment of the
property and appurtenances, such as reciprocal covenants or easements,
impending adjacent construction, any usage restriction imposed by statute,
ordinance or zoning resolution unless disclosed elsewhere in the plan.
24.3(z)
66
Section 24.4 Transmittal Letter and Certifications.
(a) Transmittal letter. A transmittal letter addressed to the Department ofLaw
that is signed and affirmed by the attorney who prepared the offering plan,
and containing the following unqualified statements, must be submitted
with the plan and Exhibits (i) at the time the plan is first submitted for
filing, and (ii) immediately prior to its acceptance for filing:
"II/We am/are the attorney(s) who prepared the offering plan for the
captioned timesharing plan. I1we affirm as follows:
Enclosed for filing pursuant to Part 24, Timeshare Offering Plans are
copies of the offering plan together with the Exhibits.
I/We am/are fully familiar with the provisions of Article 23-A of the
General Business Law and the regulations promulgated by the
Department of Law in Part 24.
I1We prepared the attached offering plan and exhibits based on
information from the sponsor. I/we have read all the printed copy
submitted to the Department of Law but expressly disclaim any
responsibility to have made an independent inspection of the building(s)
or property or investigation of the information furnished to me/us by
sponsor.
I/We have no actual knowledge of a violation of Article 23-A of the
General Business Law or Part 24 of the regulations promulgated by the
Department of Law, nor do I/we have actual knowledge of any material
fact omitted or any untrue statement of a material fact included in the
offering plan."
(b) Certification by sponsor. Include in Part II of the plan and in the Exhibits
a certification subscribed and sworn to by the sponsor and sponsor's
principals in their capacity as principals, in the following form:
"We are the sponsor and the principals of sponsor ofthe offering plan for
the captioned timesharing plan.
We understand that we have primary responsibility for compliance with
the provisions of Article 23-A of the Genral Business Law, the
regulations promulgated by the Department of Law in Part 24 and such
other laws and regulations as may be applicable.
24.4(b)
67
We have read the entire offering plan. We have investigated the facts set
forth in the offering plan and the underlying facts. We have exercised due
diligence to fonn a basis for this certification. We jointly and severally
certifY that the offering plan does, and that documents submitted hereafter
by us which amend or supplement the offering plan will:
(i) set forth the detailed terms of the transaction and be complete,
current and accurate;
(ii) afford potential investors, purchasers and participants an adequate
basis upon which to found their judgment;
(iii) not omit any material fact;
(iv) not contain any untrue statement of a material fact;
(v) not contain any fraud, deception, concealment, suppression, false
pretense or fictitious or pretended purchase or sale;
(vi) not contain any promise or representation as to the future which is
beyond reasonable expectation or unwarranted by existing
circumstances;
(vii) not contain any representation or statement which is false, where
I1we:
(a) knew the truth;
(b) with reasonable effort could have known the truth;
(c) made no reasonable effort to ascertain the truth; or
(d) did not have knowledge concerning the representation or
statement made.
This certification is made under penalty of perjury for the benefit of all
persons to whom this offer is made. We understand that violations are
subject to the civil and criminal penalties of the General Business Law and
Penal Law."
(c) Certification by engineer or architect. Include in Part II of the plan and in
the Exhibits the following certification subscribed and sworn to by an
engineer or architect (who must either be registered as an architect or be
licensed to practice as a professional engineer in the jurisdiction where the
24.4(c)
68
timeshare property is located). The certification must be dated within one
hundred and twenty (120) days prior to the date of submission of the
offering plan to the Department of Law. A second certification containing
the language in parentheses, below, shall be submitted with any addendum
to a report.
(I) The certification must be in the form below for newly constructed
units or facilities.
"The sponsor of the timesharing plan for the captioned
property retained me/our firm to prepare a report describing
the property when constructed (the "Report"). I/We examined
the building plans and specifications that were prepared by _
_ _ _ _ _ _ dated and prepared the
Report dated , (I/We are supplementing the
report in this addendum dated ,) a copy(ies)
of which is (are) intended to be incorporated in the offering
plan so that prospective purchasers may rely on the Report
(and addendum).
I/We understand that I/we am/are responsible for complying
with Article 23-A of the General Business Law and the
regulations promulgated by the Attorney General in Part 24
insofar as they are applicable to this Report (addendum).
I/We have read the entire Report and investigated the facts set
forth in the Report and the facts underlying it with due
diligence in order to from a basis for this certification. I/We
certify that the Report (addendum) and all documents
prepared by me/us disclose all the material facts (relevant to
the topics ofthe addendum) which were then discernible from
the building plans and specifications referred to above. This
certification is made for the benefit of all persons to whom
this offer is made. I/We certify that the Report (addendum):
(i) sets forth in detail the condition ofthe entire property as
it will exist upon completion of construction, provided
that construction is in accordance with the plans and
specifications that I/we examined;
24.4(c)
69
(ii) in my/our professional opmIOn affords potential
investors, purchasers and participants an adequate basis
upon which to found their judgment concerning the
physical condition of the property (the aspects of the
property discussed in the addendum);
(iii) does not omit any material fact;
(iv) does not contain any untrue statement ofa material fact;
(v) does not contain any fraud, deception, concealment, or
suppreSSIOn;
(vii) does not contain any representation or statement which
is false, where I1we:
(a) knew the truth;
(b) with reasonable effort could have known the truth;
(c) made no reasonable effort to ascertain the truth; or
(d) did not have knowledge concerning the representa
tions or statement made.
(viii) it is to be understood that all aspects of the physical
condition ofthe property cannot be detennined from an
examination of building plans and specifications and
that all statements combined in this certification are
premised on and limited to such plans and
specifications.
I1We further certifY that I am/we are not owned or controlled
by and have no beneficial interest in the sponsor and that
my/our compensation for preparing this Report (addendum)
is not contingent on the success of the timesharing plan or on
the profitability or price of the offering. This statement is not
intended as a guarantee or warranty of the physical condition
of the property."
(2) The certification must be in the form below for a project undergoing
rehabilitation.
24.4(c)
70
"The sponsor of the timesharing plan for the captioned
property retained me/our firm to prepare a report disclosing
the condition ofthe project when rehabilitated (the "Report").
I/We visually inspected the property on _
examined the building plans and specifications that were
prepared by dated _
_and prepared the Report dated , (I/We
are supplementing the report in this addendum dated _
_ _ _,) a copy(ies) of which is (are) intended to be
incorporated in the offering plan so that prospective
purchasers may rely on the Report (and addendum).
I1We understand that I/we am/are responsible for complying
with Article 23-A of the General Business Law and the
regulations promulgated by the Department ofLaw in Part 24
insofar as they are applicable to this Report(addendum).
I/We have read the entire Report (addendum) and investigated
the facts set forth in the Report (addendum) and the facts
underlying it and conducted the visual inspection referred to
above with due diligence in order to form a basis for this
certification. I/we certify that the report (addendum) and all
documents prepared my me/us disclose all the material facts
(relevant to the topics of the addendum) which were then
discernible from a visual inspection of the property and from
an examination ofthe building plans and specifications. This
certification is made for the benefit of all persons to whom
this offer is made. I/we certify that the report (addendum):
(i) sets forth in detail the condition ofthe entire property as
it will exist upon completion ofrehabilitation, provided
rehabilitation is in accordance with the plans and
specifications that I/we examined.
(ii) in my/our professional opinion affords potential
investors, purchasers and participants an adequate basis
upon which to found their judgment concerning the
physical condition of the property (the aspects of the
property discussed in the addendum):
(iii) does not omit any material fact;
24.4( c)
71
(iv) does not contain any untrue statement ofa material fact;
(v) does not contain any fraud, deception, concealment, or
suppreSSIOn;
(vi) does not contain any promise or representation as to the
future which is beyond reasonable expectation or
unwarranted by existing circumstances;
(vii) does not contain any representation or statement which
is false, where I1we:
(a) knew the truth;
(b) with reasonable effort could have known the truth;
(c) made no reasonable effort to ascertain the truth; or
(d) did not have knowledge concerning the representa
tion or statement made.
(viii) it is to be understood that all aspects of the physical
condition of the property cannot be determined by a
visual inspection or from an examination of building
plans and specifications and that all statements
contained in this certification are premised on and
limited to such examination and visual inspection.
I1We further certifY that I am/we are not owned or controlled
by and have no beneficial interest in the sponsor and that
my/our compensation for preparing this Report (addendum)
is not contingent on the success of the timesharing plan or on
the profitability or price of the offering. This statement is not
intended as a guarantee or warranty of the physical condition
of the property."
(3) The certification must be in the form for a project being sold in "as
is" condition or undergoing minimal rehabilitation.
"The sponsor of the timesharing plan for the captioned
property retained me/our firm to prepare a report disclosing
the condition of the property (the "Report"). I/We visually
inspected the property on , and prepared
24.4( c)
72
the Report dated , (1\ We are supplementing
the report in this addendum dated ,) a
copy(ies) of which is (are) intended to be incorporated in the
offering plan so that prospective purchasers may rely on the
Report (and addendum).
I/We understand that I/we am/are responsible for complying
with Article 23-A of the General Business Law and the
regulations promulgated by the Department ofLaw in Part 24
insofar as they are applicable to this Report (addendum).
I/We have read the entire Report (addendum) and investigated
the facts set forth in the Report (addendum) and the facts
underlying it and conducted the visual inspection referred to
above with due diligence in order to form a basis for this
certification. I/We certify that the report (addendum) and all
documents prepared by me/us disclose all the material facts
(relevant to the topics of the addendum) which were then
discernible from a visual inspection of the property. This
certification is made for the benefit of all persons to whom
this offer is made. I/We certify that the Report (addendum)
based on my/our visual inspection:
(i) sets forth in narrative from the physical condition ofthe
entire property (the aspects ofthe property discussed in
the addendum) and is current and accurate as of the
date of inspection;
(ii) in my/our professional OpInIOn affords potential
investors, purchasers and participants an adequate basis
upon which to found their judgment concerning the
physical condition of the property (the aspects of the
property discussed in the addendum);
(iii) does not omit any material fact;
(iv) does not contain any untrue statement ofa material fact;
(v) does not contain any fraud, deception, concealment, or
suppreSSIOn;
24.4(c)
73
(vi) does not contain any promise or representation as to the
future which is beyond reasonable expectation or
unwarranted by existing circumstances;
(vii) does not contain any representation or statement which
is false, where I1we:
(a) knew the truth;
(b) with reasonable effort could have known the truth;
(c) made no reasonable effort to ascertain the truth; or
(d) did not have knowledge concerning the representa
tions or statement made.
(viii) it is to be understood that all aspects of the physical
condition of the property cannot be determined by a
visual inspection and that all statements contained in
this certification are premised on and limited to such
visual inspection.
I/We further certify that I am/we are not owned or controlled
by and have no beneficial interest in the sponsor and that
my/our compensation for preparing this Report (addendum)
is not contingent on the success of the timesharing plan or on
the profitability or price of the offering. This statement is not
intended as a guarantee or warranty of the physical condition
of the property."
(4) The certification must be in the form below where the detailed
description of the property is being omitted pursuant to Section
24.7(bb).
"The sponsor of the timesharing plan for the captioned
property retained me/our firm to examine the plans and
specifications for the construction of all elements of the
buildings, grounds and facilities, to inspect the construction
of all elements of the buildings, grounds and facilities, and to
issue the certification which follows: Copies of this
certification are intended to be incorporated in the offering
plan so that prospective purchasers may rely on it.
24.4(c)
74
I1We understand that I/we am/are responsible for complying
with Article 23-A of the General Business Law and the
regulations promulgated by the Attorney General in Part 24
insofar as they are applicable to this certification.
I/We have examined the plans and specifications for the
construction of all elements of the buildings, grounds and
facilities comprising this timeshare offering, and I/we have
also examined and inspected the actual construction of all
elements of the buildings, grounds and facilities in order to
make this certification. This certification is made for the
benefit ofall persons to whom this offer is made. I1We certify
as follows:
(i) All aspects ofthe construction ofthe buildings, grounds and facilities
are in accordance with the filed plans and specifications (as
amended); are in compliance with all applicable laws and codes; are
in compliance with locally accepted construction practices; and are
in compliance with all applicable local, state and federal
environmental laws and regulations.
(ii) This certification, in my/our professional opinion, affords potential
investors, purchasers and participants an adequate basis upon which
to found their judgment concerning the physical condition of all
aspects of the property.
(iii) This certification does not omit any material fact.
(iv) This certification does not contain any untrue statement of a material
fact.
(v) This certification does not contain any fraud, deception,
concealment, or suppression.
(vi) This certification does not contain any promise or representation as
to the future which is beyond reasonable expectation or is
unwarranted by existing circumstances.
(vii) This certification does not contain any representation or statement
which is false, where I1we:
24.4(d)
75
(a) knew the truth;
(b) with reasonable effort could have known the truth;
(c) made no reasonable effort to ascertain the truth; or
(d) did not have knowledge concerning the representation or
statement made.
(d) Certification by expert on adequacy of the budget. Except where (1) a
timeshare development has been in full operation for at least two years prior
to submission for filing of a Plan and (2) the sponsor provides in Part I of the
Plan certified
financial statements for the last two years of operation and (3) highlights as
a Special Risk any loss or extraordinary occurrence, include in Part II of the
Plan and in the Exhibits a certification subscribed and sworn to by an expert,
who may be the chief financial officer of the sponsor, concerning the
adequacy of Schedule B (and Schedule C) in the following form. The
certification must be dated within ninety (90) days prior to the date of the
submission of the offering plan to the Department of Law. The expert's
certification must be based on experience in the management ofhotel, resort
or timeshare properties and must disclose the approximate number of
properties managed and length of time managed, together with other
relevant real estate experience, qualifications and licenses.
"The sponsor of the timeshare offering plan for the captioned
property retained me/our firm to review or prepare Schedule(s) B
(and C) containing projections ofincome and expenses for timeshare
operation. My/our experience in this field includes:
I/we understand that I/we am/are responsible for complying
with Article 23-A of the General Business Law and the
regulations promulgated by the Attorney General in Part 24
insofar as they are applicable to Schedule B (and C).
I/we have reviewed the Schedule(s) and investigated the facts
set forth in the Schedule(s) and the facts underlying it/them
with due diligence in order to form a basis for this
certification.
I1we certify that the projections in Schedule B (and C) appear
reasonable and adequate based on present prices (adjusted to
reflect continued inflation and present levels of consumption
for comparable units similarly situated).
24.4(d)
76
I/we certify that Schedule(s) B (and C):
(i) sets forth in detail the tenus of the transaction as it
relates to the Schedules and is complete, current and
accurate.
(ii) affords potential investors, purchasers and participants
an adequate basis upon which to found their judgment.
(iii) does not omit any material fact.
(iv) does not contain any untrue statement of a material fact.
(v) does not contain any fraud, deception, concealment, or suppression.
(vi) does not contain any promise or representation as to the future which
is beyond reasonable expectation or unwarranted by existing
circumstances.
(vii) does not contain any representation or statement which is false, where
I1we:
(a) knew the truth;
(b) with reasonable effort could have known the truth;
(c) made no reasonable effort to ascertain the truth; or
(d) did not have knowledge concerning the representation or
statement made.
I1we further certify that I am! we are not owned or controlled by and have
no beneficial interest in the sponsor and that my/our compensation for
preparing this Certification is not contingent on the success of the offering.
I1we understand that a copy of this Certification is intended to be
incorporated into the offering plan so that prospective purchasers may rely
on it.
This certification is made under penalty of perjury for the benefit of all
persons to whom this offer is made. We understand that violations are
subject to the civil and criminal penalties of the General Business Law and
Penal Law."
24.4(d)
77
Section 24.5 Amendments.
(a) General. Documents to supplement or amend an offering plan
(collectively,"amendment(s)") shall be deemed part of the offering plan and shall
meet the following requirements:
(1) If the offering plan does not comply with GBL Section 352-e(1)(b) or
Section 24.I(b) of this Part due to change of circumstances, the passage of
time or any other reason, the offering plan must be amended promptly.
(2) An amendment must include a representation that all material changes of
facts or circumstances affecting the property or the offering are included
unless the changes were described in prior amendment(s) submitted to but
not yet filed with the Department of Law.
(3) Except as provided in Section 24.5(d), an amendment to an offering plan
shall be filed on the date indicated in the letter issued by the Department of
Law stating that the amendment has been filed and not sooner.
(4) Amendments that have been filed with the Department of Law must be
attached to the inside front cover of the offering plan before the amended
plan is distributed to the public. The cover of the offering plan must be
stamped "This plan has been amended. See inside cover." Any revisions,
additions or deletions of specific language in the offering plan should
reprint a sufficient portion of the paragraph from the offering plan as
revised so that the revised portion of the offering plan may be understood
easily. An offering plan may be rewritten to incorporate the amendments
into the body of the plan, and must be rewritten, if required by the
Department of Law.
(5) If there is a substantial amendment to the offering plan that adversely
affects purchasers under contract, the sponsor must grant timeshare
purchasers a right of rescission and a reasonable period of time that is not
less than fifteen (15) days after notice to exercise the right. Sponsor must
promptly return any money paid by a purchaser who rescinds.
(b) Procedure for submission of amendments. Amendments must be mailed to or
submitted during business hours to the Real Estate Financing Bureau, Department
of Law, 120 Broadway, 23rd floor, New York, NY 10271. Include the following
when submitting an amendment:
24.5(b)
78
(1) A transmittal letter, signed by the attorney who prepared the amendment
that:
(i) states the date the offering plan was filed and the Department ofLaw
file number;
(ii) identifies the subject amendment in numerical order:
(iii) states whether prior amendments had been submitted to but not yet
filed with the Department of Law;
(iv) identifies, if possible, the attorney in the Department of Law who
reviewed the most recent submission; and
(v) gives the current status of the offering plan.
(2) Three (3) copies of the amendment to the offering plan.
(3) Check(s) (certified or uncertified) for filing fee(s) under GBL Section 352
e(7) payable to "New York State Department of Law" stapled or clipped to
the transmittal letter.
(4) One (1) copy of the offering plan including all filed amendments.
(5) One (1) form RS-2 signed by the sponsor.
(6) Evidence of approval for filing in the situs state, if a five (5) business day
review is requested pursuant to Section 24.1 (d).
(c) Amendments extending term of the offering plan. Pursuant to Section 24.3(a)(5),
the term of the initial offer is twelve (12) months commencing on the date
indicated in the letter issued by the Department of Law stating that the plan is
filed. Any amendment extends the term of the offering for an additional six (6)
month term from the date of filing of the amendment. In the absence of any
amendments, an extension ofthe term must be made by amendment before the end
of the then current term and must comply with the provisions of Section 24.5 and
the requirements set forth below.
(1) The amendment must disclose all material changes such as an increase in
maintenance charges or a material increase in an expense item.
24.5(c)
79
(2) The amendment must state the number of unsold timeshares remaining and
the status of construction of the units and other facilities.
(d) Price change amendments. Any amendment proposing to change any offering
price is subject to the requirements set forth below and must be consistent with
Section 24.3(k).
(1) Notwithstanding Section 24.5(a)(3), if the amendment is limited solely to
price changes and no prior amendment has been submitted to but not yet
filed with the Department of Law, the amendment shall be deemed filed
when submitted to the Department of Law. This amendment will not
extend the term of the
offering.
(2) If the amendment contains price changes and supplements or amends any
other part of the offering plan, the amendment shall be filed on the date
indicted in the letter issued by the Department of Law stating that the
amendment has been filed.
(3) The transmittal letter for a price change amendment must be accompanied
by a completed copy of Form C-ll as promulgated by the Department of
Law.
24.5(d)
80
Section 24.6 Advertisements
(a) All advertising (including, but not limited to circulars, tlyers, cards, letters,
brochures, pamphlets, lodging and vacation certificates, direct mail prize
giveaways, and radio and television solicitations ofinterest for offering plans filed
pursuant to this Part) shall contain the following statements, or substantially
similar language provided such language makes specific reference to, and uses the
term "timeshare sales", in easily readable print separated from the body of the
advertisement or spoken in a distinctly audible voice.
THIS ADVERTISEMENT IS BEING USED FOR THE PURPOSE OF SOLICITING
TIMESHARE SALES.
THE COMPLETE OFFERING TERMS ARE IN AN OFFERING PLAN AVAILABLE
FROM THE SPONSOR.
(b) Any chart or diagram used in an advertisement must be consistent with the offering
plan. Any room or floor plan must be to scale.
(c) No abbreviations shall be employed in advertisements unless the meaning is
unmistakably clear.
(d) All advertisements in connection with an offering plan filed pursuant to this Part
shall be consistent with the representations and information required to be set forth
by the General Business Law and this Part. All assertions offact in advertisements
must be provably true.
(e) Anticipated maintenance charges shall be preceded by the word "projected" or
"estimated" or abbreviations of those terms. In estimating maintenance charges,
there shall be no subtraction or representation of specific dollar savings because
of anticipated tax deductions.
(f) Advertisements of amenities or services available at a fee charged in addition to
the maintenance charges or in addition to the purchase price must refer to the
additional fee. Advertisements of amenities or services that will not be available
at closing must state the approximate date of availability.
(g) An artist's rendering of a property in an advertisement must be marked as an
artist's rendering, and must accurately and realistically depict the dimensions,
height and landscaping ofthe property and surrounding roads, buildings and open
space.
24.6(g)
81
(h) Advertisements of financing offered or procured by sponsor must include the term
of the financing.
(i) All advertising must clearly and conspicuously use the term "timesharing" to
describe the product offered for sale by the sponsor.
CD All advertisements must disclose the price range for the interests being sold.
(k) In addition to the other requirements set forth in this Section 24.6, all
advertisements which offer prizes, gifts, awards or other premiums must:
(1) clearly and conspicuously state whether or not respondents will be required
to submit to a sales presentation in order to receive the premium or
premiUms;
(2) specify the premium or premiums to be given to the respondents and the
retail value of each premium;
(3) fully and accurately describe the premium or premiUms;
(4) clearly and conspicuously disclose all rules, requirements and preconditions
for claiming the premium or premiums, including any costs to the
respondent associated with the offer;
(5) not appear to be an urgent and official notification to winners in a contest
and must not use any other means to convey a false sense of urgency or
importance.
(I) Any communication by the sponsor or his agents with contract vendees which is
sent to purchasers prior to closing shall contain no material information which is
not contained in or inconsistent with disclosures made in the documents submitted
to and accepted for filing by the New York State Department of Law.
24.6(1)
82
Section 24.7 Description of Property (and Specifications) and (Building Condition)
Except as provided in Section 24.7(bb), each offering plan submitted must include a
comprehensive description of the timeshare buildings and property and buildings and
property outside the immediate timeshare regime which timeshare owners have the right
to use and occupy as part of the timeshare plan (at no additional charge or at a discount
from rates charged to the general public). If any materials being used are not new, the
condition should be fully described. Describe and set forth outline specifications for all
applicable items in the order listed below. If the building is undergoing partial
rehabilitation, describe the condition ofthe major systems that are not being rehabilitated
and are likely to require major upgrading within the next five years and highlight as a
special risk.
(a) Location and use of property. State whether this property and proposed use will
comply with all zoning and use requirements. Include in discussion:
(l) address;
(2) block and lot number;
(3) zoning; and
(4) permissible use.
(b) Status of construction. State:
(1) year built;
(2) class of construction;
(3) certificate of occupancy (type and number), if any;
(4) alteration pennit numbers and description of work done.
(c) Site. Discuss:
(1) SIze;
(2) number of buildings and use;
(3) streets owned or maintained by the project:
(i) paving (material and condition);
(ii) curbing (material and condition);
(iii) catch basins, drainage (location and condition);
(iv) street lighting (material, type, location and condition);
(4) drives, sidewalks and ramps:
(i) paving (material and condition);
(ii) curbing (material and condition);
(iii) catch basins, drainage (location and condition);
(iv) street lighting (material, type, location and condition).
24.7(c)
83
(d) Utilities. Identify source or provider of each utility. Specifically identify which
are public utilities or regulated companies and which are solely the obligations of
the timeshare regime. Indicate whether water, sewer (or septic tank), gas, electric
and telephone are metered individually, collectively or by any other method of
billing.
(e) Sub-soil conditions. Describe (including water conditions):
(1) whether uneven foundation movement or settling has occurred (cracking,
mortar joint decay, etc.);
(2) whether there is any evidence of moisture or seepage or ground water
infiltration and, if any, indicate whether corrective action is needed;
(3) whether there is any danger from flooding, either due to water table in area
or overflow from other bodies of water, noting the potential for mudslides
or erosion and what preventive action is appropriate.
(f) Landscaping and enclosures. Describe:
(1) grass cover (type, location);
(2) plantings (type, location);
(3) trees (location);
(4) fencing (type, location);
(5) gates (type, location);
(6) garden walls (type, location);
(7) retaining walls (type, location);
(8) display pools and foundations (location, materials).
(g) Building size. Specify:
(1) total height (approximate total feet from ground level to highest part of
roof);
(2) crawl spaces (floor to ceiling, height);
(3) number of sub-cellars and cellars;
(4) number of floors (actual including penthouses-give floor to ceiling height
if not between 7 Y2 and 8 l;2 feet);
(5) equipment rooms (location and use);
(6) parapet (height above roof).
24.7(g)
84
(h) Structural system. Describe materials used, include type of foundation(s) and
method of installation. SpecifY:
(1) Exterior of buildings:
(i) Walls: List materials, type of construction, method of construction.
For New York City buildings, if Local Law 10 applies, state the
results of the inspection. If Local Law lOis inapplicable, so state.
If such inspection is required but not performed specifY as a
violation. If insulated, describe material, type, size and insulating
value where available.
(ii) Windows: SpecifY type and materials in all parts of the building
including sills, screens, window guards, lintels, storm sash,
hardware, single or double glazing and caulking. Indicate whether
lot line windows exist and describe any potential future problems.
(2) Parapets and copings: State type of materials, how firmly secured in place
and whether there is any indication of problems (e.g., leakage, spalling,
deterioration of mortar, cracking, etc.).
(3) Chimneys and caps: Indicate number, location and material of each
chimney for boilers, incinerators, compactors and fireplaces. If fireplaces
are not usable for wood fires, this fact must be conspicuously disclosed.
(4) Balconies and terraces.
(i) Deck finish (material);
(ii) Balustrade (type, material);
(iii) Railings (material);
(iv) Copings (material);
(v) Soffits (material);
(vi) Doors to balconies and terraces (type, material).
(5) Exterior entrances. Describe:
(i) Exterior doors and frames (material, type, lock);
(ii) Vestibule doors and frames (material, type, lock);
(iii) Exterior stairs (material, location);
(iv) Railways (material, location);
(v) Mailboxes (type, location);
(vi) Lighting type, location).
24.7(h)
85
(6) Service entrances. Describe:
(i) Doors and frames (material, type, lock);
(ii) Gates (material, type, lock);
(iii) Exterior stairs (material, location);
(iv) Railings (material, location).
(7) Roof and roof structures. Describe:
(i) Type roofs for all areas:
(£!) Material;
(.h) Insulation (size, type and insulating value if available);
(~) Surface finish;
(g) Bond or guarantee;
(~) Flashing materials including counter flashing.
(ii) Drains:
(£!) Location, material and type;
(.h) Gutters and leaders (type, material).
(iii) Skylights (location, type, material).
(iv) Bulkheads:
(£!) Stairs (materials);
(.h) Elevators (materials);
(~) Other.
(v) Metal work at roof levels:
(£!) Exterior, metal stairs (materials);
(.h) Vertical ladders, including gooseneck (material);
(~) Railings (material);
(g) Hatches to roof (type, material);
(~) Other.
(vi) Rooftop facilities (describe in detail).
(8) Fire escapes. Describe at each floor and specify any unusual access
situations:
(i) Location (describe how attached and supported);
(ii) Floors covered;
24.7(h)
86
(iii) Drop ladder;
(iv) Type;
(v) Materials.
(9) Yard and courts. Describe each yard or court including front, rear and
interior areas, listing methods of access:
(i) Paving (material);
(ii) Drainage (type and material);
(iii) Railings (material);
(iv) Stairs (material);
(v) Fencing (type and material);
(vi) Walls (type and material).
(lO) Interior stairs. Describe:
(i) Number of stairs of each type;
(ii) Enclosure construction and interior finishes;
(iii) Stair construction (steel, concrete, wood);
(iv) Stringers (material):
(v) Treads (material);
(vi) Risers (material);
(vii) Guard Rails (material);
(viii) Balustrade (material).
(11) Interior doors and frames. Describe material, type, and location for each,
and state whether fireproof or exceeds fire/safety standards:
(i) Unit entrance and interior doors and frames;
(ii) Corridor doors and frames;
(iii) Stair hall doors and frames;
(iv) Roof doors, basement doors and frames.
(12) Elevators. Describe:
(i) Number of passenger and service elevators;
(ii) Manufacturer, age of each and capacity (in lbs. and number of
passengers);
(iii) Type of operation for each elevator by elevator number or location
in building (for large numbers of elevators describe by class
passenger/freight);
(iv) Automatic (type of controls);
(v) Floors served:
(vi) Type (hydraulic, gearless);
24.7(h)
87
(vii) Doors (sliding, swinging, manual, automatic);
(viii) Location of machine rooms;
(ix) DC to motor (manufacturer);
(x) AC to motor-generator set (manufacturer);
(xi) Other.
(13) Elevator cabs. Describe:
(i) Kind (manufacturer);
(ii) Floor (material);
(iii) Walls
(iv) Ceiling (material);
(v) Lighting (describe);
(vi) Alarm, safety system.
(i) Auxiliary facilities:
(1) Laundry rooms. Describe:
(i) Location and number of rooms;
(ii) Clothes washers, number and type (e.g., heavy duty, coin operated,
electric, gas);
(iii) Clothes dryer (number and type);
(iv) Room ventilation (method and final exhaust);
(v) Dryer ventilation (method and final exhaust).
(2) Refuse disposal. Describe, including:
(i) Incinerator(s) (number, location, capacity, type, manufacturer);
(ii) Compactor(s) (number, location, capacity, type, manufacturer);
(iii) Approvals by authority having jurisdiction (date of each approval);
(iv) Initial storage location (ultimate storage location);
(v) Pick-up schedule, and whether public or private provider.
U) Plumbing and drainage:
(1) Water supply. Describe system, pumps, storage and location.
(2) Fire protection system. Describe:
(i) Standpipes (material, size, location);
(ii) Hose racks, hoses and nozzles (location);
(iii) Sprinkler heads (type system, location);
(iv) Siamese connection (type, location).
24.7(j)
88
(3) Water storage tank(s) and enclosures. Describe:
(i) Number, type, location of each;
(ii) Material (interior, exterior and roof of tank);
(iii) Access to tank (e.g., vertical gooseneck ladder);
(iv) Capacity (total gallons);
(v) Capacity (fire reserve).
(4) Water pressure and how maintained.
(5) Sanitary sewage system. Describe, including:
(i) Sewage piping (materials);
(ii) Sewage pumps (if any);
(iii) Sewage disposal (public/private, treatment, drainfield, sewer).
(6) Permit(s) required. List and include date(s) obtained.
(7) Storm drainage system. Describe system, adequacy of method of disposal
and materials including:
(i) Catch basins (location);
(ii) Yard and roof drains (location);
(iii) Piping (materials);
(iv) Eject or sump pumps (describe in detail and describe conditions
requiring pumps).
(k) Heating. Describe (including space heating and domestic hot water heating):
(1) Describe heating and distribution of domestic hot water and whether
capable of providing peak required services. Describe heating system's
ability to maintain legally required conditions under anticipated weather
conditions, specifYing internal temperature and ambient temperature used
in calculations;
(2) Number of boilers and description;
(3) Manufacturer and age ofboiler(s) (model, capacity-alternatively give type,
approximate age and approximate remaining useful life);
(4) Manufacturer and age of burners (model-alternatively gIve type and
approximate remaining useful life);
(5) Type of controls;
24.7(k)
89
(6) Radiators, piping, insulation, valves, pumps;
(7) Fuel (for oil give type and grade);
(8) Location of oil tank, materials, enclosure;
(9) Capacity of oil tank;
(l0) For gas (details on type and supply system).
(1) Gas supply (if not described above). Describe:
(1) Type;
(2) Meters;
(3) Piping.
(m) Air conditioning. Describe cooling system's adequacy to maintain comfortable
conditions under anticipated weather conditions, specifYing internal temperature
and base ambient temperature used in calculations. Describe:
(1) Type of system;
(2) Central system (give manufacturer, model and capacity);
(3) Cooling towers, condensers (roof top, self-contained units, including
number, location and description);
(4) Individual units covered by the otTer (window/sleeve-specifY number,
capacity, amperage and efficiency).
(n) Ventilation. Describe system in kitchens, fireplaces and all windowless areas such
as corridors, garages, laundries, baths, etc.
(0) Electrical system. SpecifY:
(1) Service from main service switch gear (amperes, voltage, phases, wire,
protective equipment);
(2) Service to individual units (risers, etc.);
24.7(0)
90
(3) Compartment switch gear (location and floor of sectional meter boards and
transformers supplying power to the meter boards);
(4) Unit service (ratings of main fuses, circuit breakers or fuses to units and
ratings);
(5) Adequacy. Specify:
(i) Service - average number of circuits per apartment and capacity to
handle modem appliances - specifically air conditioners, dishwashers
and electric dryers;
(ii) Lighting and fixtures;
(iii) Convenience outlets, appliance outlets.
(6) Intercommunication and/or door signal systems.
(p) Television reception facilities (master antennae, cable TV, security closed circuit
TV).
(q) Public area lighting. Describe and state adequacy (entrances, halls and stairs,
corridors, basements, courts and yards).
(r) Garages and parking areas. Describe:
(1) Location of garages (description of facility);
(2) Location of parking areas (number of spaces in each);
(3) Surfaces (materials used, lighting, fencing, etc.):
(4) Parking (attended or not attended);
(5) Garage ventilation (method and equipment);
(6) Garage fire protection (method and equipment);
(7) Drainage.
(s) Swimming pool(s). Describe in detail.
(1) Type (concrete, material composition) and location on property:
(2) Size, including length, width, depth, and approximate number of bathers
permitted at any time;
24.7(s)
91
(3) Enclosure (material including roof);
(4) Pumping and filter system (describe material);
(5) Water heating equipment, or usage of building's hot water (feed or heat
exchangers);
(6) If on building roof: specify structural support system.
(t) Tennis courts, playgrounds and recreation facilities.
(l) Tennis courts. Describe:
(i) Type (clay, macadam, turf);
(ii) Number and size;
(iii) Lighting (number and type);
(iv) Fencing or enclosure (including distance between fence or enclosure
and all sides of court).
(2) Playgrounds. Describe location and size(s) of playground(s), fencing (if
any), equipment types, and sand bed or safety padding.
(3) Other recreation facilities. Describe any beach or lake front, boating
facilities, golf course(s), handball, basketball or other game courts.
(u) Permits and Certificates. List all applicable permits which must be obtained
and inspections which are to be done. List type of inspection, authority inspecting
and duration of approval once obtained, include all compactors, incinerators,
boilers, oil storage tanks, elevators, etc. In New York City include Department
of Air Resources, Elevator Safety, Boiler Safety, Fire Department and Buildings
Department permits.
(v) Violations. List all violations outstanding as of the date of this report and the
agency imposing the violation, the condition involved, the date the violation
issued, and work required by violation notice to cure. If no violations are
outstanding, so state.
(w) Unit Information. Specify the number of units inspected. Specify the unit
designations for each typical unit or line of units, including the number and type
of rooms. Give criteria for calculations. For lofts give useable residential space
in square feet. Describe (include foyers, living rooms, dining areas, kitchen,
bedroom, bathrooms, etc.):
24.7(w)
92
(I) Type and grade of finish material used in each type of unit and the number
of coverings given. Include paint, wall and floor coverings, as well as
specifying the type of flooring, walls, and ceiling used.
(2) Describe presence, type and condition of all bathroom fixtures.
(3) Describe presence, type and condition of kitchen and laundry equipment.
(i) If data is substantially the same for all units a single narrative may
be substituted for this schedule.
(ii) If any equipment or fixtures described are not included in the
offering price, or the offering price is conditioned on the equipment
and fixtures selected, such fact must be conspicuously noted in the
body of the plan.
(x) Finish schedule of spaces other than units. The following is a form of schedule to
be given for each floor.
Room Ceiling Remarks
(I) Show all common rooms and spaces including but not limited to: Sub-sub
cellar, sub-cellar, basement, first floor, penthouse floor, public and service
halls, corridors, lobbies.
(y) Safety and warning devices. Describe any fire or smoke safety devices installed
in units and common areas. State what devices are required by law, and whether
any required devices have not been installed.
(z) Additional information required. Include the following in the Description of
Property Section of the plan:
(I) A site plan showing roads, the outside dimensions of the building and
clearly designated common areas, including recreation and refuse disposal
areas, if more than one building is being offered;
(2) An area map showing the location of the timesharing plan with respect to
its surroundings;
(3) Floor plans for each unit drawn to scale and showing room dimensions.
24.7(z)
93
(aa) Asbestos. (1) State whether Asbestos Containing Material (ACM) is present in
insulating or fireproofing material anywhere in the timeshare building(s) and
building(s) outside the immediate timeshare regime which timeshare owners have
the right to use and occupy as part ofthe timesharing plan (at no additional charge
or at a discount from rates charged to the general public). Sponsor shall perform
such tests as are necessary to make such determination. In the event that ACM is
present, sponsor shall have a person who is qualified to render an opinion on
asbestos prepare a report on the asbestos in the building(s) (the "asbestos report").
Such asbestos report shall contain at least the following information:
(i) The qualifications of the person preparing the report.
(ii) A detailed inventory of the asbestos in each unit and in all other
areas of the property, including the location, amount of ACM, type
and concentration of asbestos in the ACM, and condition. At least
ten (10) percent of all units must be inspected in an initial inspection.
If ACM is found in any of these units, a second inspection must be
performed in all remaining accessible units. List units inspected.
(iii) Recommendations for handling each and every item of the asbestos
inventory, i.e., removal, enclosure, encapsulation, or leaving
undisturbed.
(iv) How the recommendations should be implemented. Include, if
applicable, whether units must be vacated or whether use of certain
rooms will be limited and the projected duration thereof. State
whether the work must be performed in compliance with any
applicable law.
(v) A recommended protocol for the future handling and maintenance of
asbestos which will remain in the building(s), whether encapsulated,
enclosed or left undisturbed.
(2) The provisions of Section 24.7(aa) shall take effect on March 1, 1989.
(i) Proposed offering plans submitted to the Department of Law on or
after March 1, 1989 shall contain a statement as to whether ACM is
present in the building(s) and, ifso, shall contain an asbestos report.
24.7(aa)
94
(ii) Offering plans submitted and/or accepted for filing between January
1, 1989 and February 28, 1989 shall be revised or amended no later
than May 1, 1989 to include a statement as to whether ACM is
present in the building(s) and, if so, shall be revised or amended to
include an asbestos report no later than July 1, 1989. Such plans
shall not be declared effective until 30 days after such a statement
and report are incorporated in an amendment and presented to
purchasers.
(iii) Offering plans accepted for filing prior to March 1, 1989 in which
any intervals remain unsold shall be amended no later than May 1,
1989 to include a statement as to whether ACM is present in the
building(s) and, if so, shall be revised or amended to include an
asbestos report no later than July 1, 1989. If before such an
amendment is accepted for filing the sponsor seeks to declare the
plan effective, close, or sell unsold intervals, the sponsor shall amend
the offering plan to inform prospective purchasers that such
statement and asbestos report are forthcoming. Such amendment
shall give purchasers the opportunity to delay closing until 30 days
after the amendment containing such statement and asbestos report
have been distributed to them.
(bb) Where all or substantially all of the timeshare offering is comprised of newly
constructed units and facilities, the architects's/engineer's report described above
may be replaced with the following:
(1) a certification by a registered architect or licensed engineer pursuant to
Section 24.4(c)(4). If construction is not complete, the offering plan may
state that such certification will be added to the offering plan upon
completion of construction but before the first closing;
(2) a statement by the sponsor that copies of all technical reports, such as those
prepared for lending institutions, have been delivered to the Department of
Law and are available for inspection at the sales office;
(3) a statement by the sponsor that in the event of litigation against the sponsor
in which allegations of construction defects are made, the sponsor will
stipulate and acknowledge that the claimant(s) relied upon the information
contained in the filed plans and specifications.
24.7(bb)
95
The Department of Law may, in its discretion, require the detailed
architect's/engineer's report described above in Sections 24.7(a)-24(aa) and
the sponsor may elect to submit such a detailed report instead of the
certifications and statements permitted under this section.
(cc) Lead-based paint. Include records, reports, violations and any other information
known or available to the sponsor or its agents concerning the presence of lead
based paint and/or lead-based paint hazards.
24.7(cc)
96