1) Multi-Site Time-Share Projects.
A "multi-site time-share project" is generally defined as two or more time- share projects (at least one of which is located in the United States) in which a time-share owner may reserve a week on a non-priority basis. When one or more of the component sites of a "multi-site time-share project" is to be sold in California, the new legislation requires the developer to obtain a public report from the California DRE for each and every component site thereof.
2) Single-Site Time-Share Projects.
A "single-site time-share project" is generally defined as a single geographic site in which a time-share owner owns a fee or leasehold (or, for that matter, a right to use) interest and has the right to reserve a week in that particular resort on a priority basis (notwithstanding the fact that the owner is able to participate in a reservation or other membership program that entitles him or her to reserve the use of a week in an affiliated resort or to participate in an exchange program whether internal or external); provided, however, the sale of a single-site resort that is coupled with a representation that the purchaser will be guaranteed the right to stay at a resort at a different geographic location will be deemed a sale of a multi-site resort governed under (1) above. The new legislation requires the developer of a "single-site time-share project" (whether or not located in California) that is to be sold in California to obtain a public report from the California DRE. In addition, where the owner of a fee or leasehold (or right to use) time-share interest in a single-site time-share project:
(a) has the right to reserve the use of a week in a component site (in a different resort that is affiliated with the single-site resort) on a non-priority basis (i.e., where that owner competes with owners of the affiliated resort for a reservation), the developer must obtain a public report from the California DRE only for the single-site resort, but the developer must both disclose to the purchasers the terms and conditions of the reservation system and certain limited factual information regarding each and every component resort and make reasonable arrangements (which arrangements will not be subject to the review and approval of the DRE) to ensure (with respect to each and every component resort) a variety of requirements.
(b) has the right to voluntarily participate in an internal or external exchange and exchange his or her week for a week in a different resort, which resort may or may not be owned by the "single-site resort" developer. The new legislation makes "exchange programs" exempt from registration in California (i.e., the developer need not obtain a public report from the DRE for the resorts into which an interval owner could exchange his or her week); the developer of the single-site resort need only disclose the terms and conditions of the exchange program and certain limited factual information regarding the "exchange resorts."
In addition to the above, the new legislation:
- Exempts "incidental benefits" (e.g., incentives) from being a part of the offering of a time-share interest (i.e., the developer would not have to provide "reasonable arrangements" which are subject to review and approval by the DRE).
- Requires a city to issue separate property tax bills if requested by the developer and if the individual owners pay a separate processing fee to reimburse the city for the excess cost of processing separate tax bills (otherwise, the city may issue a single tax bill to the single-site owner association). Also permits a HOA to terminate the issuance of individual tax bills.
- Exempts time-share projects located outside of the United States that are sold in California (and are not a component of a "multi-site project") from being registered in California.
- Permits the DRE to accept information submitted for out-of-state projects from the states in which such projects are located, and take into consideration the laws of such states when registering such projects in California; provided, however, the DRE retains the right to require that all out-of-state projects that are registered in California afford the same level of protection to California purchasers that would be afforded them had the project been located in California.