2016 -- S 2760 SUBSTITUTE B

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LC005340/SUB B

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     STATE OF RHODE ISLAND

IN GENERAL ASSEMBLY

JANUARY SESSION, A.D. 2016

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A N   A C T

RELATING TO PROPERTY - RHODE ISLAND REAL ESTATE TIME-SHARE ACT -

TERMINATION OF TIME SHARES

     Introduced By: Senators Pichardo, and Miller

     Date Introduced: March 10, 2016

     Referred To: Senate Judiciary

     It is enacted by the General Assembly as follows:

     SECTION 1. Section 34-41-2.05 of the General Laws in Chapter 34-41 entitled "Rhode

Island Real Estate Time-Share Act" is hereby amended to read as follows:

     34-41-2.05. Termination of time shares. -- (a) This section applies to all time share

estates except it shall apply to time-share licenses only to the extent expressly provided by the

time-share instrument.

      (b) All time shares in a time-share property may be terminated only by as follows:

     (1) By agreement of the time-share owners having at least eighty sixty percent (80%)

(60%) of the time shares, or such larger majority as the time-share instrument may specify. ; or

     (2) Any provision in the time-share instrument notwithstanding, by a plan of termination

approved by the lesser of the lowest percentage of voting interests necessary to amend the

instrument, or as otherwise provided in the instrument for approval of termination if:

     (i) The estimated cost of construction for repairs which are necessary to restore the time-

share property to its former condition or bring the time-share property into compliance with

applicable laws or regulations exceeds the combined fair market value of the units in the time-

share property after completion of the construction or repairs;

     (ii) It becomes impossible to operate or reconstruct a time-share property to its prior

physical configuration because of land use laws or regulations;

     (iii) The association is not paying its debts as they become due;

     (iv) The association's debts exceed its assets;

     (v) More than twenty-five percent (25%) of the association members are delinquent in

payment of the annual maintenance fee and/or any special assessments;

     (c) An agreement to terminate all time shares pursuant to subsection (b)(1) of this section

shall comply with the following:

      (c)(1) An agreement to terminate all time shares in a time-share property must be

evidenced by the execution of a termination agreement, or ratifications thereof, in the same

manner as a deed, by the requisite number of time-share owners. The termination agreement must

specify a date after which the agreement will be void unless it is recorded before that date. A

termination agreement and a certification by the managing entity of the ratification thereof must

be recorded in every municipal office of land evidence records in which a portion of the time-

share property is situated, and is effective only upon recordation.

      (d)(2) Unless the termination agreement sets forth the material terms of a contract or

proposed contract under which an estate or interest in each time-share unit equal to the sum of the

time shares therein is to be sold and designates a trustee to effect the sale, title to an estate or

interest in each time-share unit equal to the sum of the time shares therein vests upon termination

in the time-share owners thereof in proportion to their respective interests as provided in

subsection (h), and liens on the time shares shift accordingly to encumber those interests. Any co-

owner of that estate or interest in a unit may thereafter maintain an action for partition or for

allotment or sale in lieu of partition pursuant to the laws of this state.

      (e)(3) If the termination agreement sets forth the material terms of a contract or proposed

contract under which an estate or interest in each time-share unit equal to the sum of the time

shares therein is to be sold and designates a trustee to effect the sale, title to that estate or interest

vests upon termination in the trustee for the benefit of the time-share owners, to be transferred

pursuant to the contract. Proceeds of the sale must be distributed to time-share owners and

lienholders as their interests may appear, in proportion to the respective interests of the time-share

owners as provided in subsection (h).

      (f)(4) Except as otherwise specified in the termination agreement, so long as the former

time-share owners or their trustee hold title to the estate or interest equal to the sum of the time

shares, each former time-share owner and his or her successors in interest have the same rights

with respect to occupancy in the former time-share unit that he or she would have had if

termination had not occurred, together with the same liabilities and other obligations imposed by

this chapter or the time-share instrument.

      (g)(d) After termination of all time shares in a time-share property and adequate

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provision for the payment of the claims of the creditors for time-share expenses, distribution must

be made, in proportion to their respective interests as provided in subsection (h), to the former

time-share owners and their successors in interest of (i) the proceeds of any sale pursuant to this

section, (ii) the proceeds of any personalty held for the use and benefit of the former time-share

owners, and (iii) any other funds held for the use and benefit of the former time-share owners.

Following termination, creditors of the association holding liens perfected against the time-share

property before the termination may enforce those liens in the same manner as any other

lienholder. All other creditors of the association are to be treated as if they had perfected liens on

the time-share property immediately before termination.

      (h)(e) The time-share instrument may specify the respective fractional or percentage

interest in the estate or interest in each unit equal to the sum of the time shares therein that will be

owned by each former time-share owner. Otherwise, not more than one hundred eighty (180)

days prior to the termination, an appraisal must be made of the fair market value of each time

share by one or more impartial qualified appraisers selected either by the trustee designated in the

termination agreement, or by the managing entity if no trustee was so designated. The appraisal

must also state the corresponding fractional or percentage interests calculated in proportion to

those values and in accordance with this subsection. A notice stating all of those values and

corresponding interests and the return address of the sender must be sent by certified or registered

mail, return receipt requested, by the managing entity or by the trustee designated in the

termination agreements, to all of the time-share owners. The appraisal governs the magnitude of

each interest unless (i) at least twenty-five percent (25%) of the time-share owners deliver, within

sixty (60) days after the date the notices were mailed, written disapprovals to the return address of

the sender of the notice, or (ii) the final judgment of a court of competent jurisdiction, entered

during or after that period, holds that the appraisal should be set aside. The appraisal and the

calculation of interests must be made in accordance with the following:

      (1) If the termination agreement sets forth the material terms of a contract or proposed

contract for the sale of the estate or interest equal to the sum of the time shares, each time share

conferring a right of occupancy during a limited number of time periods must be appraised as if

the time until the date specified for the conveyance of the property had already elapsed.

Otherwise, each time share of that kind must be appraised as if the time until the date specified

pursuant to subsection (c) had already elapsed.

      (2) The interest of each time-share owner is the value of the time share he or she owned

divided by the sum of the values of all time shares in the unit or units to which his or her time

share applies.

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      (i)(f) Foreclosure or enforcement of a lien or encumbrance against all of the time shares

in a time-share property does not of itself terminate those time shares.

     SECTION 2. This act shall take effect upon passage.

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LC005340/SUB B

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EXPLANATION

BY THE LEGISLATIVE COUNCIL

OF

A N   A C T

RELATING TO PROPERTY - RHODE ISLAND REAL ESTATE TIME-SHARE ACT -

TERMINATION OF TIME SHARES

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     This act would amend the Rhode Island Real Estate Time-Share Act to provide for

dissolution of the time-share form of ownership by fewer than sixty percent (60%) of the owners

in certain circumstances.

     This act would take effect upon passage.

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LC005340/SUB B

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