Chapter 167
2016 -- S 2760 SUBSTITUTE B
Enacted 06/29/2016

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

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) 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 e), 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 e).
      (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
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 e), 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) aAt 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) tThe 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.
      (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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