§ 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 as follows:
(1) By agreement of the time-share owners having at least sixty percent (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:
(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.
(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 (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.
(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 (e).
(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.
(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 (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.
(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.
(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.
(P.L. 1984, ch. 141, § 2; P.L. 2016, ch. 167, § 1; P.L. 2016, ch. 169, § 1.)