TITLE 34
Property

CHAPTER 34-41
Rhode Island Real Estate Time-Share Act

ARTICLE 34-41-3.01
Management of the Time-Share Property

SECTION 34-41-3.04


§ 34-41-3.04 Transfer of special developer rights.

(a) For the purposes of this section, "special developer right" means a right reserved for the benefit of a developer to add more units to a time-share property (§ 34-41-2.02(a)(5)); to maintain sales offices, management offices, models, and signs (§ 34-41-2.06); or to appoint, control, or serve as the managing entity. No special developer right created or reserved under this chapter may be transferred except by an instrument evidencing the transfer recorded in every office of municipal land evidence records in which any portion of the time-share property is located. The instrument is not effective unless it is also executed by the transferee.

(b) Upon transfer of a special developer right, the liability of a transferor developer is as follows:

(1) A transferor is not relieved of any obligation or liability arising before the transfer and remains liable for warranty obligations imposed upon him or her by this chapter. Lack of privity does not deprive any time-share owner of standing to maintain an action to enforce any obligation of the transferor.

(2) If a successor to any special developer right is an affiliate of a developer (§ 34-41-1.02(1)), the transferor is jointly and severally liable with the successor for any obligations or liabilities of the successor relating to the time-share property.

(3) If a transferor retains any special developer right, but transfers other special developer rights to a successor who is not an affiliate of the developer, the transferor is liable for any obligations or liabilities imposed on a developer either by this chapter or by the time-share instrument relating to the retained special developer rights and arising after the transfer.

(4) A transferor has no liability for any act or omission or any breach of a contractual or warranty obligation arising from the exercise of a special developer right by a successor developer who is not an affiliate of the transferor.

(c) Unless otherwise provided in a mortgage instrument or deed of trust, in case of foreclosure of a mortgage, tax sale, judicial sale, sale by a trustee under a deed of trust, or sale under Bankruptcy Code, 11 U.S.C. § 101 et seq., or receivership proceedings, of any time shares owned by a developer in the time-share property, a person acquiring title to all the time shares being foreclosed or sold, but only upon his or her request, succeeds to all special developer rights, or only to any rights reserved in the time-share instrument to § 34-41-2.06 and held by that developer to maintain sales offices, management offices, models, and signs. The judgment or instrument conveying title must provide for transfer of only the special developer rights requested.

(d) Upon foreclosure, tax sale, judicial sale, sale by a trustee under a deed of trust, or sale under Bankruptcy Code, 11 U.S.C. § 101 et seq., or receivership proceedings, of all time shares in a property owned by a developer:

(1) The right to appoint, control, or serve as the managing entity terminates unless the judgment or instrument conveying title provides for transfer of all special developer rights to a successor developer; and

(2) The developer ceases to have any other special developer rights.

(e) The liabilities and obligations of a person who succeeds to a special developer right are as follows:

(1) A successor to any special developer right who is an affiliate of a developer is subject to all obligations and liabilities imposed on the transferor by this chapter or by the time-share instrument.

(2) A successor to any special developer right, other than a successor described in subdivisions (3) or (4) of this subsection, who is not an affiliate of a developer, is subject to all obligations and liabilities imposed by this chapter or the time-share instrument:

(i) On a developer, which relate to his or her exercise or non-exercise of special developer rights; or

(ii) On his or her transferor, other than:

(A) Misrepresentations by any previous developer;

(B) Warranty obligations on improvements made by any previous developer or made before the property became a time-share property;

(C) Breach of any fiduciary obligation by any previous developer of his or her appointees; or

(D) Any liability or obligation imposed on the transferor as a result of the transferor's acts or omissions after the transfer.

(3) A successor to only a right to maintain sales offices, management offices, models, and signs (§ 34-41-2.06), if he or she is not an affiliate of a developer, may not exercise any other special developer right and is not subject to any liability or obligation as a developer, except the obligation to provide a public offering statement, and any liability arising as a result thereof, and obligations under Article V of this chapter.

(4) A successor to all special developer rights held by his or her transferor who is not an affiliate of that developer and who has succeeded to those rights pursuant to a deed in lieu of foreclosure or a judgment or instrument conveying title to the time shares under subsection (c) may declare his or her intention in a recorded instrument to hold those rights solely for transfer to another person. Thereafter, until transferring all special developer rights to any person acquiring title to any time share owned by the successor, or until recording an instrument permitting exercise of all those rights, that successor may not exercise any of those rights other than any right held by his or her transferor to appoint, control, or serve as the managing entity, and any attempted exercise of those rights is void. So long as a successor may not exercise special developer rights under this subsection, he or she is not subject to any liability or obligation as a developer other than liability for his or her acts and omissions in appointing, controlling, or serving as the managing entity.

(f) Nothing in this section subjects any successor to a special developer right to any claims against or other obligations of a transferor developer, other than claims and obligations arising under this chapter or the time-share instrument.

History of Section.
(P.L. 1984, ch. 141, § 2.)