We are always watching timeshare legislation and the effect on Hawaii timeshare ownership.
U.S. developers are backing a Florida bill that would limit liability on disclosure violations and boost the cap on maintenance fees, while the National Timeshare Owners Association has raised a red flag, saying the changes reduce protections for consumers
The legislation was designed, initially, to help streamline regulations that developers claim are outdated and impractical. Now, thanks to the National Timeshare Owners Association’s (NTOA) lobbying effort, the debate juxtaposes those claims against basic owner issues such as the disclosure requirements.
The legislation was proposed by Florida Rep. Eric Eisnaugle (R-Orlando) and Sen. Kelli Stargel (R-Lakeland). It would carve limits in the liability that developers would incur for failing to fully disclose the terms and rules of a timeshare at the time of purchase. The proposal also would raise the overall ceiling on owner maintenance fees by separating taxes and some common expenses from the annual 125-percent cap on increases in annual maintenance fees. In addition, the bill provides a method for older legacy resorts to terminate or extend their timeshare plans on a 60-percent majority vote of owners (as opposed to 100 percent). The 60-percent rule would only apply to resorts 25 years or older.
The timeshare legislation (HR453 and SB932) is supported by ARDA and major developers in Florida. Until recently, the bills were percolating quietly through various legislative committees. Then NTOA CEO Greg Crist started raising objections to technical legal changes that, in NTOA’s view, would curtail timeshare owners’ basic rights-including the right to rescind a contract based upon a developer’s violations of disclosure rules.
The Orlando Sentinel published a thorough article on the legislation on March 12. Read the full story by reporter Sandra Pedicini here.
“This is a developer-sponsored bill that strips away at consumer protection mechanisms,” Crist told the Sentinel.
The flashpoint of the bill, for consumers and timeshare owners, is a provision that reduces developer liability for contract mistakes and disclosure violations-and thereby makes it harder for buyers to rescind a contract based upon developer errors or omissions. According to the legislation, when a developer generally complies with disclosure rules (but not completely), a “violation of this chapter shall not be actionable and does not give rise to any purchaser cancellation right.”
Stargel, one of the bill’s authors, said the exemption would only apply to “nonmaterial” technical mistakes, not major disclosure violations. In practice, she added, it would prevent timeshare owners from getting out of their contracts by citing minor flaws. Legal experts in the Florida Legislature, however, have already challenged Stargel’s assertions. With no clear definition of the term “nonmaterial,” they said, the breadth of the exemption is open to interpretation and litigation.
Another aspect of the bill that would impact owners-in their wallets-would allow operators of multi-site timeshares to exceed the cap on maintenance fees, as needed, to cover extraordinary expenses, emergencies, and taxes that are deemed to be out of their control. The current cap on maintenance-fee increases provides no flexibility for dealing with practical financial emergencies, the authors say.
A third leg of the bill may, in practice, have more impact than the other provisions. It applies to legacy timeshare resorts that are becoming economically untenable (due to many reasons, including their aging owner base and unpaid maintenance fees). Under the proposal, timeshare associations that have been in business for 25 years or more may vote to extend or terminate their plans-that is, put themselves out of business-on a vote of 60 percent of the owners.
This addresses a growing problem in states, such as Florida, where there are few practical ways to wind down resorts that, in other states, would simply be bulldozed. Many timeshare associations operate under current rules that require 100 percent owner approval to extend or end their timeshare resort.
The Florida legislative session wraps up May 1. New laws take effect July 1. People interested in learning more about the Florida timeshare bills, or voicing their concerns about their provisions, should contact their local legislators, NTOA, and ARDA-ROC.
The full text of the House and Senate Bills can be viewed here