HAR §16-106-3. Developer registration

(a) Unless the transaction is exempt by law, a developer shall not offer, sell, transfer, or otherwise dispose of any time share interest in a time share plan through marketing efforts in the State, whether the plan is comprised of any unit or units located in the State or out-of-state, unless the developer for the plan has filed with the director an application for registration as prescribed by section 16-106-4(a), and the application has been accepted for registration by the director. The requirement for registration shall also be satisfied before a developer may offer, sell, transfer, or otherwise dispose of any interest in a time share plan comprised of any unit or units located in the State through out-of-state marketing efforts. An application for registration shall include the filing of a disclosure statement meeting the requirements set forth in this section. (b) The following shall be printed on the bottom half of the face page of the disclosure statement, in centered capital letters in bold print one-half inch in size, with one-half inch spaces between lines: READ THIS DISCLOSURE STATEMENT BEFORE SIGNING ANYTHING and below it, the following shall be printed: The disclosure statement is prepared and issued by the developer of the time share plan. It is NOT prepared or issued by the State of Hawaii. THE STATE OF HAWAII HAS NOT PASSED ON THE MERITS OF THE TIME SHARE PLAN DESCRIBED HEREIN. (c) Any disclosure statement distributed to the public shall: 106-7 (1) Comply with the disclosure requirements set forth in section 514E-9, HRS; (2) Provide a description of the number of units and types of units being offered by the developer for the time share plan; (3) Provide a summary of the provisions of the escrow agreement required under chapter 514E, HRS, and as provided for in subchapter 9; (4) If the developer is offering to sell any time share interest by agreement of sale or other installment sales contract, and the time share interest being sold is subject to a "blanket lien" (as that term is defined in section 514E-1, HRS), provide a description of the consequences which a subsequent foreclosure of that blanket lien will have upon the purchaser’s interest in the agreement of sale or sales contract and the time share interest being sold thereunder; (5) Provide a brief description of the hazard and liability insurance coverages on the project and any protection afforded purchasers against the possible loss or destruction of the time share unit or units; (6) Provide a brief description of the method by which interests in the time share plan will be offered, the name and address of each sales agent through which the offering is to be made, and a statement of any material relationship, exclusive of the marketing relationship, between the developer and each agent; (7) Disclose the major conflicts of interest which may arise on the part of the plan manager in carrying out the duties, responsibilities, and obligations attendant to the position of a plan manager, if the developer or an affiliate of the developer is also designated as the plan manager for the time share plan; and (8) Disclose the major conflicts of interest which may arise on the part of the exchange agent (if an exchange program is offered for the time share plan) in carrying out the duties, responsibilities, and obligations attendant to the position of an exchange agent, if the developer or an affiliate of the developer is also designated as an exchange agent for the time share plan. (d) Any disclosure statement not in conformance with the requirements of subsection (c) shall be void and any offer, sale, transfer, or disposition of any interest in the time share plan which is the subject thereof shall be voidable at the option of the purchaser pursuant to section 514E-11.3, HRS. (e) The format for the disclosure statement shall be prescribed by the director. [Eff 11/15/80; am and comp 3/28/85; comp 8/30/85; comp 11/29/85; 106-8 comp 6/5/87; comp 3/7/88; comp 9/15/90] (Auth: HRS §§514E-9, 514E-13) (Imp: HRS §§514E-9, 514E-10) §16-106-4 Registration required; developer, acquisition agent, sales agent, OPC, plan manager, exchange agent, sales agent employees, and independent contractors. (a) In addition to the requirements set forth in section 514E-9, HRS, a developer shall file the following with the director for the purpose of registering the time share plan to be offered by the developer; provided that an application submitted by a developer who has only an option to purchase property to be offered under a time share plan shall not be acceptable; and provided further that no application shall be deemed complete, nor shall the same be accepted for registration, unless the prescribed information is provided separately tabbed and numbered in the exact order as follows: (1) An application for registration on a form prescribed by the director; (2) A disclosure statement meeting the requirements of section 514E-9, HRS, and section 16-106-3; (3) A current financial statement not more than ninety days old at the time of submission of the application, prepared in accordance with generally accepted accounting principles and certified by the developer or a certified public accountant to be true and correct in all respects and to fairly, completely, and accurately represent the financial condition of the subject thereof as of the respective date thereof; provided that in lieu of this financial statement, an audited financial report may be submitted if it is the most current report of the subject thereof and is not more than fifteen months old at the time of submission of the application. Any false, misleading, or fraudulent financial statement or report submitted by the developer shall be grounds for cancellation, suspension, or revocation of a registration; (4) For each unit to be registered under the time share plan, a policy of title insurance, preliminary title report, abstract of title, or certificate of title not more than sixty days old at the time of submission of the application; provided that the policy of title insurance, preliminary title report, abstract of title, or certificate of title discloses the status of ownership of the unit and any and all liens and encumbrances affecting the unit; (5) Copies of all encumbrances against title to each unit to be registered under the time share plan; 106-9 (6) If a corporation, a certified copy of the articles of incorporation and bylaws thereof; if a partnership or joint venture, a certified copy of the partnership registration and partnership agreement; (7) If a corporation, partnership, or joint venture, a certificate of good standing issued by the business registration division of the department not more than thirty days before the date of submission of the application; (8) A copy of an executed escrow agreement meeting the requirements of chapter 514E, HRS, and as provided for in subchapter 9; (9) The name and address of the person in the State authorized to receive service of process on behalf of the developer; provided that written notification of any change of this name or address shall be submitted to the director within twenty days of any change; (10) As required by section 16-106-45, confirmation by the respective county that the time share plan meets the geographic limitation requirements of section 514E-5, HRS; provided that this confirmation of zoning shall be obtained from the respective county not more than thirty days before the date of submission of the application. The director shall prescribe a form to be completed by the proper county authority evidencing this confirmation of zoning; (11) A complete statement as to the manner in which the time share plan complies with the requirements of section 514E-6, HRS, governing time sharing in projects; (12) A complete statement, including a specific citation to the appropriate provision of section 514E-19, HRS, of the method which the developer intends to use to protect purchasers against underlying blanket liens; provided that the statement required under this subsection shall not be deemed complete unless it includes both sufficient detail to enable the director to determine the precise means by which the requisite protection will be provided and copies of all pertinent agreements and materials relevant to the proposed method of protection; (13) As required by sections 16-106-25 and 16-106-26, if the time share plan is a "preexisting plan" as defined in this chapter, evidence of the creation of the plan prior to June 29, 1980, and the filing of the plan not later than December 3l, 1980, and the number of interests in the plan, if any, which were previously sold; (14) If applicable, a copy of the declaration of horizontal property regime for the subject property, as recorded and subsequently amended, the bylaws of the association of apartment owners and house rules of the association, and for any project which is not 106-10 registered with the state real estate commission under chapter 514A, HRS, a copy of the project’s condominium map; (15) If applicable, a copy of the declaration of covenants, conditions and restrictions, as recorded and subsequently amended, which establishes the time share plan; (16) A copy of the petition and charter of incorporation for the time share owners association required by section 514E-29, HRS, accepted by the department, as well as the bylaws of the association or club; (17) A completed specimen copy of the notice of mutual right of cancellation of time share purchase prescribed in section 16-106-20(c); (18) A completed specimen copy of the reservation agreement, contract of sale, or agreement of sale to be used in connection with the sale of time share interests; (19) If applicable, a completed specimen copy of the deed, lease, or other instrument to be used to convey the property to the purchaser; (20) A specimen copy of the purchaser’s declaration of understanding of the plan and the contract, if any; (21) A copy of the executed management agreement; (22) A copy of each executed sales agency or broker listing agreement; provided that the commission schedule may be omitted from such agreement; (23) A copy of the executed contract with an exchange agent, if applicable; (24) As required by section 16-106-38, copies of any advertising or promotional materials to be used in connection with the marketing of time share interests; and (25) The registration fee. Pursuant to section 514E-10.5, HRS, the director may contract with private consultants in connection with the review of the filing required of time share developers under section 514E-10(a), HRS, and this section, the cost of the review to be borne by each developer; provided that this review shall not affect the consultant review authorized under section 514E-27, HRS, which the director may request for filings which encompass alternative arrangements for purchaser protection. The consultant fees are in addition to the registration fees specified in chapter 16-53, Hawaii Administrative Rules. (b) An acquisition agent, including the developer if it is also the acquisition agent, conducting business in the State shall not solicit or encourage others to attend a time share sales presentation or to contact a time share sales 106-11 agent or developer whether the time share plan includes any unit located in the State or out-of-state, unless the acquisition agent submits an application for registration to the director and the director accepts the application; provided that the acquisition agent shall submit a separate application for each time share plan with respect to which the acquisition agent is providing prospective purchasers; and provided further that no application shall be deemed complete, nor shall the same be accepted for registration, unless the prescribed information is provided separately tabbed and numbered in the exact order as follows: (1) An application for registration on a form prescribed by the director; provided that the application shall include, but not be limited to, the following: (A) The name of the time share plan with respect to which the acquisition agent is providing prospective purchasers; (B) The principal office address and telephone number of the acquisition agent; and (C) If a corporation, the name, address, and telephone number of its responsible managing employee; (2) Satisfactory evidence that the acquisition agent is bonded as required by section 16-106-40.1 to cover any violation by the acquisition agent of any solicitation ordinances or other regulations governing the use of the premise or premises in which the time share plan is promoted; or evidence that the acquisition agent is currently licensed pursuant to chapter 467, HRS, as a real estate salesperson or a real estate broker; (3) As required by section 16-106-8(a), an alphabetized list of the names, addresses, and telephone numbers of all employees and independent contractors who will be engaged in contacting persons who may be interested in purchasing time share interests in the time share plan, and, if any of these employees and independent contractors is licensed pursuant to chapter 467, HRS, as a real estate salesperson or a real estate broker, evidence that the employee or independent contractor is so licensed; (4) A copy of the executed agency agreement applicable to the time share plan; (5) The name and address of the person in the State authorized to receive service of process on behalf of the acquisition agent; provided that written notification of any change of this name or address shall be submitted to the director within twenty days of any change; (6) If a corporation, partnership, or joint venture, a certificate of good standing issued by the business registration division of the 106-12 department not more than thirty days before the date of submission of the application; and (7) The registration fee. An acquisition agent shall submit, for each employee or independent contractor who will be acting as an OPC by contacting persons who may be interested in purchasing interests in the time share plan, an application for registration on a form prescribed by the director and signed by the prospective employee or independent contractor and the registration fee. (c) A sales agent, including the developer if it is also the sales agent, conducting business in the State shall not sell or offer to sell any interest or interests in a time share plan for a developer whether the time share plan includes any unit located in the State or out-of-state, unless the sales agent submits an application for registration to the director and the director accepts the application; provided that the sales agent shall submit a separate application for each time share plan with respect to which the sales agent is offering or selling time share interests; and provided further that no application shall be deemed complete, nor shall the same be accepted for registration, unless the prescribed information is provided separately tabbed and numbered in the exact order as follows: (1) An application for registration on a form prescribed by the director; provided that the application shall include, but not be limited to, the following: (A) The name of the time share plan with respect to which the sales agent is selling time share interests; (B) The principal office address and telephone number of the sales agent; and (C) If a corporation, the name, address, and telephone number of its responsible managing employee; (2) Evidence that the sales agent is currently licensed pursuant to chapter 467, HRS, as a real estate salesperson or a real estate broker; (3) As required by section 16-106-8(a), an alphabetized list of the names, addresses, and telephone numbers of all employees and independent contractors who will be engaged in offering or selling interests in the time share plan, as well as evidence that each of these individuals is currently licensed pursuant to chapter 467, HRS, as a real estate salesperson or a real estate broker; (4) A copy of the executed sales agency or brokerage agreement applicable to the time share plan; provided that the commission schedule may be omitted from such agreement; (5) A copy of the executed escrow agreement meeting the requirements of chapter 514E, HRS, and as provided for in subchapter 9; 106-13 (6) The name and address of the person in the State authorized to receive service of process on behalf of the sales agent; provided that written notification of any change of this name or address shall be submitted to the director within twenty days of any change; (7) If a corporation, partnership, or joint venture, a certificate of good standing issued by the business registration division of the department not more than thirty days before the date of submission of the application; and (8) The registration fee. A sales agent shall submit, for each employee or independent contractor who will be acting as an OPC by contacting persons who may be interested in purchasing interests in the time share plan, an application for registration on a form prescribed by the director and signed by the prospective employee or independent contractor and the registration fee. A sales agent shall also submit, for each person on the list required by paragraph (3), an application for registration on a form prescribed by the director and signed by the real estate salesperson or broker. (d) A plan manager, including the developer if it is also the plan manager, shall not undertake the duties, responsibilities, and obligations of managing a time share plan sold or offered for sale in the State, whether the time share plan contains any unit located in the State or out-of-state, unless the plan manager submits an application for registration to the director and the director accepts the application; provided that the plan manager shall submit a separate application for each time share plan for which the plan manager is offering management services; and provided further that no application shall be deemed complete, nor shall the same be accepted for registration, unless the prescribed information is provided separately tabbed and numbered in the exact order as follows: (1) An application for registration on a form prescribed by the director; provided that the application shall include, but not be limited to, the following: (A) The name of the time share plan with respect to which the plan manager is offering management services; (B) The principal office address and telephone number of the plan manager; (C) If a corporation, the name, address, and telephone number of its responsible managing employee; and (D) The address at which all accounting records, including but not limited to receipts, expenditures, and payment vouchers, are maintained; 106-14 (2) A notarized statement, signed by the developer and the plan manager, listing the plan manager’s duties, responsibilities, and obligations, which shall include, but not be limited to: (A) Management and maintenance of each time share unit; (B) Assessment and collection of maintenance fees; (C) Payment of real property taxes due on each time share unit as provided in section 514E-3(a), HRS; (D) Supervising and monitoring occupancy scheduling to assure owners or users of time share interests in each time share unit that they will be provided with the promised use of the unit; (E) Providing time share owners or users with a copy of the house rules of the building and supervising the enforcement of these rules; and (F) Keeping a detailed and accurate record, in chronological order, of receipts and expenditures relating to the time share plan with which the plan manager is affiliated; (3) Satisfactory evidence that the plan manager is bonded as required by section 16-106-40 to cover any default of the plan manager or any of the employees of the plan manager of their duties and responsibilities; (4) A copy of the executed management agreement for the time share plan; (5) The name and address of the person in the State authorized to receive service of process on behalf of the plan manager; provided that written notification of any change of this name or address shall be submitted to the director within twenty days of any change; (6) If a corporation, partnership, or joint venture, a certificate of good standing issued by the business registration division of the department not more than thirty days before the date of submission of the application; and (7) The registration fee. (e) An exchange agent, including the developer if it is also an exchange agent, shall not operate an exchange program for a time share plan: (1) If the time share plan includes any unit or units located in the State; or (2) If any time share interest in the time share plan is offered for sale or sold in the State (whether or not any time share unit in the time share plan is located in the State); unless the exchange agent registers under the chapter by filing with the director the information required in section 514E-10(e), HRS, and the registration fee. 106-15 (f) All applications for registration required by this section shall be deemed accepted if the director has not acted upon the applications within sixty days following receipt of the same; except that this subsection shall not apply to any application which is incomplete and does not contain all of the information required to be submitted to the director under this section. (g) Any party required to register under this section shall notify the director in writing of any material change in any information submitted to the director within twenty days of any material change. Failure to notify the director of any material change in the information submitted shall be grounds for cancellation, suspension, or revocation of a registration. (h) Any registration required by this section shall be renewed not later than December 31 of each odd-numbered year. Failure to complete all renewal requirements before December 31 of each odd-numbered year shall result in forfeiture of the registration. (i) The registration of a developer, acquisition agent, sales agent, OPC, plan manager, exchange agent, or sales agent employees or independent contractors, or both, may be placed on inactive status. The information required by this section shall be updated before an inactive registration will be activated. (j) The registration fees required by this section shall be in the form of a cashier’s check or certified check made payable to the "Department of Commerce and Consumer Affairs" in the amount specified in chapter 16-53, Hawaii Administrative Rules. (k) A cash bond form shall be prescribed by the director. (l) The registration fee shall be paid upon submission of a registration application. Applications shall not be accepted for department review unless accompanied by the requisite fee. (m) The format for registration shall be prescribed by the director. [Eff 11/15/80; am and comp 3/28/85; am and comp 8/30/85; am and comp 11/29/85; am and comp 6/5/87; am and comp 3/7/88; comp 9/15/90] (Auth: HRS §§514E-9, 514E-13) (Imp: HRS §§514E-9, 514E-10)