110-RICR-40-00-4
110-RICR-40-00-4. Rules and Regulations for Real Estate Time Share/Interval Ownership Sales and Practices (version Periodic Refile, 01/11/2007 to 01/11/2007)
State of Rhode Island and Providence Plantations
Department of Attorney General
Consumer Protection Divisions
Proposed Rules and Regulations for
Real Estate Time Share/Interval Ownership
Sales and Practices
INTRODUCTION
1.00 AUTHORITY
These regulations are adopted pursuant to Chapter 6-13.1 of the General Laws of Rhode
Island, the Deceptive Trade Practices Law, specifically R.I.G.L. Section 6-13.1-7 (c).
1.01 PURPOSE
These regulations are for the purpose of determining, regulating and/or prohibiting
certain conduct, terminology and/or representations concerning real estate time share sales and
practices which are, or may, involve unfair methods of competition or unfair or deceptive acts or
practices as defined in R.I.G.L. Section 6-13.1-1 and as prohibited by R.I.G.L. 6-13.1-2.
1.02 SCOPE
These regulations apply to all time share interests in real estate or nay phase of time share
interests except for any such interest governed solely by Chapter 34-38, of the General Laws of
Rhode Island entitled “Regulation of Out of State Real Estate Sales and Dispositions.” It should
be noted that the Rhode Island Condominium Act also governs time share condominium units
under certain conditions. These regulations are also intended to be consistent with Chapter 34-
36.1 of the General Laws of Rhode Island entitled the ”Rhode island Condominium Act.” These
regulations apply only to transactions which occur after these regulations become effective.
DEFINITIONS
2.00
As used in these Rules and Regulations, the following words shall have the following
meanings:
2.01 ACT or PRACTICE
An act or practice shall include any threat or attempt to perform such act or practice.
SUBJECT: TIME SHARE
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2.02 ADVERTSIEMENT, ADVERTISING, ADVERTISE
An commercial message in any newspaper, magazine, leaflet, flyer, or catalog, on radio,
television, public address system, or made in person, in direct mail literature or other printed
material, or any point of transaction literature or price tag which is delivered or made available to
a customer or prospective customer in any manner whatsoever.
2.03 AFFILIATE of a DEVELOPER
Any person who controls, is controlled by, or is under common control with a developer.
A person “controls” a developer if the person (i) is a general partner, officer, director, or
employer of the developer, (ii) directly or indirectly or acting in concert with one or more other
persons, or through one or more subsidiaries, own, controls, holds with power to vote, or holds
proxies representing, more than twenty percent (iii) controls in any manner the election of a
majority of the directors of the developer, or (iv) has contributed more than twenty percent
(20%) of the capital of the developer. A person “is controlled by” a developer if the developer
(i) s a general partner, officer, director, or employer of the person, (ii) directly or indirectly or
acting in concert with one or more other persons, or through one or more subsidiaries, owns,
controls, holds with power to vote, or hold proxies representing, more than twenty percent (20%)
of the voting interest in the person, (iii) controls in any manner the election of a majority of the
directors of the person, or (iv) has contributed more than twenty percent (20%) of the capital of
the person. Control does not exist if the powers described in this paragraph are held solely as
security for an obligation and are not exercised.
2.04 CONSPICUOUS
A term is conspicuous when it is so written that person against whom it is to operate
ought to have noticed it. Language in the body of a form is “conspicuous” if it is in larger or
contrasting type or color.
2.05 CONVERSION BUILDING
Means a building that at any time before the disposition of any time share was occupied
wholly or partially by persons other than purchasers and person who occupied with the consent
of purchasers.
2.06 DECEPTIVE WARRANTY
For the purpose of this chapter a “deceptive warranty” is:
SUBJECT: TIME SHARE
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(a) A guarantee or warranty that contains an affirmation, promise, description, or
representation that is either false, fraudulent, or that, in the light of all the circumstances,
would mislead the consuming public; or fails to contain the necessary information to
avoid misleading the consuming public; or,
(b) A guarantee or warranty created by the use of such terms as “guarantee” or
“warranty” if the terms and conditions of such guarantee or warranty so limit its scope
and application as to render the representation illusory, as where any costs or charges to
the consumer attendant upon such work are prohibitive or approach the costs for the
repairs absent any warranty or guarantee.
2.07 DEVELOPER
Means any person who (i) offers to dispose of or disposes of his interest in a time share
not previously disposed of, or succeeds to any special developer right, or (iii) applies for
registration of the time share under these regulations.
2.08 DISPOSE or DISPOSITION
Means a voluntary transfer of any legal or equitable interest in a time share, but does not
include the transfer or release of a security interest.
2.09 DWELLING UNIT
Any building or structure, or any unit therein or part thereof, and all the common areas
inside and outside such building or structure, occupied or intended for occupancy as a residence
by one or more individuals; including a mobile home or a lot therefor.
2.10 MANAGING ENTITY
Means the manager or, if there is no manager, the association.
2.11 OFFERING
Means any advertisement, inducement, solicitation, or attempt to encourage any person to
acquire a time share, other than as security for an obligation. An advertisement in a newspaper
or other periodical of general circulation, or in any broadcast medium to the general public, of a
time share in a unit not located in this State, is not an offering if the advertisement states that an
offering may be made only in compliance with the law of the jurisdiction in which the unit or
units are located; such offering shall contain the following language in bold-faced print “THIS IS
NOT AN OFFERING PROTECTED BY THE RULES AND REGULATIONS FOR REAL
ESTATE TIME SHARE SALES AND PRACTICES;” provided, however, if the subject time-
SUBJECT: TIME SHARE
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share property is registered pursuant to Section 3.00 et. seq. of this Act, such language need not
be printed on the offering.
2.12 OWNER
Any person who holds title to one or more dwelling units in any manner including but not
limited to a partnership, corporation or trust. For purposes of theses regulations the term
“owner” shall include one who manages, controls, and/or customarily accepts rent on behalf of
the owner.
2.13 PERSON
Means a natural person, corporation, government, governmental subdivision or agency,
business trust, estate, trust, partnership, association, joint venture, or other legal or commercial
entity. (In the case of a land trust, however, “person” means the beneficiary of the trust rather
than the trust of the trustee.)
2.14 PLACE OF BUSINESS
The main or permanent branch office or fixed location for doing business of a seller. A
booth at a fair or other temporary, stationary or mobile selling point does not constitute a place of
business for the purpose of these regulations.
2.15 PURCHASER
Means any person, other than a developer, who by means of a voluntary transfer acquires
a legal or equitable interest in a time share other than as security for an obligation.
2.16 TIME SHARE
Means, whenever referred to herein, a time share estate or a time share license or any
form of interval ownership in real estate.
2.17 TIME SHARE ESTATE/INTERVAL OWNERSHIP
Means a right to occupy a unit or any of several units during five (5) or more separated
time periods over a period of at least five (5) years, including renewal options, coupled with a
freehold estate or an estate for years in a time share property or a specified portion thereof.
SUBJECT: TIME SHARE
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2.18 TIME SHARE EXPENSES
Means expenditures, fees, charges, or liabilities (i) incurred with respect to the time
shares by or on behalf of all time share owners in one time share property, and (ii) imposed on
the time share units by the entity governing a project of which the time share property is a part,
together with any allocations to reserves, but excluding purchase money payable for time shares.
2.19 TIME SHARE INSTRUMENT
Means one or more documents, by whatever name denominated, creating or regulating
time shares.
2.20 TIME SHARE LICENSE
Means a right to occupy a unit or any of several units during five (5) or more separated
time periods over a period of at least five (5) years, including renewal options, not coupled with
a freehold estate or an estate for years.
2.21 TIME SHARE OWNER
Means a person who is an owner or co-owner of a time share other than as security for an
obligation.
2.22 TIME SHARE PROPERTY
Means one or more time share units subject to the same time share instrument, together
with any other real estate or rights therein appurtenant to those units
2.23 TIME SHARE UNIT
Means a unit in which time shares exist.
2.24 UNFAIR METHODS OF COMPETITION AND UNFAIR OR DECEPTIVE
ACTSOR PRACTICES
Means any activity as defined in Rhode Island General Law 6-13.1-1(e)(1)-(17) and
amendments thereto.
2.25 UNIT
Means real property, or a portion thereof, designated for separate use.
SUBJECT: TIME SHARE
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2.26 WARRANTY/GURANTEE
The terms “warranty” or “guarantee” or any term connoting a warranty or guarantee as
used in these regulations are synonymous. The terms apply also to purported warranties and
guarantees and to any promise or representation in the nature of a warranty or guarantee.
A warranty that the goods shall be merchantable is implied in a contract for their sale if
the seller is a merchant with respect to goods of that kind.
CONSUMER PROTECTION
3.00 APPLICABILITY
Exemptions –
(a) These regulatory requirements apply to all time shares subject to these Regulations,
except as provided in subsection (b).
(b) Neither a public offering statement nor the materials required by Rule 3.09 (Resale of
Time Shares) need be prepared or delivered in the case of:
(1) a gratuitous disposition of a time share;
(2) a disposition pursuant to court order;
(3) a disposition by a government or governmental agency;
(4) a disposition by foreclosure or deed in lieu of foreclosure;
(5) a disposition that may be cancelled at any time and for any reason by the
purchaser without penalty;
(6) a disposition of time share in a unit situated wholly outside this State pursuant
to a contract executed wholly outside this State, if there has been no offering within this State;
(7) an offering by a developer of time shares in no more than one time share unit
at any one time; or
(8) a disposition of a time share property or all time shares therein to one
purchaser.
SUBJECT: TIME SHARE
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3.01 LIABILITY FOR PUBLIC OFFERING STATEMENT REQUIREMENTS
(a) Except as provided in Rule 1.02 and subsection (b), a developer, prior to the offering of
any interest in a unit to the public, shall prepare a public offering statement conforming to the
requirements of these regulations.
(b) A developer may transfer responsibility for preparation of all or a part of the public
offering statement to a successor developer or to a person in the business of selling real estate
who intends to offer time share in the time share property for his own account. In the event of
any such transfer, the transferor shall provide the transferee with any information necessary to
enable the transferee to fulfill the requirements of subsection (a).
(c) Any developer or other person in the business of selling real estate who offers a time
share for his own account to a purchaser shall deliver a public offering statement in the manner
prescribed in Rule 3.02. The person who prepared all or a part of the public offering statement is
liable under Rule 3.15, and R.I.G.L. 6-13.1-1 et seq. for any false or misleading statement set
forth therein or for any omission of material fact therefrom with respect to that portion of the
public offering statement which he prepared. If a developer did not prepare any part of a public
offering statement that he delivers, he is not liable for any false or misleading statement set forth
therein or for any omission of material fact therefrom unless he had actual knowledge of the
statement or omission or, in the exercise of reasonable care, should have know of the statement
or omission.
(d) If a time share property is part of any other real estate regime in connection with the
sale of which the delivery of a public offering statement is required under the laws of this State, a
single public offering statement conforming to the requirements of Rules 3.01, 3.02, and 3.03 as
those requirements relate to all real estate regimes in which the time share property is located,
and to any other requirements imposed under the laws of this State, may be prepared and
delivered in lieu of providing two (2) or more public offering statements.
3.02 PUBLIC OFFERING STATEMENT: GENERAL PROVISIONS
(a) A public offering statement must contain and fully and accurately disclose:
(1) the name and principal address of the developer and the location of the time
share property;
(2) a general description of the time share property and the time share units,
including without limitation the number of units, including without limitation the number of
units in the time share property and in any project of which it is a part, and the schedule of
commencement and completion of all improvements;
(3) as to all units owned or offered by the developer in the same project:
SUBJECT: TIME SHARE
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(i) the types and number of units;
(ii) identification of units that are time share units;
(iii) the types and duration of the time shares, including minimum
durations;
(iv) the maximum number of units that may become part of the
time share property; and
(v) a statement of the maximum number of time shares that may be
created or a statement that there is no maximum;
(4) copies and a brief narrative description of the significant features of the time
share instrument and any documents referred to therein (other than any plats and plans), copies
of any contracts or leases to be signed by purchasers at closing, and a brief narrative description
of any contracts or leases that will or may be subject to cancellation by the owners of time share
estates;
(5) the identity of the managing entity and the manner, if any, whereby the
developer may change the managing entity or its control;
(6) a current balance sheet and a projected budget for the association, if there is an
association, either within or as an exhibit to the public offering statement, for one year after the
date of the first transfer to a purchaser, and thereafter the current budget, a statement of who
prepared the budget, and a statement of the budgetary assumptions concerning occupancy and
inflation factors. The budget must include, without limitation:
(i) a statement of the amount of money, or a statement that there is
no money, included in the budget as a reserve for repairs and replacement;
(ii) a statement of any other monetary reserves;
(iii) the projected time share expense liability by category of
expenditures for the times share units, and
(iv) the projected time share expense liability for each time share;
(7) a description of (i) the nature and purpose of all charges, dues, maintenance
fees, and other expenses that may be assessed, (ii) the current amounts assessed, and (iii) the
method and formula for altering charges in the future;
SUBJECT: TIME SHARE
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(8) any services which the developer provides or expenses he pays and which he
expects may become at any subsequent time a time share expense of the time shares, and the
projected time share expense liability attributable to each of those services or expenses for each
time share;
(9) any initial or special fee due from the purchaser at closing, together with a
description of the purpose of the fee and the method of its calculation;
(10) a statement of the effect on the time share owners of liens, defects, or
encumbrances on or affecting the title to the time share units;
(11) a description of any financing offered by the developer;
(12) the terms and significant limitations of any warranties provided by the
developer, including statutory warranties and limitations on the enforcement thereof or on
damages;
(13) a statement that:
(i) within three (3) days (excluding Sundays and Holidays) after
receipt of a public offering statement a purchaser, before transfer, may cancel any contract for
purchase of a time share from a developer,
(ii) if a developer fails to provide a public offering statement to a
purchaser before transferring a time share, the purchaser is entitled to recover from the developer
ten percent (10%) of the sales price of the time share, and
(iii) if a purchaser receives a public offering statement more than
three (3) days (excluding Sundays and Holidays) before signing a contact, he cannot cancel the
contract for failure timely to receive the public offering statement;
(14) a statement of any unsatisfied judgments against the developer or the
managing entity, the status of any pending suits involving the sale or management of real estate
to which the developer or an affiliate of the developer or the managing entity is a defending
party, and the status of any pending suits of which the developer has actual knowledge of
significance to the time share units;
(15) a statement that any deposit made in connection with the purchase of a time
share will be held in an escrow (or trust) account until expiration of the time for rescission or any
later time specified in the contract to purchase the time share and will be returned to the
purchaser if the purchaser cancels the contract pursuant to Rule 3.07;
(16) any restraints on transfer of time shares or portions thereof;
SUBJECT: TIME SHARE
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(17) a description of the insurance coverage provided for the benefit of time share
owners;
(18) any current or expected fees or charges to be paid by time share owners for
the use of any facilities related to the project;
(19) the extent to which financial arrangements have been provided for
completion of all promised improvements pursuant to Rule 3.13 (Developer’s Obligation to
Complete);
(20) the extent to which a time share unit may become subject to a tax or other
lien arising out of claims against other time share owners of the same time share unit;
(21) a description of the rights and remedies available in the time share instrument
of a time share owner who is prevented from enjoying exclusive occupancy of a time share unit,
or a statement that there are none provided in the instrument; and
(22) all unusual and material circumstances, features, and characteristics of the
project.
(b) As used in this subsection, “exchange company” means a person operating a program of
the kind described in this subsection. If the time share owners are to be permitted or required to
become members of or to participate in a program for the exchange of occupancy rights among
themselves or with the time share owners of other time share units or both, the public offering
statement or a supplement delivered therewith must contain or fully and accurately disclose:
(1) whether membership or participation in the program by a timeshare owner is
voluntary or mandatory;
(2) the name and address of the exchange company and whether the exchange
company is an affiliate of the developer; or whether the exchange company or any of its officers
or directors has any legal or beneficial interest in any developer or manager for any time share
property participating in the exchange program;
(3) the names of all officers, directors, and shareholders owning five percent (5%)
or more of the outstanding stock of the exchange company;
(4) the terms and conditions of the contractual relationship between the time share
owner and the exchange company;
(5) the procedures whereby that contractual relationship can be changed or
terminated, and whether it can be terminated or otherwise affected by action or inaction of the
developer or the managing entity of by other factors beyond the control of the time share owner;
SUBJECT: TIME SHARE
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(6) a complete and accurate description of all limitations, restrictions, or priorities
employed in the operation of the exchange program, including, but not limited to, limitations on
exchanges based on seasonality, unit size, or levels of occupancy, expressed in boldfaced type,
and, in the event that such limitations, restrictions, or priorities are not uniformly applied by the
program, a clear description of the manner in which they are applied;
(7) the procedures to qualify for and effectuate exchanges, and the manner in
which exchanges are arranged by the exchange company;
(8) whether exchanges are arranged on a space-available basis and whether any
guarantees of fulfillment of specific requests for exchanges are made by the program;
(9) whether and under what circumstance a time share owner, in dealing with the
exchange company, may lose the use and occupancy of his time share in any properly applied for
exchange without his being provided with substitute accommodations by the exchange company;
(10) the fees or range of fees for participation by time share owners in the
program, a statement whether any such fees may be altered by the exchange company, and the
circumstances under which alterations may be made;
(11) the name and address of the site of each time share property,
accommodations or facility that is participation in the program;
(12) the number of units in each time-share property participation in the program
that are available for occupancy and that qualify for participation in the program, expressed
within the following numerical groupings: 1-5; 6-10; 11-20; 21-50; and 51 and over; and a
statement of the criteria used to determine those units that are available for occupancy;
(13) the number of owners with respect to each time share property who are
eligible to participate in the program expressed within the following numerical groupings: 1-100;
101-249; 250-499; 500-999; and 1,000 and over; and a statement of the criteria used to determine
those time share owners who are currently eligible to participate in the program;
(14) the disposition made by the exchange company of time shares deposited with
the program by time share owners eligible to participate in the program and not used by the
exchange company in effecting exchanges;
(15) the following information which shall be independently audited by a certified
public accountant or accounting firm in accordance with the standards of the Accounting
Standards Board of the American Institute of Certified Public Accountant:
(i) the number of time share owners eligible to participate in the
program. Such numbers shall disclose the relationship between the exchange company and time
share owners as being either fee paying or gratuitous in nature;
SUBJECT: TIME SHARE
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(ii) the number f time share properties, accommodations or
facilities eligible to participate in the exchange program categorized by those having a
contractual relationship between the developer or the managing entity and the exchange
company and those having solely a contractual relationship between the exchange company and
owners directly;
(iii) the percentage of confirmed exchanges, which shall be the
number of exchanges confirmed by the exchange company divided by the number of exchanges
properly applied for, together with a complete and accurate statement of the criteria used to
determine whether an exchange request was properly applied for;
(iv) the number of time shares for which the exchange company
has an outstanding obligation to provide an exchange to a time share owner who relinquished a
time share during the year in exchange for a time share in any future year; and
(v) the number of exchanges confirmed by the exchange company
during the year.
(16) a statement in boldfaced type to the effect that the percentage described in
subsection (b)(15)(iii) is a summary of the exchange requests entered with the exchange
company in the period reported and that the percentage does not indicate a purchaser’s
probabilities of being confirmed to any specific choice or range of choices, since availability at
individual locations may vary.
(c) In the event an exchange company offers a program directly to the purchaser or time
share owner, the exchange company shall deliver to each purchaser or time share owner, prior to
the execution of any contract between the purchaser or time share owner and the company
offering the program, the information set forth in subsection (b) above. The requirements of this
paragraph shall not apply to nay renewal of a contract between a time share owner and an
exchange company, unless there are significant changes in the information required by
subsection (b) since the execution of the prior contract.
(d) Each exchange company offering a program to purchasers in this state must include the
statement set forth in subsection (b)(16) on all promotional brochures, pamphlets,
advertisements, or other material disseminated by the exchange company which also contain the
percentage of confirmed exchanges described in subsection (b)(15)(iii).
(e) As used in this subsection, “multi-location developer” means a developer creating or
selling its own time shares in more than one time share property under a program permitting time
share owners, by reservation or other similar procedure, to occupy time share units in more than
one timeshare property. If time share owners are to be permitted or required to participate in a
multi-location program, the public offering statement or a supplement delivered therewith must
contain or fully and accurately disclose:
SUBJECT: TIME SHARE
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(1) a complete and accurate description of the procedure to qualify for an
effectuate use rights in time share units in the multi-location program;
(2) a complete and accurate description of all limitations, restrictions, or priorities
employed in the operation of the multi-location program, including, but not limited to,
limitations on reservations, use or entitlement rights based on seasonality, unit size, levels of
occupancy or class of owner, expressed in boldfaced type, and, in the event that such limitations,
restrictions, or priorities are not uniformly applied by the multi-location program, a clear
description of the manner which they are applied;
(3) whether use is arranged on a space-available basis and whether any guarantees
of fulfillment of specific requests for use are made by the multi-location developer;
(4) the name and address of the site of each time share property included in the
multi-location program;
(5) the number of time share units in each time share property which are
unavailable for occupancy; with respect to each such time share unit, the interest which the
multi-location developer has therein (e.g. fee ownership, leasehold, option to purchase), and if
less than fee ownership a statement of all relevant terms of the multi-location developer’s interest
therein; and with respect to each such time share unit, whether it may be withdrawn from the
multi-location program;
(6) the following information which shall be independently audited by a certified
public accountant or accounting firm in accordance with the standards of the Accounting
Standards Bard of the American Institute of Certified Public Accountants:
(i) the number of time share owners in the multi-location program;
(ii) for each time share property in the multi-location program, the
number of properly made requests for use of time share units in such time share property; and
(iii) for each time share property, the number of owners who
received the right to use a unit in such time share property as a percentage of the time share
owners who properly requested such use in the time share property.
(7) A statement in boldfaced type to the effect that the percentages described in
subsection (e)(6) do not indicate a purchaser’s probabilities of being able to use any time share
unit since availability at individual locations may vary.
(f) A developer shall promptly amend:
SUBJECT: TIME SHARE
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(1) the public offering statement to report any material change in the information
required by subsection (a) and (b), and
(2) the public offering statement or any supplement thereto to report any material
change known to him in the information required by subsection (b), except that:
(i) any material change in information required by subsections
(b)(2), (3), and (11) shall be reported to purchasers within thirty (30) days after the change
occurs. No liability shall be attributed to any person in the change is reported within the 30-day
period; and
(ii) the information required by subsections (b)(13), (14), and (15)
shall be calculated, at the minimum, from the records of the exchange company for the preceding
calendar year, and need not be updated than on a yearly basis, and
(3) the public offering statement or nay supplement thereto to report any material
change in the information required by subsection (e), except that the information required by
subsections (e)(4), (5), and (6) shall be calculated, at the minimum, from the records of the multi-
location developer for the preceding calendar year, and need not be updated more than on a
yearly basis;
(4) insofar as the developer relies in good faith on information provided by others
in making disclosures required by subsection (b), he is responsible for a misrepresentation only if
he has knowledge of its falsity; and
(5) an exchange company shall be treated as a developer for the purposes of
determining liability under these rules for any program in which the exchange company contracts
directly with the purchaser, and in which it has no contract with the time share developer.
3.03 PUBLIC OFFERING STATEMENT
(a) If a conversion building that includes or is to include one or more time share units is
more than ten (10) years old and the developer or any affiliates of the developer own or control
more than fifty percent (50%) of all units in the project, the public offering statement must
contain, in addition to the information required by Rule 3.02:
(1) a statement b the developer, based on a report prepared by an independent
registered architect or engineer, describing the present condition of all structural components and
mechanical and electrical installations material to the use and enjoyment of the time share units;
(2) a statement the developer of the expected useful life of each item reported on
in paragraph (1) or a statement that no representations are made in that regard; and
SUBJECT: TIME SHARE
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(3) a list of any outstanding notices of uncured violations of building code or
other municipal regulations, together with the estimated cost of curing those violations.
(b) this section applies only to unit in which use as a dwelling or for recreational purposes,
or both, is permissible.
3.04 PUBLIC OFFERING STATEMENT; TIME SHARE SECURITIES
If a time share is currently registered with the Securities and Exchange Commission of the
United States, a developer satisfies all requirement relating to the preparation of public offering
statement of this Act if he delivers to the purchaser (and files with the Agency) a copy of the
public offering statement filed with the Securities and Exchange Commission. (A time share is
not a security under the provisions of Chapter 7-11 entitled “Sale of Securities.”
3.05 PRACTICES PROHIBITED
It shall be an unfair or deceptive act or practice for any developer, sales agent or acquisition
agent of time share plans or units to:
(1) Solicit prospective purchasers on any public street, beach or other public
property or facility in violation of State or county laws or regulations.
(2) Use any promotional device, including but not limited to sweepstakes, lodging
certificates, gift awards, premiums, or discounts without fully and conspicuously disclosing that
such promotional devices are being used for the purpose of soliciting the sale of vacation time
sharing plans;
(3) Use any promotional device as set forth above to obtain the names and
addresses of prospective purchasers without fully and conspicuously disclosing that names and
addresses so acquired will be used for the purpose of soliciting the sale of the vacation time
sharing plans;
(4) Misrepresent or deceptively represent any material fact concerning the time
share plans or time share units, including, but not limited to:
(A) The amount or period of time the accommodation units and
facilities will be available to any purchaser;
(B) The location or locations of the offered units and
accommodations and facilities;
(C) The size, nature, extent, qualities or characteristics of the
offered units, accommodations, and facilities;
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(D) The nature or extent of any services incident to the units,
accommodations and facilities;
(E) The right of a purchaser, if any, to exchange his right to units
in one location for his right to units in another location;
(F) The conditions under which a customer may exchange his right
to an accommodation in one location for his right to an
accommodation in another location; or
(G) The contents of the contract or the purchaser’s rights,
privileges or benefits thereunder;
(5) Fail to honor or comply with all provisions of the contract with the purchaser;
(6)(a) Include, in any contract, any provision purporting to waive any right or
benefit provided for purchasers pursuant to these Regulations;
(b) To seek or solicit such a waiver during the effective period of
these Regulations;
(7) Sell any vacation time sharing plan the duration of which exceeds the period
during which the availability of the offered accommodations and facilities can be guaranteed; or
(8)(a) Do any other act which constitutes fraud, misrepresentation, or failure to
make a disclosure of a material fact.
(b) Sales brochures, if any, shall be provided to each purchaser,
and the following caveat in conspicuous type shall placed on the inside front cover or in the first
page containing text material of the sale brochure, or otherwise conspicuously displayed: ORAL
REPRESENTATION CANNOT BE RELIED UPON AS CORRECTLY STATING
REPRESENTATIONS OF THE DEVELOPER. FOR CORRECT REPRESENTATIONS,
MAKE REFERENCE TO THIS BROCHURE AND TO THE DOCUMENTS REQUIRED BY
RHODE ISLAND STATUTES AND/OR REGULATIONS, TO BE FURNISHED BY A
DEVELOPER TO A BUYER OR LESSEE. If time share estates have or may be created with
respect to any unit in the condominium, such sales brochure shall contain the following
statement in conspicuous type: UNITS IN THIS CONDOMINIUM ARE SUBJECT T TIME
SHARE ESTATES.
3.06 DISCLOSURE
(a) It shall be an unfair or deceptive act or practice for the seller of a vacation time sharing
plan to fail to utilize and furnish the buyer with a fully completed copy of a contract pertaining to
such sale at the time of its execution, said contract shall include:
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(1) The actual date the contract is executed by all parties;
(2) The name and address of the seller;
(3) In immediate proximity to the space reserved in the contract for the signature
of the buyer and in boldface type of a size of 10 points larger than the largest type in the text the
following statement:
“YOU MAY CANCEL THIS CONTRACT WITHOUT ANY PENALTY OR
OBLIGATION WITHIN THREE (3) DAYS FROM THE DATE YOU SIGN THIS
CONTRACT OR RECEIVE THE PUBLIC OFFERING STATEMENT, WHICHEVER IS
LATER IN TIME.
IF YOU DECIDE TO CANCEL THIS CONTRACT, YOU MUST HAND DELIVER
NOTICE OF CANCELLATION OF THE SELLER OR MAIL NOTICE TO THE SELLER BY
CERTIFIED OR REGISTERED MAIL. YOUR NOTICE OF CANCELLATION SHALL BE
EFFECTIVE UPON THE DATE DELIVERED OR SENT AND SHALL BE DELIVERED OR
SENT TO THE NAME OF THE SELLER AT ADDRESS OF SELLER. ALL PAYMENTS
MADE HEREUNDER WILL BE RETURNED IN FULL WITHIN FIFTEEN DAYS AFTER
RECEIPT OF YOUR NOTICE OF CANCELLATION.
This right to cancel shall not survive the actual transfer of title by deed where there has
been at least three (3) days (excluding Sundays and Holidays) between the signing of the
contract and transfer by deed.
(4) A synopsis of any sales presentation made by the seller to the purchaser over
the telephone or other electronic device;
(5) The existence of any lien on the accommodation or facility which could affect
the rights of the purchaser or his assignee;
(6) However, when any of the specific language required to be placed in a
contract pursuant to this rule is in conflict with or duplicative of the language required by those
registered under Rhode Island General Law 34-36.1 or its successor, the language of Rhode
Island General Law Chapters 34-36.1 or its successor shale be exclusive.
(b) It shall be an unfair or deceptive act or practice for any seller of vacation time sharing
plans to fail to fully and conspicuously disclose in the contract:
(1) The total financial obligation of the purchaser, which shall include the initial
purchase price and any additional charges to which the purchaser may be subject, including but
not limited to per diem, season, reservation, maintenance, management, recreation or utility
charges;
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(2) Any individual or business entity which has or may have the right to alter,
amend or add t charges which the purchaser may be subject, and the terms and conditions under
which such charges may be imposed;
(3) The nature and duration of each agreement between the business offering the
vacation time sharing plans for sale and the individual or business entity providing the
accommodations or other facilities;
(4) In immediate proximity to the space reserved in the contract for the signature f
the buyer and boldfaced type of the same size as required by 3.06 (a)(3)
“NO PURCHASER SHOULD RELY UPON REPRESENTATIONS OTHER
THAN THOSE INCLUDED IN THE CONTRACT.”
However, inclusion of this statement shall not impair the buyer’s right to bring
any legal action based upon any cause of action arising from verbal statements;
(5) The date of availability of each amenity of the offered accommodations and
facilities when same are not completed at the time of sale of such plan.
(6) The specific number of years that constitutes the term of the contract.
3.07 PURCHASER’S RIGHT TO CANCEL
(a) A person required to deliver a public offering statement pursuant to Rule 2.02(c) shall,
before transfer of a time share and no later than the date of any contract of sale, provide a
prospective purchaser with (i) a copy of the public offering statement and all amendments and
supplements thereto, and (ii) the disclosure required in the case of resale by Rule 3.08. Unless
the purchaser has received those materials more than three (3) days (excluding Sundays and
Holidays) before execution of any contract of sale, the contract is violable by him until he has
received those materials and for three (3) days (excluding Sundays and Holidays) thereafter or
until transfer, whichever first occurs.
(b) If a purchaser elects to cancel a contract pursuant to subsection (a), he may do so by
hand-delivering notice thereof to the seller or by mailing notice thereof to the developer or to his
agent for service of process. Cancellation is without penalty, and all payments made by the
purchaser before cancellation must be refunded within fifteen (15) days after receipt of the notice
of cancellation.
(c) If a person required to deliver a public offering statement pursuant to these rules fails to
provide a purchaser to whom a time share is transferred with the materials as required by
subsection (a), the purchaser, in addition to any rights to damages or other relief, is entitled to
receive from the seller an amount equal to ten percent (10%) of the sales price of the time share.
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3.08 RESALE OF TIME SHARES
(a) Except in the case of a sale where delivery of a public offering statement is required, or
unless exempt under Rule 3.00 (b), a seller of a time share shall furnish to the purchaser before
execution of any contract for the sale, or otherwise before the transfer of title, a copy of the time
share instrument (other than any plants or plans) and a certificate containing:
(1) a statement disclosing the effect on the proposed transfer of any right of first
refusal or other restraint on transfer of the time share or any portion thereof;
(2) a statement setting forth the amount of the periodic time share expense
liability and any unpaid time share expense of special assessment of other sums currently due
and payable from the seller;
(3) a statement of any other fees payable by time share owners; and
(4) a statement of any judgments or other matters that are or may become liens
against the time share or the time share unit and the status of any pending suits that may result in
those liens.
(b) A managing entity, within three (3) days (excluding Sundays and Holidays) after a
request by a time share owner, shall furnish a certificate containing the information necessary to
enable the time share owner to comply with this section. A time share owner providing a
certificate pursuant to subsection (a) is not liable to the purchaser for any erroneous information
provided by the managing entity and included in the certificate, other than for judgment liens
against the time share or the time share unit.
(c) A purchaser is not liable for any unpaid time share expense liability or fee greater than
the amount set forth in a certificate prepared by a managing entity. A time share owner is not
liable to a purchaser for the failure or a delay of managing entity to provide the certificate in a
timely manner, but the purchase contract is voidable by the purchaser until the certificate has
been provided and for three (3) days (excluding Sundays and Holidays) thereafter or until
transfer, whichever first occurs.
3.09 ESCROW DEPOSITS
Any deposit made in connection with the purchase or reservation in this State of a time
share from a person required to deliver a public offering statement pursuant to Rule 3.01(c) must
be placed in escrow, either in this State or in the state where the time share project is located, in
an Account designated solely for that purpose, by a licensed title insurance company, an
attorney, a licensed real estate broker, an independent bonded escrow company, or any institution
whose accounts are insured until (i) delivered to the developer at the time of any final transfer or
conveyance of a time share interest, (ii) delivered to the developer because of the purchaser’s
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default under a contract to purchase the time share, (iii) refunded to the purchaser, or (iv) until
delivered to the developer in accordance with 4.01 (b)(6).
3.10 LIENS
(a) In the case of a sale of a time share where deliver of a public offering statement is
required pursuant to Rule 3.01(c), a seller shall, before transferring a time share, record of
furnish to the purchaser releases of all liens affecting that time share which the purchaser does
not expressly agree to subject to or assume, or shall provide a surety bond or substitute collateral
for or insurance against the lien as provided for liens on real estate in Title 34 of the Rhode
Island General Laws.
(b) If a lien other than a deed of trust or mortgage becomes effective against more than one
time share estate, any time share owner is entitled to a release of his time share estate from the
lien upon payment of his proportionate liability for the lien in accordance with time share
expense liability unless he or his predecessor in interests agreed otherwise with the lienor. After
payment, the managing entity may not assess or have a lien against that time share estate for any
portion of the time share expenses incurred in connection with that lien.
(c) If a lien to be foreclosed or enforced against all time shares in a time share property,
service of notice pursuant to these regulations upon the managing entity, if any, constitutes
service thereof upon all the time share owners for the purposes of foreclosure or enforcement.
The lienholder shall also forward promptly, by certified or registered mail, a copy thereof to each
time share owner at his last known address. Such notice does not suffice for the entry of a
deficiency or other personal judgment against any time share owner.
3.11 CONVERSION BUILDING
(a) A developer of a time share property which includes all or any part of a conversion
building, and any person in the business of selling real estate for his own account who intends to
offer time shares in such a property, shall give each of the residential tenants and any residential
subtenant to possession of the proposed time share units notice of the conversion no later than
one hundred twenty (120) days before the developer will require the tenants and any subtenant in
possession to vacate. Rents shall not be increased during said notice period. The notice must set
forth generally the rights of tenants and subtenants under this section and be hand-delivered to
the unit or mailed to the tenant and subtenant at the address of the unit or any other mailing
address provided by a tenant. No tenant or subtenant may be required by the developer to vacate
upon less than one hundred twenty (12) days’ notice, except by reason of non-payment of rent,
waste, or conduct that disturbs other tenants’ peaceful enjoyment of the premises, and the terms
of the tenancy may not be altered during that period. Failure to give notice as required by this
section is a defense to an action for possession.
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(b) For sixty (60) days after delivery or mailing of the notice described in subsection (a),
the person required to give the notice shall offer to convey each time share unit or time share
proposed unit occupied for residential use to the tenant who leases that unit. Tenants shall have
the right to cancel their lease and receive no penalties for said cancellation as long as all
obligations of the lease have been met. If a tenant fails to purchaser the unit during the sixty (60)
day period, the offeror may not offer to dispose of an interest in that unit during the following
one hundred eighty (180) days at a price or on terms more favorable to the offeree than the price
or terms offered to the tenant. This subsection does not apply to any unit in a conversion
building if that unit will be restricted exclusively to non-residential use or the boundaries of the
converted unit do not substantially conform to the dimensions of the residential unit for
conversion.
(c) If a seller, in violation of subsection (b), conveys a time share unit to a purchaser for
value who has no knowledge of the violation, recordation of the deed conveying the unit
extinguishes any right a tenant may have under subsection (b) to purchase that unit if the deed
states that the seller has complied with subsection (b), but does not affect the right of a tenant to
recover damages from the seller for a violation of subsection (b).
(d) If a notice of conversion specifies a date by which a unit must be vacated and otherwise
complies with the provisions of Chapter 34-18 of the General Laws, the notice also constitutes a
notice to vacate specified by that statute.
(e) Notwithstanding the notice provisions of subsection (a) herein any tenant who has
continuously resided in the unit for then (10) years or more or any tenant who has attained the
age of sixty-two (62) shall be given one (1) year notice. Rents shall not be increased during said
notice period. A tenant as described in this subsection shall have one hundred eighty (180) days
within which to purchase the unit as provided for in subsection (b) and the remaining provisions
of that subsection shall apply.
The owner or developer shall pay reasonable moving expenses and costs, to any tenant who
has attained the age of sixty-two (62), within a fifty (50) mile radius.
(f) Nothing in this section permits termination of a lease by a developer in violation of its
terms.
3.12 EXPRESS WARRANTIES OF QUALITY
(a) Express warranties made by any seller to a purchaser of a time share, if relied upon by
the purchaser, to prevent deception or unfair practices, are created as follows:
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(1) Any affirmation of fact or promise which relates to time times share, the time
share unit, rights appurtenant to either, area improvements that would directly benefit the time
share, or the right to use or have the benefit of facilities not located on the time share unit,
creates an express warranty that the time share, the time share unit, and related rights and uses
will conform to the affirmation or promise;
(2) Any model or description of the physical characteristics of the time share
property, including plans and specification of or for improvements, creates an express warranty
that the property will substantially conform to the model or description;
(3) Any description of the quantity or extent of the real estate constituting the time
share property, including plats or surveys, creates an express warranty that the property will
conform to the description, subject to customary tolerances, and;
(4) A provision that a purchaser may put a time share unit only to a specified use
is an express warranty that the specified use is lawful.
(b) Neither formal words; such as “warranty” or “guarantee”, nor a specific intention to
make a warranty, is necessary t create an express warranty of qualify, but a statement purporting
to be merely an opinion or commendation of the time share, the time share unit, or the value of
either does not create a warranty.
3.13 IMPLIED WARRANTIES OF QUALITY
(a) A developer and any person in the business of selling real estate for his own account, to
prevent unfair practices or deception, warrants that a time share unit will be in at least as good
condition at the earlier of the time of the transfer or of the delivery of possession as it is was at
the time of contracting, reasonable wear and tear excepted.
(b) A developer and any person in the business of selling real estate for his own account
impliedly warrants that a time share unit and any other real property the time share owners have
a right to use in conjunction therewith are suitable for the ordinary uses of real estate of its type
and that any improvements made or contracted for by him, or made by any person before
transfer, will be:
(1) free from defective materials, and
(2) constructed in accordance with applicable law, according to sound engineering
and construction standards, and in a workmanlike manner.
(c) In addition, a developer warrants to a purchaser of a time share than an existing use of
the time share unit, continuation of which is contemplated by the parties, does not violate
applicable law at the earlier of the time of transfer or of the delivery of possession.
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(d) Warranties imposed by this section may be excluded or modified as provided in Rule
3.14.
(e) For purposes of this section, improvements made or contracted for by an affiliate of a
developer are made or contracted for by the developer.
(f) Any transfer of a time share transfers to the purchaser all of any developer’s implied
warranties of quality.
3.14 EXCLUSION OR MODIFICATION OF IMPLIED WARRANTIES OF QUALITY
(a) Except as limited by subsection (b) which subsection applies with respect to a purchaser
of a time share in a time share unit that may be used as a dwelling or for recreational purposes,
implied warranties of quality:
(1) May be excluded or modified by agreement of the parties; and
(2) Are excluded by expression of disclaimer, such as “as is,” “with all faults,” or
other language that in common understanding calls the purchaser’s attention to the exclusion of
warranties.
(b) With respect to a purchaser of a time share in a time share unit that may be used as a
dwelling or for recreational purposes, no general disclaimer of implied warranties of quality is
effective, but a developer may disclaim liability in an instrument signed by the purchaser for a
specified defect of specified failure to comply with applicable law if the existence of the defect
or failure entered into and became a part of the basis of the bargain.
3.15 VIOLATIONS
It shall be an unfair act or practice for any person subject to these regulations to violate or
fail to comply with any provision of these regulations or of the time share instrument.
3.16 LABELING OF PROMOTIONAL MATERIAL
It shall be an unfair act or practice to use any promotional material for display or to deliver
to or use any promotional material concerning prospective purchaser which describes or portrays
any improvement in the time share property unless the description of portrayal of the
improvement is conspicuously labeled or identified as “NEED NOT BE BUILT.”
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3.17 DEVELOPER’S OBLIGATION TO COMPLETE
It shall be an unfair act or practice for a developer to fail to complete within a reasonable
time period all promised improvements described in the time share instrument and promotional
materials.
3.18 SUBSTANTIAL COMPLETION OF UNITS
It shall be an unfair act or practice to convey an interest in a unit for which delivery of a
public offering statement is required until the unit is substantially completed as evidenced by a
recorded certificate of substantial completion executed by an independent registered architect or
engineer, or by issuance of a certificate of occupancy authorized by law.
ADMINISTRATION AND REGISTRATION
4.00 REGISTRATION REQUIRED
Registration of the following information is required under these regulations. This
requirement is necessary to ensure the ability to enforce and effectively carry out the consumer
protection measures these regulations are intended to implement. A developer may not offer or
transfer a time share unless the time share is registered with the Department of Business
Regulations (hereinafter “the Agency”), but an offering by a developer of time shares in no more
than one time-share unit at any one time is exempted from the requirement of the regulations.
4.01 APPLICATION FOR REGISTRATION: APPROVAL OF UNCOMPLETED
UNITS
(a) For the purposes of this section, “substantially completed” means that all structural
components and mechanical systems of all buildings constituting or containing any time share
units or portions thereof are finished in accordance with the plans, as evidenced by a recorded
certification of completion executed by an independent registered engineer, surveyor, or
architect.
(b) An application for registration must contain the required information and be
accompanied by any reasonable fees required by the agency. A developer shall promptly file
amendments to report any actual or expected material change in any document or information
contained in his application.
(c) If a developer files with the agency the time share instrument or proposed time share
instrument, or an amendment or proposed amendment to the time share instrument, describing
time share units consisting in whole or in part of buildings or portions of buildings that have not
been substantially completed, the developer shall also file with the agency:
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(1) a verified statement showing all costs involved in completing the time share
property;
(2) a verified estimate of the time of completion of construction of the time share
property;
(3) satisfactory evidence that he has sufficient funds to cover all costs to complete
the time share property;
(4) a copy of the executed construction contract and any other contracts for the
completion of the time share property;
(5) a one hundred percent (100%) payment and performance bond covering the
entire cost of construction of the time share property;
(6) if purchasers’ funds are to be utilized for the construction of the time share
property, an executed copy of the escrow agreement with an escrow company or financial
institution authorized to do business within the state which provides:
(i) that disbursements of purchasers’ funds may be made from time
to time to pay for construction of the time share property, architectural, engineering, finance, and
legal fees, and other costs for the completion of the time share property in proportion to the value
of the work completed by the contractor as certified by an independent registered architect or
engineer, on bills submitted and approved by the lender of construction funds or the escrow
agent;
(ii) that disbursement of the balance of purchasers’ funds
remaining after completion of the time share property may be made only after the escrow agent
or lender receives satisfactory evidence that the period for filing mechanics’’ and materialmen’s
lien has expired, the right to claim those liens has been waived, or adequate provision has been
made for satisfaction of any claimed mechanics’ or materialmen’s lien; and
(7) any other materials or information the agency may reasonably require.
4.02 RECIEPT OF APPLICATION; ORDER OF REGISTRATION
The agency shall acknowledge receipt of an application for registration within five (5)
business days after receiving it. The registration shall be made available to the general public for
inspection thereafter.
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4.03 ANNUAL REPORT AND AMENDMENTS
(a) A developer within thirty (30) days after the anniversary date of the order of
registration, annually shall file a report to bring up to date the material contained in the
application for registration and the public offering statement. This provision does not relieve the
developer of the obligation to file amendments pursuant to subsection (b).
(b) A developer promptly shall file amendments to the public offering statement with the
agency.
(c) If an annual report reveals that a developer owns or controls time shares representing
less than twenty-five percent (25%) of the time shares in the time share units and that a
developer has no power to increase the number of time shares in the units, the agency shall issue
an order relieving the developer of any further obligation to file annual reports.
4.04 AGENCY REGULATION OF PUBLIC OFFERING STATEMENT
(a) Both the agency and the Department of Attorney General at any time may require a
developer to alter or supplement the form or substance of a public offering statement to assure
adequate and accurate disclosure to prospective purchasers.
(b) The public offering statement may not be used for any promotional purpose before
registration and afterwards only if it is used in its entirety. No person may advertise or represent
that the agency has approved or recommended the time shares, the disclosure statement, or any
of the documents contained in the application for registration.
(c) In the case of any time share property situated wholly outside f this State, no application
for registration or proposed public offering statement filed with the agency which has been
approved by an agency of the state in which the time share property is located and substantially
complies with the requirements of this act may be rejected by the agency on the grounds of non-
compliance with any different or additional requirements imposed by this Act or by the agency.
However, the agency may require additional documents or information in particular cases to
assure adequate and accurate disclosure to prospective purchasers.
CONCLUSION
5.00 ENFORCEMENT
These rules and regulations are enforceable to the same extent as would be any violation of
the provisions of the Rhode Island Deceptive Trade Practices Law, Chapter 6–13.1,.et seq. of the
General Laws of Rhode Island.
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Specifically, enforcement remedies include injunctive and/or monetary relief pursuant to
Rhode Island General Laws 6-13.1-5; appointment of a receiver pursuant to Rhode Island
General Law 6-13.1-5, civil penalties pursuant to Rhode Island General Law 6-13.1-8, and
criminal penalties pursuant to 6-13.1-14.
5.01 SEVERABILITY
If any provision of these rules and regulations or the application thereof to any person or
circumstances shall be held invalid, such invalidity shall not affect the provisions or application
of the rules and regulations which can be given effect, and to this end the provisions of these
rules and regulations are declared to be severable.
These regulations are adopted under the authority of the Deceptive Trade Practices Act,
Chapter 6-13.1 of the Rhode Island General Laws and the Administrative Procedures Act,
Chapter 42-35 of the Rhode Island General Laws. These regulations shall become effective
twenty (20) days after filing with the Office of Secretary of State.
____________________________________
DENNIS J. ROBERTS II
ATTORNEY GENERAL FOR THE
STATE OF RHODE ISLAND
DATED:
January 25, 1984