South Carolina General Assembly
104th Session, 1981-1982

Bill 2500


                    Current Status

Bill Number:               2500
Ratification Number:       156
Act Number                 106
Introducing Body:          House
Subject:                   Vacation time sharing, definition,
                           violations, licenses, etc
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(Text matches printed bills. Document has been reformatted to meet World Wide Web specifications.)

(A106, R156, H2500)

AN ACT TO AMEND SECTION 27-32-10, AS AMENDED, CODE OF LAWS OF SOUTH CAROLINA, 1976, RELATING TO DEFINITIONS WITH REGARD TO VACATION TIME SHARING, SO AS TO ADD CERTAIN DEFINITIONS; TO AMEND SECTION 27-32-20, AS AMENDED, RELATING TO PROHIBITED ACTS BY SELLERS OF VACATION TIME SHARING PLANS, SO AS TO FURTHER PROVIDE SUCH PROHIBITED ACTS; TO AMEND SECTION 27-32-120, AS AMENDED, RELATING TO PENALTIES FOR CERTAIN VIOLATIONS AND THE EFFECT OF SUCH VIOLATIONS OF CONTRACTS FOR THE SALE OF TIME SHARED UNITS, SO AS TO PROVIDE PROCEDURES FOR INFORMING PERSONS OF SUCH VIOLATIONS, TO REVISE THE PENALTIES FOR VIOLATIONS, AND TO PROVIDE THAT CERTAIN ESCROW DEFICIENCIES SHALL NOT BE CONSIDERED VIOLATIONS AND THAT LENDERS WHO HAVE ADVANCED FUNDS TO A PROJECT SHALL HAVE NO LIABILITY TO CONTRIBUTE FUNDS TO CURE THE ESCROW DEFICIENCY; TO AMEND SECTION 27-32-130, AS AMENDED, RELATING TO ENFORCEMENT AND IMPLEMENTATION OF VACATION TIME SHARING PROVISIONS, SO AS TO FURTHER PROVIDE FOR SUCH ENFORCEMENT AND IMPLEMENTATION; TO ADD SECTION 27-32-180 SO AS TO PROVIDE FOR THE LICENSING OF SELLERS OF SUCH PLANS INCLUDING REQUIRED QUALIFICATIONS OF SELLERS, THE REQUIREMENT OF PASSING AN ELIMINATION THEREFOR AND THE PAYMENT OF CERTAIN FEES; TO ADD SECTION 27-32-190 SO AS TO PROVIDE FOR THE REGISTRATION OF VACATION TIME SHARING PLANS, ACCOMMODATIONS AND FACILITIES AND FOR THE POWERS AND AUTHORITY OF THE SOUTH CAROLINA REAL ESTATE COMMISSION IN REGARD THERETO; TO ADD SECTION 27-32-200 SO AS TO ESTABLISH A "VACATION TIME SHARING RECOVER FUND" WHICH SHALL BE USED FOR THE PAYMENT OF CLAIMS OF PERSONS INJURED BY ACTS OF LICENSED SELLERS OF VACATION TIME SHARING PLANS; TO ADD SECTION 27-32-210 SO AS TO PROVIDE FOR THE CONDITIONS UNDER WHICH SUCH INJURED PERSONS SHALL BE ELIGIBLE TO RECOVER FROM THE RECOVERY FUND; TO ADD SECTION 27-32-220 SO AS TO PROVIDE CERTAIN LIMITATIONS ON PAYMENTS FROM THE FUND; AND TO ADD SECTION 27-32-230 SO AS TO PROVIDE FOR BINDING ARBITRATION OF CLAIMS AGAINST THE FUND, PROVIDE FOR THE AUTOMATIC REVOCATION OF THE SALES LICENSE OF OFFENDING LICENSEES, AND PROVIDE THAT THE RIGHT OF PERSONS RECEIVING AN AWARD FROM THE FUND SHALL BE SUBROGATED IN FAVOR OF THE REAL ESTATE COMMISSIONER.

Be it enacted by the General Assembly of the State of South Carolina:

Definitions

SECTION 1. Section 27-32-10 of the 1976 Code, as amended by Act 179 of 1979, is further amended by adding:

"(18) 'Vacation time sharing sales license' means a license issued by the Commission authorizing individuals to act as sellers of vacation time sharing plans.

(19) 'Fund' and 'recovery fund' shall mean the South Carolina Vacation Time Sharing Recovery Fund.

(20) 'Claim' shall mean a monetary loss sustained or allegedly sustained by a person due to the wrongdoing of a licensee.

(21) 'Licensee' shall mean a person having a Vacation Time Sharing sales license."

Violations

SECTION 2. Item (1) of Section 27-32-20 of the 1976 Code, as amended by Act 179 of 1979, is further amended to read:

"(1) Sell, lease, encumber or convey in any manner or to solicit or advertise such transactions unless the seller has been duly licensed under the provisions of Section 27-32-180 or Chapter 57 of Title 40 hereunder and unless the vacation time sharing plan and the units thereby affected have first been registered with the Commissioner. Provided, however, that the registration requirements of this chapter shall not apply to nor restrict the listing and resale of any vacation time sharing plan when:

(a) the vacation time sharing plan resold is within an existing time sharing facility currently registered with the Commission pursuant to the requirements of this chapter;

(b) the vacation time sharing plan resold is subject to the identical rules, regulations, conditions or limitations on the use of the accommodations or facilities which affect all other vacation time sharing plans within that time sharing facility."

Licenses-applications and examinations

SECTION 3. The 1976 Code is amended by adding:

"Section 27-32-180. (A) Any person desiring to act as a seller of vacation time sharing plans shall file with the Commission a written application upon such form as the Commissioner shall designate and shall pass to the satisfaction of the Commissioner the examination hereinafter prescribed.

(B) Prerequisites for taking the vacation time sharing sales examination are as follows:

(1) Evidence satisfactory to the Commissioner that the applicant bears a good reputation for honesty and truthfulness.

(2) A current examination of the applicant's credit history, the results of which must indicate that the applicant has satisfactorily met all past debts or made adequate provisions therefor.

(3) An irrevocable consent to jurisdiction in this State and appointment of the Commissioner as agent for service of process.

(4) Employment by a licensed South Carolina real estate broker.

(C) The Commission shall prepare and conduct an examination on the fundamentals of this chapter and related topics and shall schedule such examination at least quarterly. No applicant shall be entitled to examination unless all prerequisites enumerated above have been met and evidence thereof received by the Commission at least ten working days prior to the examination. The minimum passing grade shall be seventy-five percent.

(D) If the applicant has met all prerequisites for examination hereunder, but has not undergone examination, the applicant may, request and the Commissioner, in his sole discretion and upon good cause shown, may issue a temporary vacation time sharing sales license. The applicant may receive such temporary license pending the next scheduled test session and the release of the results therefrom, whereupon the temporary license shall expire. No temporary license granted hereunder shall be renewed. The fee for the temporary license, which shall be in addition to the required examination fee and regular license fee, shall be twenty-five dollars.

(E) Every applicant shall pay the sum of twenty-five dollars for each examination taken. Every applicant shall also pay a license fee of one hundred dollars upon successful completion of the examination. The Commission shall be entitled to retain all fees collected to defray its expenses. No fees collected hereunder shall be in lieu of any business license fees or taxes imposed by any city, county or municipal authority. The Commission shall be entitled to contract with any outside source to prepare and conduct vacation time sharing sales examinations in its behalf and to pay for the reasonable cost thereof from the examination fees collected.

(F) Vacation time sharing sales licenses shall be renewed annually, on or before June thirtieth, upon submission of a renewal request in such form as the Commissioner shall prescribe and payment of a fifty dollar renewal fee. Failure to timely renew shall result in cancellation of the license "

Plans to be registered-powers of commissioner

SECTION 4. The 1976 Code is amended by adding:

"Section 27-32-190. Every vacation time sharing plan for sale or offered for sale in this State shall be registered with the South Carolina Real Estate Commission as follows:

A. Upon receipt of an application for registration in proper form, the Commissioner shall forthwith initiate an examination to determine that:

(1) The seller can convey or cause to be conveyed the vacation time sharing plan offered for sale if the purchaser complies with the terms of the offer.

(2) The advertising material and general promotional plan are not false or misleading.

(3) The requirements of this chapter have been fulfilled.

(4) The seller has not, or, if a corporation, its officers, directors, and principals have not been convicted of any crime involving land dispositions, crimes of moral turpitude, any securities law violations, fraudulent business activities, or any aspect of the vacation time sharing business in this State, the United States, or any other state or foreign country within the past ten years, and has not been subject to any injunction or administrative order within the past ten years restraining a false or misleading promotional plan involving any of the activities above.

B. Upon receipt of the application for registration in proper form, the Commissioner shall issue a notice of filing to the applicant. Within thirty days from the date of the notice of filing, the Commissioner shall enter an order registering the vacation time sharing plan or rejecting the registration. If no order of rejection is entered within thirty days from the date of notice of filing, the vacation time sharing plan shall be deemed registered unless the applicant has consented in writing to a delay. No reasonable request for an extension of time by the Commissioner shall be withheld.

(1) If the Commissioner affirmatively determines upon inquiry and examination that the requirements of this chapter have been met, it shall enter an order registering the plan.

(2) If the Commissioner determines upon inquiry and examination that any of the requirements of this chapter have not been met, the Commissioner shall notify the applicant that the application for registration must be corrected in the particulars specified within fifteen days. If the requirements are not met within the time allowed, the Commissioner shall enter an order rejecting the registration which shall include the findings of fact upon which the order is based. The order rejecting the registration shall not become effective for twenty days during which time the applicant may petition for reconsideration and shall be entitled to a hearing.

(3) If it appears that a person, company or any business organization has engaged or is about to engage in an act or practice constituting a violation of a provision of this chapter or any rule or order thereunder, the Commissioner, through the Attorney General, with or without prior administrative proceedings, may bring an action in the Circuit Court to enjoin the acts or practices and to enforce compliance with this chapter or any rule or order hereunder. The Commissioner shall contact, whenever practicable, any person or business violating this chapter prior to recourse to the Circuit Court. Upon proper showing, injunctive relief or temporary restraining orders may be granted, and a receiver or conservator may be appointed. Neither the Commissioner nor the Attorney General shall be required to post bond in any court proceeding.

C. The Commissioner may:

(1) Make any public or private investigation which it deems necessary, either within or outside of this State, to determine whether any person has violated or is about to violate this chapter or any rule or order hereunder, or to aid in the enforcement of this chapter or in the prescribing of rules and forms thereunder.

(2) Require or permit any person to file a statement in writing under oath or otherwise as the Commissioner determines, as to ali facts and circumstances concerning the matter to be investigated.

(3) For the purpose of any investigation or proceeding under this chapter, the Commissioner or any officer designated by rule may administer oaths or affirmations, and upon his own motion or upon request of any party shall subpoena witnesses, compel their attendance, take evidence, and require the production of any matter which is relevant to the investigation, including the existence, description, nature, custody, condition and location of any books, documents, or other tangible things and the identity and location of persons having knowledge of relevant facts or any other matter reasonably calculated to lead to the discovery of material evidence.

(4) Upon failure to obey a subpoena or to answer questions propounded by the investigating officer and upon reasonable notice to all persons affected thereby, the Commissioner, through the Attorney General, may apply to the Circuit Court for an order compelling compliance.

D. The Commissioner may:

(1) Issue an order requiring the seller to cease and desist from any unlawful practice and to take such affirmative action as in the judgment of the Commissioner will carry out the purposes of this chapter if, after notice and hearing, the Commissioner determines that a seller has:

(a) Violated any provisions of this chapter.

(b) Directly or through any agent of employees knowingly engaged in any false, deceptive, or misleading advertising, promotional, or sales methods to offer or dispose of an interest in any vacation time sharing plan.

(c) Made any substantial change in the plan of development and sale of the vacation time sharing plan subsequent to the order of registration without obtaining the prior written approval of the Commissioner.

(d) Violated any unlawful order or rule of the Commission.

(2) Make findings of fact in writing that the public interest will be irreparably harmed by delay in issuing an order and in such case may issue a temporary cease and desist order. Prior to issuing the temporary cease and desist order, the Commissioner, whenever possible by telephone or otherwise, shall give notice of the proposal to issue a cease and desist order to the seller. Every temporary cease and desist order shall include in its terms a provision that upon request a hearing will be held promptly to determine whether or not it becomes permanent.

E. The Commissioner may:

(1) Revoke any registration of a vacation time sharing plan if, after notice and hearing upon a written finding of fact, it determines that the seller has:

(a) Failed to comply with the terms of a cease and desist order.

(b) Been convicted in any court of competent jurisdiction, subsequent to filing of the application for registration, of a crime involving fraud, deception, false pretenses, misrepresentation, false advertising or dishonest dealing.

(c) Disposed of, concealed or diverted any funds or assets of any person so as to defeat the rights of vacation time sharing plan purchasers.

(d) Failed to faithfully perform any stipulation or agreement made with the Commissioner as an inducement to grant any registration, to reinstate any registration or to approve any promotional plan or advertisement.

(e) Made intentional misrepresentations or concealed material facts in an application for registration. Findings of fact that a specific provision of law has been violated shall be accompanied by a concise and explicit statement of the underlying facts supporting the findings.

(2) Issue a cease and desist order instead of revoking a registration if he finds, after notice and hearing, that the seller has been guilty of a violation for which revocation could be ordered." Vacation Time Sharing Recovery Fund-persons aggrieved may seek recovery from fund-payments

SECTION 5. The 1976 Code is amended by adding:

"Section 27-32-200. There is hereby created a special fund to be known as the 'Vacation Time Sharing Recovery Fund', which shall be maintained by the Commission and funded as hereinafter provided for the payment of claims to persons injured by the acts of persons licensed under the provisions of this chapter.

In addition to the license fees required under the provisions of this chapter, every licensee shall pay an annual fee in such amount as the Commission shall determine but in no event exceeding twenty-five dollars for the establishment of a vacation time sharing recovery fund. Such funds shall be held and accumulated from year to year by the State Treasurer in a special fund for the Commission to be designated 'South Carolina Vacation Time Sharing Recovery Fund'. The fund shall be a continuing fund not subject to fiscal year limitations and shall be under the administrative direction of the Commission. Expenditures from this fund shall, be made in accordance with the provisions of this chapter without legislative appropriation. Warrants for expenditures from the fund shall be drawn by the Comptroller General pursuant to claims approved and signed by the Commissioner.

Section 27-32-210. (A) Any person aggrieved by the conduct of a licensee hereunder shall be eligible to seek recovery from the fund if the following conditions have been met:

(1) The facts giving rise to the applicant's claim occurred on or after January 1, 1982, and were based on a specific violation of this chapter.

(2) The applicant has made demand upon the licensee by certified mail, return receipt requested, for his actual damages and such demand has been refused or ignored.

(3) The applicant is not:

(a) related by blood or marriage to the licensee,

(b) licensed under the provisions of this chapter,

(c) the employer, principal or ,broker in charge of the licensee,

(d) a party jointly responsible for the claim.

(4) Application for recovery has been made not later than one year from the date or discovery of the loss.

Failure of the applicant to fully comply with this section shall constitute waiver of all rights hereunder.

(B) Application for recovery shall be made under oath and upon such form as the Commissioner shall prescribe and shall contain the following minimum information:

(1) Name and address of the applicant.

(2) Name and address of the licensee and his last known working address.

(3) Amount of recovery sought, together with evidence supporting the claim.

(4) Copies of all complaints or other legal process initiated.

(5) Disclosure of any partial satisfaction received, offered or otherwise available from the licensee, his broker-in-charge, or from any bond or policy of insurance or any other source. (6) A detailed statement of the events precipitating the loss, together with documents and other evidence supporting the claim.

(C) Upon receiving a claim in proper form, the Commissioner shall forward the claim by certified mail, return receipt requested, to the last known address of the licensee and to the broker-in-charge of such licensee. The licensee and the broker-in-charge shall within twenty days file a verified answer to the claim. If no answer is filed within twenty days, the broker or licensee shall be in default and the Commissioner shall schedule an arbitration of the claim. If the broker or licensee files a timely answer, the Commissioner shall investigate the claim for a period not to exceed sixty days and shall thereafter promptly schedule an arbitration of the claim. The licensee, broker, Commissioner and claimant shall be entitled to present evidence, question and cross-examine witnesses as parties to the arbitration.

Section 27-32-220. Payments from the recovery fund shall be limited in the following respects:

(1) Only the applicant's actual damages shall be paid from the recovery fund. No applicant shall be entitled to recover punitive, special or consequential damages or attorney's fees.

(2) The fund shall not be liable for more than five thousand dollars per transaction, regardless of the number of persons aggrieved or the number of time sharing interests involved in such transaction.

(3) The liability of the fund shall not exceed in the aggregate ten thousand dollars for any one licensee in a single calendar year and in no event shall it exceed twenty thousand dollars for any one licensee.

(4) If the maximum liability of the fund is insufficient to pay in full the valid claims of all aggrieved persons whose claims relate to the same transaction or to the same licensee, the amount for which the fund is liable shall be distributed among the claimants in a ratio that their respective claims bear to the total of such valid claims or in such manner as the Board of Arbitrators in its sole discretion shall decide. The Board of Arbitrators in its sole discretion shall be empowered to join in one action all claims having a common factual basis so that an equitable distribution from the fund may be achieved.

(5) In the event valid claims against the fund exceed the monies therein contained, the Commissioner shall satisfy such unpaid claims or portions thereof as soon as a sufficient amount of money has been deposited, together with interest at the rate of eight percent per annum from the date of award. All claims against the fund shall be made in the same order as the awards therefrom were authorized by the Board of Arbitrators. Any award hereunder shall specifically not be a claim against the State if it cannot be paid due to a lack of funds m the Vacation Time Sharing Recovery Fund.

Section 27-32-230. (A) Any person licensed under the provisions of this chapter and any person claiming an interest in the fund shall submit to the decision of a Board of Arbitrators, which shall in every respect be final and binding. The Board of Arbitrators shall be composed of three arbitrators, one chosen by the applicant, one chosen by the licensee and the Commissioner or his designee. If the licensee fails to nominate an arbitrator within five days of request or does not respond to the claim, the Commissioner shall nominate the third arbitrator. The decision of the majority shall rule. All arbitrations shall be held at the office of the Commissioner at such time as he shall prescribe and according to such rules of procedure as he shall prescribe.

(B) Upon payment of any claim, the license of the offending licensee shall be automatically revoked. The licensee shall not be qualified for relicensing until all amounts paid on his account are repaid in full to the Recovery Fund, together with interest at the rate of eight percent per annum. Nothing in this section shall prevent the Commission or any other authority from pursuing any other remedy at law or equity.

(C) Any applicant receiving an award from the fund shall subrogate all rights relative to such claim unto the Commissioner to the full extent of all amounts so paid, including interest, and shall cooperate with the Commissioner in the prosecution of the subrogated claim. Any amounts so recovered against the licensee or other responsible parties shall be deposited into the fund, less the costs and expenses of collection."

Penalties for violations

SECTION 6. Section 27-32-120 of the 1976 Code, as last amended by Act 179 of 1979, is further amended to read:

"Section 27-32-120. If upon investigation by the Real Estate Commission or Commissioner, any person is found to be in violation of this chapter, the Commissioner shall inform such person of the violation by certified mail, return receipt requested, and if the Commissioner finds the violation is of a minor nature, he may assess a monetary fine. Within ten days from receipt of such certified mail, the person found in violation of this chapter may pay such fine or take such other remedial steps as the Commissioner in his sole discretion may require; provided, however, that if no fine is paid and no other remedial agreement is reached within the time allowed or any extension of time granted by the Commissioner, such person may be prosecuted for the violation as otherwise provided in this section. Upon payment of a fine or agreement for remedial action, the Commissioner shall be authorized to release any person found in violation of this chapter from any further liability to the State arising from such violation. Any person who wilfully violates any provision of this chapter shall be deemed guilty of a misdemeanor and upon conviction for a first offense shall be fined not more than five thousand dollars for each violation, upon conviction for a second offense shall be fined not more than five thousand dollars or shall be imprisoned for a term not to exceed six months, or both, for each violation and upon conviction for a third or subsequent offense shall be fined not more than five thousand dollars or shall be imprisoned for a term not more than five years, or both, for each violation.

For purposes of this chapter a wilful violation occurs when the person committing the violation knew or should have known that his conduct was a violation of this chapter.

In addition to the penalties provided in this section, any contract for the sale of a time-shared unit in violation of this chapter shall be voidable at the sole option of the purchaser and entitles such purchaser to a refund of all consideration paid by him pursuant to such contract.

Provided, that a deficiency in an escrow required by this chapter, which results solely from the cancellation or worthlessness of receivables previously placed in escrow, shall not be considered a violation of this chapter. In the event of an escrow deficiency, a lender who has advanced funds to a project shall have no liability to contribute funds to the escrow to cure the deficiency, and the lender's lien on the project property shall not be affected by the deficiency."

Real Estate commission to enforce act

SECTION 7. Section 27-32-130 of the 1976 Code, as last amended by Act 179 of 1979, is further amended to read:

"Section 27-32-130. The Real Estate Commission shall be responsible for the enforcement and implementation of this chapter and the Attorney General, at the request of the Real Estate Commissioner, shall prosecute any violation hereunder. The Commission shall promulgate regulations for the implementation of this chapter and such regulations shall be subject to the State Administrative Procedures Act. The provisions of this section shall not be construed to limit in any manner the right of a purchaser or lessee to bring a private action to enforce the provisions of this chapter."

Time effective

SECTION 8. This act shall take effect upon approval by the Governor.