201 KAR 11:180. Promotion of out-of-state property and
time-shares, registration and prerequisites.
RELATES TO: KRS 324.020(6), 324.142
STATUTORY AUTHORITY: KRS 324.142,
324.281(5), 324.282
NECESSITY, FUNCTION, AND CONFORMITY: KRS
324.282 authorizes the Real Estate Commission to promulgate administrative
regulations necessary to carry out and enforce the provisions of KRS Chapter
324. KRS 324.142 authorizes the Real Estate Commission to promulgate
administrative regulations establishing requirements and procedures for its
licensees who are engaged in promotional activities in this commonwealth for
property located outside this commonwealth. This administrative regulation
establishes the procedure and content of registration required for promotional
activities of out-of-state property and time-shares.
Section 1. Definitions. (1)
"Promotional activities" means every solicitation or attempt to bring
about the sale, exchange, lease, assignment, license or award with regard to an
interest in real estate.
(a) A time-share estate, wherein a
freehold estate or an estate for years is conveyed;
(b) A vacation lease, wherein a buyer
purchases the right to occupy a specific accommodation for a specified time
period over a specified number of years;
(c) A vacation license or club
membership, wherein a buyer acquires the right to occupy an undesignated unit
at certain real property(ies) during a specific time each year for a specific
number of years; or
(d) Variations of the above that result
in the acquisition of the right to use real property for a limited period of
time in recurring intervals for a number of years.
(2) "Time-share" means an
arrangement under which one may acquire, for a period of time, the right to use
and occupy property, for a recurring block of time. A time-share may be:
(a) A time-share estate, wherein a
freehold estate or an estate for years is conveyed;
(b) A vacation lease, wherein a buyer
purchases the right to occupy a specific accommodation for a specified time
period over a specified number of years;
(c) A vacation license or club
membership, wherein a buyer acquires the right to occupy an undesignated unit
at certain real property(ies) during a specific time each year for a specific
number of years; or
(d) Variations of the above that result
in the acquisition of the right to use real property for a limited period of
time in recurring intervals for a number of years.
Section 2. To obtain commission approval
for engaging in promotional activities in the Commonwealth for property located
outside of the Commonwealth, each applicant shall file with the commission the
applicable documents set forth below:
(1) "Registration of out-of-state
properties and time share" form, setting forth pertinent date pertaining
to: legal description of property, name(s) of developers, owners and persons
involved in promotional activities, type of offering, form of ownership of
property, encumbrance(s) on property, current and anticipated improvements,
taxes and assessments, facilities and services offered or to be offered in the
future, and description of promotional activities to be conducted in Kentucky.
(2)(a) If a corporation, submit a copy of
the Articles of Incorporation with all amendments thereto and a current list of
the names and addresses of officers and directors with their principal
occupation at the current time,
(b) Out-of-state corporations must also
submit "certificate of authority" issued by the office of the
Secretary of State of the Commonwealth of Kentucky.
(3) If a partnership or association,
submit a copy of Articles of Partnership or other organizational documents.
(4) "Consent to Service of
Process" form.
(5) Copies of all sales contracts,
agreements, option forms, lease forms, and the prospectus currently used for
the property.
(6) "Consent to Inspect" form,
for commission to inspect the real estate being promoted and to inspect and
copy books and reports of the owner and/or developer at the cost of the
applicant.
Section 3. Exemptions. The registration
required under Section 2 of this administrative regulation shall not apply to:
(1) The making of any offer or
disposition of any out-of-state property:
(a) By an owner in a single or isolated
transaction;
(b) By any government or government
agency; or
(c) By court order.
(2) Any applicant that has been granted
an exemption by the Kentucky Real Estate Commission on the ground that their
promotional activities involve property of a small amount or of such a limited
character that the public interest and protection of purchasers is deemed
unnecessary with regard to said offerings.
(3) Any applicant who has registered
under the Federal Interstate Land Sales Full Disclosure Act shall be exempt
from the registration requirements contained in Section 2 of this
administrative regulation, upon the filing with the commission of a copy of an
effective statement of record filed with the Secretary of Housing and Urban
Development.
Section 4. Sellers of time-share plans in
Kentucky regardless of location of property shall verify, on the
"Affidavit of Timeshare Developer" form:
(1) That each purchaser shall receive a
fully completed copy of any contracts pertaining to the sale which includes the
date of execution of contract, financial obligations of purchaser (including
initial purchase price and any additional charges to which purchaser may be
subject), estimated date of availability of accommodation or facility which is
not completed at time of contract, and a description of the nature and duration
of the time-share being sold.
(2) That each purchaser shall be informed
orally at the time he or she signs a contract of the purchaser's right to
rescission, which shall be substantially similar to that set forth in
subsection (3) of this section.
(3) That all sales contracts utilized in the
promotion and sale of said time-share plans shall include in underlined, bold
face type of a minimum size of ten (10) points substantially the following
statement: "You may cancel this contract without any penalty or obligation
within three (3) business days from the above date. If you cancel, any payments
made by you under the contract and any negotiable instrument executed by you
will be returned within ten (10) business days following receipt by the seller
of your cancellation notice, and any security interest arising out of the
transaction will be cancelled. If you decide to cancel this contract, you must
notify the seller in writing of your intent to cancel. Your notice of
cancellation shall be effective upon the date sent and shall be sent to:
Name of seller at:
Address of seller:
NO PURCHASER SHOULD RELY UPON REPRESENTATIONS
OTHER THAN THOSE INCLUDED IN THIS CONTRACT."
(4) That if no interest in real property
is being conveyed, contracts shall also contain the following statements in
underlined, bold face type of a minimum size of ten (10) points: "You may
also cancel this contract at any time after the accommodations or facilities
are no longer available as provided in this contract."
Section 5. (1) Violation of any of the
requirements of this administrative regulation or failure to comply with the
provision of the notice of cancellation by a licensee shall constitute a
violation of KRS 324.160(4)(u) of this administrative regulation.
(2) Pursuant to KRS 324.142, commission
approval is required for a licensee to promote out-of-state property and
time-shares, even if exempted from other registration requirements under
Section 3 of this administrative regulation. Violation of any of the
requirements of this administrative regulation or failure to comply with the
provision of the notice of cancellation by an owner/developer shall result in
either revocation or denial of approval, whichever is applicable, and may be enforced
by injunctive action under KRS 324.020(6).
Section 6. Incorporation by Reference.
(1) The following material is incorporated by reference:
(a) "Registration of Out-of-State
Properties and Time Shares" (1985);
(b) "Consent to Service of
Process" (1985);
(c) "Consent to Inspect"
(1985); and
(d) "Affidavit of Timeshare
Developer" (1985).
(2) This material may be inspected,
copied, or obtained, subject to applicable copyright law, at the Kentucky Real
Estate Commission, 10200 Linn Station Road, Suite 201, Louisville, Kentucky
40223, Monday through Friday, 8 a.m. to 4:30 p.m. (11 Ky.R. 1215; Am. 1368;
eff. 3-12-85; 31 Ky.R. 1332; 1648; eff. 4-22-2005.)