201 KAR 11:180. Promotion of out-of-state property and time-shares, registration and prerequisites

Link to law: http://www.lrc.ky.gov/kar/201/011/180.htm
Published: 2015

Subscribe to a Global-Regulation Premium Membership Today!

Key Benefits:

Subscribe Now
      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.)