Section 407.625

Title XXVI TRADE AND COMMERCE

Chapter 407

Effective - 31 May 1985, see footnote   

  407.625.  Exchange program — information required to be furnished purchaser — exchange companies to file certain information annually — failure to comply, penalty. — 1.  If a purchaser is offered the opportunity to subscribe to any exchange program, the developer shall, except as provided in subsection 2 of this section, deliver to the purchaser, prior to the execution of any contract between the purchaser and the exchange company and the sales contract, at least the following information regarding such exchange program, and the purchaser shall certify, in writing, to the receipt of such written information:

  (1)  The name and address of the exchange company;

  (2)  The names of all officers, directors, and shareholders owning five percent or more of the outstanding stock of the exchange company;

  (3)  Whether the exchange company or any of its officers or directors has any legal or beneficial interest in any developer or managing agent for any time-share plan participating in the exchange program and, if so, the name and location of the time-share plan and the nature of the interest;

  (4)  Unless the exchange company is also the developer or an affiliate, a statement that the purchaser's contract with the exchange company is a contract separate and distinct from the sales contract;

  (5)  Whether the purchaser's participation in the exchange program is dependent upon the continued affiliation of the time-share plan with the exchange program;

  (6)  Whether the purchaser's membership or participation, or both, in the exchange program is voluntary or mandatory;

  (7)  A complete and accurate description of the terms and conditions of the purchaser's contractual relationship with the exchange company and the procedure by which changes thereto may be made;

  (8)  A complete and accurate description of the procedure to qualify for and effectuate exchanges;

  (9)  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 exchange program, a clear description of the manner in which they are applied;

  (10)  Whether exchanges are arranged on a space available basis and whether any guarantees of fulfillment of specific requests for exchanges are made by the exchange program;

  (11)  Whether and under what circumstances an 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;

  (12)  The fees or range of fees for participation by owners in the exchange program, a statement whether any such fees may be altered by the exchange company, and the circumstances under which alterations may be made;

  (13)  The name and address of the site of each time-share property, accommodation or facility which is participating in the exchange program;

  (14)  The number of units in each property participating in the exchange program which are available for occupancy and which qualify for participation in the exchange program, expressed within the following numerical groupings: 1-5, 6-10, 11-20, 21-50, and 51 and over;

  (15)  The number of owners with respect to each time-share plan or other property which are eligible to participate in the exchange 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 owners who are currently eligible to participate in the exchange program;

  (16)  The disposition made by the exchange company of time-shares deposited with the exchange program by owners eligible to participate in the exchange program and not used by the exchange company in effecting exchanges;

  (17)  The following information, which, except as provided in subsection 2 of this section, 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 Accountants and reported for each year no later than July first of the succeeding year, beginning no later than July 1, 1986:

  (a)  The number of owners enrolled in the exchange program.  Such numbers shall disclose the relationship between the exchange company and owners as being either fee paying or gratuitous in nature;

  (b)  The number of 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 association and the exchange company and those having solely a contractual relationship between the exchange company and owners directly;

  (c)  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;

  (d)  The number of time-shares for which the exchange company has an outstanding obligation to provide an exchange to an owner who relinquished a time-share during the year in exchange for a time-share in any future year;

  (e)  The number of exchanges confirmed by the exchange company during the year;

  (18)  A statement in boldfaced type to the effect that the percentage described in paragraph (c) of subdivision (17) of this subsection 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/owner's probabilities of being confirmed to any specific choice or range of choices, since availability at individual locations may vary.

  2.  The information required by subsection 1 of this section shall be accurate as of a date which is no more than thirty days prior to the date on which the information is delivered to the purchaser; except that, the information required by subdivisions (2), (3), (13), (14), (15) and (17) of subsection 1 of this section shall be accurate as of December thirty-first of the preceding year if the information is delivered between July first and December thirty-first of any year; information delivered between January first and June thirtieth of any year shall be accurate as of December thirty-first of the year prior to the preceding year.  At no time shall such information be accurate as of a date which is more than eighteen months prior to the date of delivery.  All references in this subsection to the word "year" shall mean calendar year.

  3.  In the event an exchange company offers an exchange program directly to the purchaser or owner, the exchange company shall deliver to each purchaser or owner, simultaneously with such offering and prior to the execution of any contract between the purchaser or owner and the exchange company, the information set forth in subsection 1 of this section.  The requirements of this subsection shall not apply to any renewal of a contract between an owner and an exchange company.

  4.  Each exchange company shall include the statement set forth in subdivision (18) of subsection 1 of this section on all promotional brochures, pamphlets, advertisements, or other materials disseminated by the exchange company which also contain the percentage of confirmed exchanges described in paragraph (c) of subdivision (17) of subsection 1 of this section.

  5.  An exchange company shall, on or before July first of each year, file with the attorney general and secretary of the association for the time-share plan in which the time-shares are offered or disposed, the information required by subsection 1 of this section with respect to the preceding year.  If the attorney general determines that any of the information supplied fails to meet the requirements of this section, the attorney general may undertake enforcement action against the exchange company in accordance with the provisions of sections 407.600 to 407.630.  No developer shall have any liability arising out of the use, delivery or publication by the developer of written information provided to it by the exchange company pursuant to this section.  Except for written information provided to the developer by the exchange company, no exchange company shall have any liability with respect to any representation made by the developer relating to the exchange program or exchange company; or the use, delivery or publication by the developer of any information relating to the exchange program or exchange company.  The failure of the exchange company to observe the requirements of this section, or the use by it of any unfair or deceptive act or practice in connection with the operation of the exchange program, shall be a violation of sections 407.600 to 407.630.

  6.  The offering of an exchange program in this state in conjunction with the offer or sale of time-shares in this state shall not constitute a security under the laws of this state.

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(L. 1985 H.B. 96, et al.)

Effective 5-31-85