Title 11A. Maryland Real Estate Time-Sharing Act — Subtitle 1

“Developer” means any person in the business of creating or disposing of that person’s time-shares in time-share projects.

“Developer” does not include an association reselling time-shares acquired by the association:

Time–shares may be created in any unit in existence before January 1, 1985, unless prohibited by a project instrument. If time–shares are not prohibited by the project instrument, the owners of at least 34 percent of the units in the project may sign and record a document among the land records of the county where the project is located, stating an intent to limit time–shares in the project, and referring to this section. Thereafter, no person or other entity may become a developer with respect to more than 1 unit in the project, but this limitation will not apply to units of which the developer was owner of record prior to the recording of the aforementioned document.

The time-share instrument for a time-share estate project shall provide for a period of time, to be called the “developer control period”, during which the developer or a managing entity selected by the developer shall manage and control the time-share project.

The developer shall be responsible for common expenses during the developer control period. Occupancy expenses shall be allocated only to the time-share estate owners. Nothing shall preclude the developer, during the developer control period, from collecting a periodic charge from the time-share estate owners for the payment of occupancy expenses. However, any such funds received and not spent or any other funds received and allocated to the benefit of the association, shall be transferred to the association by the developer immediately upon termination of the developer control period.

Upon termination of the developer control period, the association shall be responsible for time-share expenses except that the developer shall be responsible for common expenses associated with his proportionate share of the time-share project. However, no time-share expense, dues, or assessment levied by the association shall discriminate against the developer.

Termination of leases and contracts for goods and services entered into during the developer control period. Any such contract shall become voidable at the option of the association no later than 2 years after the developer sells the first time-share estate in the project; and

A regular accounting by the developer to the association of matters that significantly affect the interest of time-share estate owners.

The termination agreement may provide for the sale of time-share units and designate a trustee to effect a sale so long as the proceeds of the sale are distributed to individual time-share owners less a sales commission of 5 percent and reasonable sales expenses to be paid to the trustee. On the termination date, the interests of a time-share owner vests in the trustee for the benefit of owners. Proceeds from a sale shall be distributed in the normal order of priority to creditors, lienholders, and to time-share owners in proportion to their shares as provided in the termination agreement or as provided in paragraph (4) of this subsection if the termination agreement does not establish proportionate shares.

On or after the termination date, any owner of a time-share may maintain an action for partition or for allotment or sale in lieu of partition.

Except as otherwise provided in the termination agreement, a time-share owner’s right to occupy a time-share unit continues until the termination sale occurs.

If the termination agreement does not specify the respective time-share owner shares in the time-share project, within 180 days prior to the termination date an appraisal must be made of the fair market value of each time-share as of the date of the termination sale by an appraiser designated in the termination agreement or by the trustee. The appraisal shall be sent to each time-share owner. The appraisal determines the value of each time-share owner’s interest unless at least 25 percent of the owners disapprove in writing within 60 days after the appraisals are sent or the final judgment of a court prevents the appraisal from being used to determine a value.

Establish a later termination date or decide that there will be no termination date; and

Provide that on or after the original termination date as set forth in the time-share instrument, a time-share owner shall continue to:

Institute, defend, or intervene in litigation or other legal proceedings in its own name on behalf of itself or 2 or more time–share owners on matters affecting time–shares, time–share units, or the time–share project;

Adopt and amend reasonable rules and regulations;

Indemnify its directors and officers and maintain directors’ and officers’ liability insurance with respect to the time–share project;

Impose charges for late payments of assessments and, after notice and an opportunity to be heard, levy reasonable fines for violation of the time–share instrument, bylaws, and rules and regulations of the time–share project; and

Exercise any other powers necessary and proper for the governance and operation of the time–share project.

The association shall maintain and make available on written request to a member in good standing of the association at reasonable cost, a list of the names and addresses of all members.

A list provided to a member under paragraph (1) of this subsection:

At any special meeting held under this subsection, any action may be taken by simple majority vote, including amendment of the association’s articles of incorporation or bylaws.

The lien is perfected upon recordation of a claim of lien, with respect to the time-share estate, among the land records of the county in which the time-share unit is situate, or with respect to the time-share license, among the financing records in the county in which the time-share unit is situated. The claim of lien shall state the description of the time-share unit, the name of the record owner, the amount due, and the period for which the assessment was due. The claim of lien shall also state that notice of intent to perfect the lien, giving the time-share owner an opportunity to dispute the amount of the assessment, was sent to the last known address of the owner not less than 10 days prior to recordation. The claim of lien shall be signed and verified by an officer or agent of the association. On full payment of the assessment and other permitted amounts for which the lien is claimed, the unit owner shall be entitled to a recordable satisfaction of the lien in any form used for the release of mortgages in the county in which the condominium is located. Fees and charges imposed under this section are enforceable as assessments under this section.

A lien for unpaid assessments is extinguished unless proceedings to enforce the lien are instituted within 3 years after the assessments become payable.

An action may not be brought to foreclose a lien except after 10-days’ written notice to the time-share owner given by registered mail, return receipt requested, to the last known address of the owner. Notice shall be deemed given even if delivery of the letter is refused by the addressee or any co-owner of the time-share.

A judgment or decree in any action brought under this section may include costs and reasonable attorney’s fees for the prevailing party.

A person who has a duty to make assessments for time-share expenses shall furnish a time-share owner upon written request as often as quarter annually a recordable statement setting forth the amount of unpaid assessments currently levied against his time-share. The statement shall be furnished within 10 business days after receipt of the request and is binding in favor of persons reasonably relying thereon.

Prior to the sale of any time-share, and while there exist any time-shares, the managing entity shall maintain for the benefit of the developer, association, and owners property insurance on the time-share project and any personal property available for use by time-share owners, other than personal property separately owned by a time-share owner, insuring against all risks of direct physical loss commonly insured against, in a total amount, after application of any deductibles, of not less than 80 percent of the actual cash value of the insured property, exclusive of land excavations, foundations, and other items normally excluded from property policies.

If such a policy is reasonably obtainable, the policy shall provide that the insurer shall waive its right to subrogation under the policy against any time-share owner or members of his household.

No act or omission by any time-share owner, unless acting within the scope of his authority on behalf of an association, shall void the policy or be a condition to recovery by any other person under the policy.

If, at the time of a loss under the policy, there is other insurance in the name of a time-share owner covering the same risk covered by the policy, the policy maintained pursuant to this section is primary insurance not contributing with the other insurance, and other insurance in the name of a time-share owner applies only to loss in excess of the primary coverage.

A surplus of proceeds after the property has been repaired or restored; or

The project is terminated.

Except to the extent that a project instrument requires otherwise and to the extent of the proceeds available, any portion of the time-share project damaged or destroyed shall be repaired or replaced promptly by the managing entity unless:

The cost of repair or replacement in excess of insurance proceeds and reserves shall be a time-share expense.

If the entire time-share project need not be repaired or replaced, unless the time-share instrument provides otherwise:

A public offering statement together with a fee equal to $1 for each time-share to be offered for sale, not to exceed $500, must be filed with, and approved by, the Secretary of State prior to being delivered to any time-share purchaser. The Secretary of State shall determine whether the public offering statement satisfies the requirements of this title, and shall either approve or reject within 45 days of receipt. After approval, the Secretary of State shall promptly issue an order of approval. If the Secretary of State rejects a public offering statement, he shall promptly issue a written order stating the reasons for rejection. The Secretary of State’s failure to act within 45 days of receipt shall be deemed an approval of the public offering statement. A developer may consent in writing to an extension of the review period for approval or rejection.

Rejection of a public offering statement shall not act as a bar to reapplication. A reapplication which amends the original statement to comply with the stated reasons for rejection and which is accomplished by an additional fee of $100 shall be approved by the Secretary of State upon determination that the amended public offering statement satisfies the requirements of this title.

A developer shall file copies of any changes to the information required by this section. Those changes must be approved by the Secretary of State before the changes are distributed to the public.

The Secretary of State shall either approve or reject the changes within 10 days of receipt. The Secretary of State’s failure to act within said 10 days shall be deemed an approval of such changes.

The Secretary of State may adopt any regulations necessary to implement and enforce this section.

The Secretary of State may prescribe forms and procedures for submitting public offering statements.

The Secretary of State shall require the applicant to identify all persons who prepared any part of the public offering statement.

A cover page stating only:

A summary of all statements required to be in conspicuous type in all exhibits to the offering statement;

A separate index of the contents and exhibits of the public offering statement;

A description of the time-share plan, including:

If the time-share owners are to be permitted or required to become members of or to participate in any exchange program, a statement containing the information set forth in § 11A-120 of this title.

At any time that a time-share project is registered with the Securities and Exchange Commission of the United States, a developer satisfies all requirements relating to the preparation of a public offering statement under this section if he delivers to the time-share purchaser and files with the Secretary of State and the Commission a copy of the public offering statement filed with the Securities and Exchange Commission if that contains substantially the same information as is required in a public offering statement under this title.

The mere offering of a time-share or the offering of an exchange program in conjunction with the offering or sale of a time-share in this State shall not constitute a security under the laws of this State.

If there is no out-of-state agency where the time-share is located that has approved the public offering statement, the application for registration of the out-of-state time-share shall consist of the public offering statement described under this section and the application form prescribed by the Secretary of State.

The developer of a time-share project 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-share in a conversion building, shall give each of the residential tenants and any residential subtenant in possession of each proposed time-share unit notice of the conversion no later than 120 days before such developer will require the tenants and any subtenant in possession to vacate. 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 the tenant or subtenant.

No tenant or subtenant may be required by the developer to vacate upon less than 120 days’ notice, except by reason of nonpayment of rent, waste, normal expiration of the term of the lease, or conduct that disturbs other tenants’ peaceful enjoyment of the premises, and the terms of the tenancy may not be altered during that period without the consent of the tenant or subtenant. Failure to give notice as required by this subsection is a defense to an action for possession.

The contract date;

The day on which the time-share purchaser received the last of all documents required to be provided as part of the public offering statement; or

The time-share unit meets all building requirements and is ready for occupancy. However, if the developer obtains a payment and performance bond from a surety to insure completion of the project as represented in the public offering statement and contract of sale, and files the bond with the Commission, this item does not apply.

Through foreclosure of a lien for nonpayment of assessments or other charges by a time-share owner as provided in § 11A-110 of this title; or

By deed in lieu of foreclosure from a time-share owner who is delinquent in payment of assessments or other charges as provided in § 11A-110 of this title.

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;

A statement setting forth the amount of the periodic time-share expense liability and any unpaid time-share expense or other sums currently due and payable from the selling time-share owner in respect of the time-share;

A statement of any other facility fees payable by time-share owners; and

A statement of any judgments or other matters that are or may become liens against the time-share being sold or the time-share unit of which it is a part and the status of any pending suits that may result in those liens.

In this section, “purchase money” includes any money, note, security, or other monetary consideration paid by a purchaser for a time–share.

All purchase money received by or on behalf of a developer from a purchaser for the purchase or reservation of a time–share shall be deposited in an escrow account designated solely for that purpose with a financial institution whose accounts are insured by a government agency until the expiration of the time for cancellation or any later time provided in the contract.

After the expiration of the cancellation period or that provided in the contract, if no notice of cancellation is received, such funds or instruments may be released as provided in subsection (b).

The conveying of good and merchantable title to the time–share estate or the granting of an unencumbered right to use the time–share project pursuant to a time–share license;

The return of the purchase money to the purchaser; or

The forfeiture of the purchase money by the purchaser, under the terms of the contract.

Zero to $200,000                 $ 100,000

$200,001 to $500,000              200,000

$500,001 to $1,000,000              500,000

Over $1,000,000                  1,000,000

The amount of purchase money from sales of time–shares held at any one time by the time–share developer shall not exceed the amount for which the developer is bonded in accordance with the schedule set forth in this section.

If a developer is required to be bonded with respect to more than one project that the developer owns or controls, directly or indirectly, the developer shall obtain a separate bond in the appropriate penalty amount for the purchase money held on each project which becomes registered with the Commission on or after July 1, 1987.

Compliance and enforcement of the specific provisions are impractical or impossible;

The laws of the state or country in which the time–share project is located require escrow or bonding protection for purchases of time–shares, and the developer has complied with such law; or

Any other reason the Commission finds relevant to permitting an alternative arrangement.

In addition to the implied warranties set forth in Section 10–203 of this article, there is an implied warranty from the developer to the association that the developer will correct any defect in material or workmanship in the common elements, including the roof, foundation, external and bearing walls, mechanical, electrical, and plumbing systems, and other structural elements of the common elements, and that the common elements are within acceptable industry standards in effect when such common elements were constructed.

The warranty of this subsection commences when a given common element is completed or when it is made available to a time–share purchaser, whichever shall later occur, and shall continue for a period of 3 years.

A suit for enforcement of a warranty may be brought by a time–share owner or by the association. If any warranty is breached, the court may award legal or equitable relief, or both.

Notice of a defect shall be given within the warranty period and suit for enforcement shall be brought within 1 year of the end of the warranty period.

The date the contract is executed by each party;

The name and address of the developer;

The total financial obligation of the purchaser, including the initial purchase price and any additional charges, time-share expenses, or facility fees;

A description of the time-share period being sold, including whether any interest in real property is being conveyed and the number of years constituting the term of the time-share plan;

The estimated date of completion of construction of each unit or common element which is not completed at the time the sales contract is executed; and

Immediately before the space for the signature of the purchaser, in conspicuous type, subject to the provisions of § 11A-114(a)(3), the following statements are to be inserted:

Contain any representation as to the availability of a resale program or rental program offered by or on behalf of the developer unless the resale program or rental program has been made a part of the offering and submitted to the Commission;

Contain an offer or inducement to purchase which purports to be limited as to quantity or restricted as to time unless the numerical quantity or time applicable to the offer or inducement is clearly and conspicuously disclosed;

Contain statements concerning the availability of time-shares at a particular minimum price if the number of time-shares available at that price comprises less than 10 percent of the unsold inventory of the developer, unless the number of time-shares then for sale at the minimum price is set forth in the advertisement;

Contain any statement that the time-shares being offered for sale can be further divided unless a full disclosure of the legal requirements for further division of the time-share is included;

Contain any asterisk or other reference symbol as a means of contradicting or changing the ordinary meaning of any previously made statement in the advertisement;

Misrepresent the size, nature, extent, qualities, or characteristics of the accommodations or facilities which comprise the time-share project;

Misrepresent the nature or extent of any services incident to the time-share project;

Misrepresent or imply that a facility or service is available for the exclusive use of purchasers or owners if a public right of access or of use of the facility or service exists;

Make any misleading or deceptive representation with respect to the contents of the time-share instrument, the sales contract, or this title;

Misrepresent the conditions under which a purchaser or owner may participate in an exchange program;

Describe any proposed or uncompleted private facilities over which the developer has no control unless the estimated date of completion is set forth and evidence has been presented to the Commission that the completion and operation of the facilities are reasonably assured within the time represented in the advertisement; or

Describe or portray any improvement which is not required to be built unless the description or portrayal of the improvement is conspicuously labeled or identified as “need not be built”.

The name and address of the exchange company;

The names of all officers, directors, and shareholders holding more than 10 percent of the voting stock of the exchange company;

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

Whether the purchaser’s participation in the exchange program is dependent upon the time-share project’s continued affiliation with the exchange program;

That the purchaser’s participation in the exchange program is voluntary;

The terms and conditions of the purchaser’s contractual relationship with the exchange program, and the procedure by which changes may be made;

The procedure to qualify for and effectuate exchanges;

All limitations, restrictions, or priorities employed in the operation of the exchange program, including limitations on exchanges based on season, unit size, or levels of occupancy, expressed in bold-faced type; and in the event that such limitations, restrictions, or priorities are not uniformly applied by the exchange program, the manner in which they are applied;

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;

Whether and under what circumstances a purchaser may, in dealing with the exchange program, lose the use and occupancy of his time-share period in any properly applied for exchange without being provided with substitute accommodations by the exchange program;

The fees for participation by purchasers in the exchange program, whether any such fees may be altered by the exchange company, and the circumstances under which alterations may be made;

The name and address of the site of each accommodation or facility in the time-share projects participating in the exchange program;

The number of time-share units in each participating time-share project which are available for occupancy expressed within the following numerical groupings: 1-5; 6-10; 11-20; 21-50; 51 and over;

The number of currently enrolled purchasers at each time-share project participating in the exchange program, expressed within the following numerical groupings: 1-100; 101-249; 250-499; 500-999; 1,000 and over; and a statement of the criteria used to determine those purchasers who are currently enrolled in the exchange program;

The disposition made by the exchange company of time-share periods deposited with the exchange program by purchasers enrolled in the exchange program and not used by the exchange company in effecting exchanges;

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 Accountants, and reported on an annual basis on or before July 1 of the succeeding year but prepared not more than 18 months before the information is delivered:

A statement in bold-faced type to the effect that the percentage described in paragraph (16)(iii) of this subsection is a summary of the exchange requests entered with the exchange program 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.

A developer may not offer a time-share to the public until the developer has received a certificate of registration as a time-share developer.

Every application for registration shall be on a form prepared by the Commission and shall provide such information as may be reasonably required by the Commission. The developer shall file with the Commission the following documents and information:

A registration application may not be approved until the applicant has:

The Commission shall approve or disapprove the application within the later to occur of 30 days after receipt of all required information or 5 days after approval by the Secretary of State of the public offering statement. Should the application be disapproved, a hearing shall be afforded the applicant in conformance with § 17-324 of the Business Occupations and Professions Article. Approved registrations shall expire on the 30th day of April in each even numbered year or on such other day as the Commission may designate.

Failed to comply with a cease and desist order issued by the Commission;

Concealed, diverted, or disposed of any funds or assets of any person in a manner impairing rights of purchasers of those time-shares;

Failed to perform any stipulation or agreement made to induce the Commission to issue an order relating to those time-shares;

Misrepresented or failed to disclose a material fact in the application for registration;

Failed to meet any of the requirements for registration;

Violated any provisions of this title; or

Committed an unfair or deceptive trade practice.

Subject to the provisions of paragraph (2) of this subsection, the Commission may order summarily the suspension of the registration of a developer if the developer:

The Commission may order summarily a suspension under this subsection only if it gives the developer:

A summary suspension ordered by the Commission under this subsection:

Each registered developer shall file with the Commission an annual report to update any information contained in the application for registration.

If an annual report reveals that a developer owns or controls time-shares representing less than 25 percent of the total time-shares in the time-share project and that a developer has no power to increase the number of time-shares he owns or controls, the Commission shall issue an order relieving the developer of any further obligation to file annual reports. Thereafter, so long as the developer is offering any time-shares for sale, the Commission has jurisdiction over the developer’s activities, but has no other authority to regulate the time-shares.

The Commission, after notice and hearing, may levy a civil penalty against a developer of not more than $1,000 for any violation by the developer of this section or § 11A–112, § 11A–113, § 11A–114, § 11A–116, § 11A–118, § 11A–119, § 11A–120, or § 11A–124 of this title.

In determining the amount of the penalty, the Commission shall give due consideration to:

The Commission may initiate investigations to determine whether any representation in any document or information filed with the Commission is false or misleading or whether any person has engaged, is engaging, or is about to engage in any unlawful act or practice.

In the course of any investigation or hearing, the Commission may subpoena witnesses and documents, administer oaths and affirmations, and adduce evidence. If a person fails to comply with a subpoena or to answer questions propounded during the investigation or hearing, the Commission may apply to an appropriate court to secure compliance.

If the applicant or developer fails to demonstrate financial solvency, the Commission may deny an application for a certificate of registration or revoke a certificate of registration already granted.

The Commission may adopt regulations under paragraph (1) of this subsection requiring an applicant or developer to:

Performs only clerical tasks;

Merely arranges appointments induced by others; or

Only prepares or distributes promotional materials.

The requirements of §§ 11A–102, 11A–103, 11A–104, 11A–105, 11A–106, 11A–107, 11A–108, 11A–109, 11A–110, 11A–111, 11A–115, and 11A–117 of this title apply only to projects located in this State.

The requirements of §§ 11A–112, 11A–113, 11A–114, 11A–116, 11A–118, 11A–119, 11A–120, 11A–121, 11A–122, 11A–124, and 11A–125 of this title apply to any developer required to register under this title with the Commission, whether or not the project is located in this State.

On the request of the owners of at least 5 percent of the time-shares, the association, or developer during the developer control period, shall cause an audit of the books and records to be made by an independent certified public accountant at common expense.

An audit may not be required more than once in any consecutive 12-month period.

Discussion of matters pertaining to employees and personnel;

Protection of the privacy or reputation of individuals in matters not related to the council of unit owners’ business;

Consultation with legal counsel;

Consultation with staff personnel, consultants, attorneys, or other persons in connection with pending or potential litigation;

Investigative proceedings concerning possible or actual criminal misconduct;

Complying with a specific constitutional, statutory, or judicially imposed requirement protecting particular proceedings or matters from public disclosure; or

On an individually recorded affirmative vote of two-thirds of the board members present, for some other exceptional reason so compelling as to override the general public policy in favor of open meetings.

An action may not be taken and a matter may not be discussed if it is not permitted by subsection (d) of this section; and

A statement of the time, place, and purpose of any closed meeting, the record of the vote of each board member by which any meeting was closed, and the authority under this section for closing any meeting shall be included in the minutes of the next meeting of the board of directors.