H*2500 Session 104 (1981-1982)
H*2500(Rat #0156, Act #0106 of 1981) General Bill, By
House Labor, Commerce and Industry
A Bill 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 on
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 examination 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, accomodations 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 Recovery
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.-at
03/04/81 House Introduced, read first time, placed on calendar
without reference HJ-904
04/23/81 House Debate adjourned HJ-2035
04/23/81 House Reconsidered HJ-2044
04/23/81 House Amended HJ-2044
04/23/81 House Read second time HJ-2053
04/28/81 House Read third time and sent to Senate HJ-2072
04/28/81 Senate Introduced and read first time SJ-15
04/28/81 Senate Referred to Committee on Judiciary SJ-15
05/20/81 Senate Committee report: Favorable with amendment
Judiciary SJ-16
05/27/81 Senate Amended SJ-28
05/27/81 Senate Read second time SJ-28
05/27/81 Senate Ordered to third reading with notice of
amendments SJ-28
05/28/81 Senate Read third time SJ-14
05/28/81 Senate Returned SJ-14
06/02/81 House Concurred in Senate amendment and enrolled HJ-2781
06/10/81 House Ratified R 156 HJ-3168
06/15/81 Signed By Governor
06/15/81 Effective date 06/15/81
06/15/81 Act No. 106
06/25/81 Copies available
(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. |