Vacation Ownership and Time-share Act of 2004: incentives.

(1) Existing law, the Vacation Ownership and Time-share Act of 2004 (VOTA) , requires a person who sells a time-share interest or creates a time-share plan to register the time-share plan with the Real Estate Commissioner, except as specified. Existing law obligates a developer of a time-share plan for the expenses associated with unsold inventory and authorizes a developer of a time-share plan to satisfy that obligation by, among other methods, entering into a deficit subsidy agreement with an association, subject to certain requirements. Existing law also authorizes a developer to undertake to pay a portion of the assessments otherwise payable by each purchaser pursuant to a buy down subsidy contract with the association, as specified. Existing law requires the developer to furnish an assurance, or security, to ensure the fulfillment of the developer's obligations pursuant to those provisions. Existing law requires a deficit subsidy agreement or buy down subsidy agreement entered into after July 1, 2005, to provide that if there is a dispute between the parties, the issue shall be submitted to arbitration in accordance with the Commercial Arbitration Rules of the American Arbitration Association. Existing law also provides that, if there is a dispute between the developer and the association with respect to the questions of satisfaction of the conditions for exoneration or release of the security, the issue be submitted to arbitration in accordance with the Commercial Arbitration Rules of the American Arbitration Association. This bill would authorize the issue to be submitted to arbitration in accordance with the rules of another third-party arbitration organization selected by the parties and in accordance with existing provisions governing arbitration. (2) Existing law requires a contractual provision for a determination by arbitration that the developer is entitled to a disbursement or charge against purchase money as liquidated damages to be conducted in accordance with procedures that are equivalent in substance to the Commercial Arbitration Rules of the American Arbitration Association. This bill would authorize that contractual provision for a determination by arbitration to be conducted in accordance with procedures that are equivalent in substance to another third-party arbitration organization selected by the parties and in accordance with existing provisions governing arbitration. (3) Existing law requires a time-share instrument for certain time-share plans to contain a termination provision that includes a provision for arbitration in accordance with the Commercial Arbitration Rules of the American Arbitration Association, subject to certain conditions and requirements. This bill would authorize those provisions to specify arbitration in accordance with the rules of another third-party arbitration organization selected by the parties and in accordance with existing provisions governing arbitration. (4) Under existing law, specified acts, when used as part of an advertising plan or program, are considered deceptive and constitute unfair trade practices, including requesting a recipient, in order to utilize an incentive, to pay money to a person or entity named or referred to in the offer, or to purchase, rent, or otherwise pay that person or entity for any product or service. Under existing law, this prohibition does not apply to specified incentives to stay at a hotel or other resort, if certain conditions are met, including that the accommodations to be occupied by the recipient of the incentive are within a 20-mile radius of the property on which the accommodations offered for sale are located. VOTA prohibits various deceptive activities in connection with the advertising and promotion of time-share plans, including offering certain travel-related incentives unless the offeror states the terms and conditions to utilize the incentive, as specified. This bill would authorize a person subject to VOTA to offer temporary accommodations to a prospective purchaser of a time-share interest located beyond a 20-mile radius of the property on which the time-share interest offered for sale is located if the prospective purchaser has received prior written notice of the location of the temporary accommodations being offered as an incentive and an estimated travel time from the temporary accommodation to the property on which the time-share interest offered for sale is located and has consented to that location. The bill would repeal this provision on January 1, 2023.