Current through Register Vol. 46, No. 39, September 25, 2024
(a)
Applicability.
The offering statement or "offering plan" required by
section
352-e of
the General Business Law ("GBL") for a timesharing plan is subject to this
Part. Offerings subject to this Part are not subject to any other Part. Resales
by individual purchasers of individual timeshare units are not subject to the
filing requirements of section 352-e of the GBL. In projects which are
otherwise fully sold out, resales by sponsor of units upon which the sponsor
has foreclosed are not subject to the filing requirements of section 352-e of
the GBL.
(b)
Standard
of compliance.
An offering plan must, at a minimum:
(1) contain in detail the terms of the
transaction and be complete, current and accurate;
(2) afford potential investors, purchasers
and participants an adequate basis upon which to found their
judgment;
(3) not omit any material
fact;
(4) not contain any untrue
statement of a material fact;
(5)
not contain any fraud, deception, concealment, suppression, false pretense or
fictitious or pretended purchase or sale;
(6) not contain any promise or representation
as to the future which is beyond reasonable expectation or unwarranted by
existing circumstances; and
(7) not
contain any representation or statement which is false, where the sponsor or
the person who made such representation or statement;
(i) knew the truth;
(ii) with reasonable effort could have known
the truth;
(iii) made no reasonable
effort to ascertain the truth; or
(iv) did not have knowledge concerning the
representation or statement made.
(c)
Definitions.
(1) As used in this Part,
sponsor means any person, partnership, joint venture,
corporation, company, trust, association or other entity which makes or takes
part in a public offering or sale, in or from the State of New York, of
securities consisting primarily of shares or participation interests or
investments in real estate, including cooperative interests in realty. Sponsor
shall not be deemed to include a selling agent who has complied with section
359-e of
the General Business Law or an attorney or other expert retained by the sponsor
solely to render professional advice or opinions in connection with this
offering.
(2) As used in this Part,
principal means all individual sponsors, all general partners
of sponsors that are partnerships, all officers, directors and shareholders of
a corporate sponsor that are actively involved in the planning or consummation
of the offering or who have decision-making authority to act, and all other
individuals who both:
(i) own an interest in
or control the sponsor; and
(ii)
actively participate in the planning or consummation of the offering,
regardless of the form of organization of sponsor.
(3) As used in this Part, timesharing
plan means any arrangement, excluding exchange programs, the primary
purpose of which is to provide each of three or more purchasers with the right
to use and occupy a unit or units for a period of time which is less than a
full year in any particular year at any particular location, and which
continues for a period of more than three years, or which, for nominal
consideration, may be renewed to continue for a period of more than three
years.
(4) As used in this Part,
timeshare means the interest acquired by a purchaser under a
timesharing plan.
(5) As used in
this Part, interval means that period of time during which a
timeshare owner is entitled to the possession and use of a unit.
(6) As used in this Part,
unit means that portion of the real property of a timesharing
plan designated for the exclusive use and occupancy of a timeshare owner during
his or her interval, including but not limited to condominium units,
cooperative apartments, campsites, lots, homes and town houses.
(7) As used in this Part,
fee
timesharing plan means a timesharing plan in which purchasers receive:
(i) a recordable undivided fee-simple
interest in a unit, and any appurtenant interest in common areas, as tenant in
common with the other purchasers of timeshares in that unit;
(ii) a recordable estate-for-years in a unit,
and any appurtenant common areas, with a vested undivided fee-simple interest
in the remainder as tenant in common with the other purchasers of timeshares in
that unit; or
(iii) a recordable
fee-simple interest in a unit, and any appurtenant common areas, for a
particular interval.
(8)
As used in this Part, leasehold timesharing plan means any
timesharing plan in which purchasers receive a recordable leasehold interest in
a unit and any appurtenant interest in common areas.
(9) As used in this Part, cooperative
timesharing plan means a timesharing plan in which purchasers receive
shares in a cooperative corporation which owns or leases the timeshare
property.
(10) As used in this
Part, right-to-use timesharing planmeans any timesharing plan
which is not a fee timesharing plan, a leasehold timesharing plan or a
cooperative timesharing plan.
(11)
Filing means the issuance of a letter from the Attorney
General stating that an offering plan or amendment has been accepted for
filing.
(12)
Digital
copy means a copy that is identical in content to a paper copy except
that it is recorded electronically in read-only .pdf format or other electronic
format that the Department of Law determines to be acceptable. Digital copies
of the plan shall include all the supporting documents included in part II of
the plan. Digital copies of the exhibits to the plan shall include all
documents referenced in section
24.2(c)(4) of
this Part, as applicable. Digital copies of the amendment shall include all
exhibits, back-up documents, and other supplemental documents annexed to the
amendment, as applicable. The Department of Law shall periodically issue a
Guidance Document as defined by State Administrative Procedure Act section
102(14), setting forth particular guidelines and procedures for the submission
of digital copies. Such Guidance Document will be available on the Department
of Law's website, as required by State Administrative Procedure Act section
202(e).
(d)
Time
of review.
After submission of the proposed offering plan for filing,
the Department of Law shall issue a letter to the sponsor or sponsor's
attorney, stating that the plan is filed, or indicating deficiencies. The
Department of Law shall issue such letter for an offering plan subject to this
Part no later than 30 days after the date of submission of the proposed
offering plan. In instances where an amendment to an offering plan is submitted
for filing for an out-of-state timesharing public offering which amendment has
been approved or accepted for filing in the situs state, the Department of Law
shall issue such letter no later than five business days after the date of
submission of the proposed amended offering plan along with evidence of the
approval or acceptance of the amendment by the situs state. The Department of
Law may issue a deficiency letter whenever it appears:
(1) that the department cannot make any
finding mandated by law; or
(2)
that the proposed offering plan is deficient in one or more respects. The
Department of Law may, in its discretion, deem an offering plan or amendment
not submitted if the proposed offering plan, amendment and/or exhibits are
incomplete and therefore do not meet the requirements of section
24.2 or
24.5(b) of this
Part.
(e)
Revisions.
Following submission of a proposed offering plan, revisions
must be made to reflect any material change of fact or circumstances pertaining
to the proposed offering, the offerors, the property involved, the condition of
the premises, or the costs of ownership and operation of the property, so that
the offering plan may continue to comply with subdivision (b) of this section.
Such revisions shall be submitted to the attorney assigned by the Department of
Law to review the proposed offering plan. The Department of Law may issue a
deficiency letter and/or require resubmission of a new offering plan if the
revisions reflect matters of fact or circumstances which were known or should
have been known to the sponsor at the time of original submission, or
substantially change the nature or terms of the offering, or if the plan as
revised comes within the grounds stated in subdivision (d) of this section.
After the offering plan is filed, the plan must be amended periodically as
required by section
24.5 of this Part.
(f)
Statutory
compliance.
Unless expressly provided herein, nothing contained in this
Part shall be construed as limiting the requirements set forth in article 23-A
of the General Business Law.
(g)
Out-of-state timesharing
plans.
A sponsor of a timesharing plan for property located
outside of New York State which makes or takes part in a public offering or
sale, in or from the State of New York of cooperative interests in realty must
file an offering plan with the Department of Law that provides the full and
fair disclosure required by law, including this Part. To comply with this
requirement, the sponsor of an out-of-state plan may file a complete offering
plan drafted in accordance with New York law and this Part. In the alternative,
the Department of Law may allow the sponsor to file the offering plan approved
by or filed with the state or jurisdiction in which the timeshare property is
located or the offering plan for another state where the timeshare is
registered, together with an addendum, containing such additional disclosure as
is required by this Part. The sponsor must represent that the plan complies
with all applicable local laws.
(h)
Exemptions.
(1) Upon written application of the sponsor
or sponsor's attorney, the Department of Law, in its discretion may by ruling
exempt a plan from the application of any provision of this Part where it is
found that enforcement of the provision is not necessary to effectuate the
purposes of the General Business Law or to protect the public interest. The
application shall:
(i) be annexed to and be
submitted with the attorney's transmittal letter;
(ii) set forth the provisions from which the
exemption is sought and the grounds for the exemption; and
(iii) be signed by the sponsor or the
sponsor's attorney.
(2)
The transmittal letter and certifications required by section
24.4 of this Part shall be in the
form required by this Part, without modification, and shall be based on the
assumption that any exemption sought pursuant to this section has been granted.
In the event that the Department of Law denies the application for exemption,
the Department of Law shall issue a deficiency letter as provided in
subdivision (d) of this section. No additional fee is required for an exemption
application.
(i)
Exemption from General Business Law, section 359-e.
A cooperative corporation whose shares are to be sold
pursuant to an offering plan filed with the Department of Law is deemed
exempted from the registration requirements of General Business Law, section
359-e, provided that all offering activities are engaged in exclusively by
persons duly registered under the filing requirements of General Business Law,
section 359-e. No application for exemption need be filed by a cooperative
corporation exempted under this subdivision.
(j)
Effectiveness of
regulations.
(1) This Part is effective
immediately for timeshare offering plans submitted to the Department of Law
after the effective date of this Part (January 29, 1985).
(2) This Part is effective immediately for
timeshare offering plans submitted to the Department of Law but not accepted
for filing on the effective date of this Part.
(3) Section
24.5 of this Part is effective
immediately for amendments (to timeshare offering plans which were accepted for
filing by the Department of Law before or after the effective date of this
Part) submitted to the Department of Law after the effective date of this Part,
or submitted to the Department of Law but not accepted for filing on the
effective date of this Part.
(4)
Section 24.6 of this Part is effective
immediately for advertisements of timeshare offering plans which were accepted
for filing by the Department of Law before the effective date of this
Part.
(k)
Abandonments, terminations and withdrawals.
If the offering plan is withdrawn or terminated prior to
filing, or is abandoned after filing, the sponsor shall execute and file form
RS-3 promulgated by the Attorney General within five business days thereafter.
If payments have been received, an accounting of the disposition of all funds
received shall be included in form RS-3. The sponsor shall concurrently send
written notice of abandonment to all purchasers, along with a full refund, and
to all offerees who have arranged with the sponsor to visit the timeshare
property in response to any advertising or promotional program.
(l)
Disclaimers.
The requirements set forth in section
24.3 of this Part apply to the
offering plan generally, and shall not be negated or contradicted by
inconsistent provisions in other portions of the offering plan, or by
provisions purporting to discharge liability or to terminate the continuing
effect of representations in the offering plan upon an event such as the
closing or the delivery of shares with the proprietary lease. Disclaimer
provisions, either direct, or indirect through stated reliance on an expert
with respect to factual matters required to be represented or set forth in the
offering plan, may not be included except as and to the extent permitted in
this Part.
