BILL ANALYSIS Ó
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|SENATE RULES COMMITTEE | AB 634|
|Office of Senate Floor Analyses | |
|(916) 651-1520 Fax: (916) | |
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THIRD READING
Bill No: AB 634
Author: Calderon (D)
Amended: 8/2/16 in Senate
Vote: 21
SENATE JUDICIARY COMMITTEE: 7-0, 6/28/16
AYES: Jackson, Moorlach, Anderson, Hertzberg, Leno, Monning,
Wieckowski
ASSEMBLY FLOOR: 79-0, 5/11/15 - See last page for vote
SUBJECT: Vacation ownership and time-shares: owners list
SOURCE: American Resort Development Association
DIGEST: This bill amends the Vacation Ownership and Time-Share
Act of 2004 (VOTA) to prohibit a time-share owner's association
from publishing its list of owners or providing a copy of that
list to any time-share interest owner or to any third party, or
from using or selling the list for commercial purposes. This
bill requires the association to provide a copy of the list to
an owner for a purpose reasonably related to membership in the
association, as specified, and enacts procedures to govern the
processing of requests to receive copies of the list.
ANALYSIS:
Existing law:
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1)States, subject to specified restrictions, that a member of a
nonprofit mutual benefit corporation may do either of the
following:
inspect and copy the record of all the members' names,
addresses and voting rights, at reasonable times, upon five
business days' prior written demand upon the corporation
which demand shall state the purpose for which the
inspection rights are requested; or
obtain from the secretary of the corporation, upon
written demand stating the purpose for which the list is
requested and tender of a reasonable charge, a list of the
names, addresses and voting rights of those members
entitled to vote for the election of directors, as of the
most recent record date for which it has been compiled or
as of a date specified by the member subsequent to the date
of demand. (Corp. Code Sec. 8330(a).)
1)Specifies that the rights set forth in the above provision may
be exercised by any member, for a purpose reasonably related
to such person's interest as a member. Existing law specifies
that where the corporation reasonably believes that the
information will be used for another purpose, it may deny the
member access to the list. (Corp. Code Sec. 8330(b).)
2)Permits the corporation to deliver to the person or persons
making the demand a written offer of an alternative method of
achieving the purpose identified in said demand without
providing access to or a copy of the membership list, provided
the alternative method reasonably and in a timely manner
accomplishes the proper purpose set forth in the demand.
(Corp. Code Sec. 8330(c).)
3)Regulates, under VOTA, the creation and sale of time-share
interests in a time-share plan, and the creation and operation
of exchange programs that facilitate the voluntary exchange of
time-share interests. (Bus. & Prof. Code Sec. 11210 et seq.)
4)States that the books of account, minutes of members and
governing body meetings, and all other records of the
time-share plan maintained by the association or the managing
entity shall be made available for inspection and copying by
any member, or by his or her duly appointed representative, at
any reasonable time for a purpose reasonably related to
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membership in the association. (Bus. & Prof. Code Sec.
11273(a).)
5)Specifies that the records shall be made available for
inspection at the office where the records are maintained.
Upon receipt of an authenticated written request from a member
along with the fee prescribed by the governing body to defray
the costs of reproduction, existing law directs the managing
entity or other custodian of records of the association or the
time-share plan to prepare and transmit to the member a copy
of any and all records requested. (Bus. & Prof. Code Sec.
11273(b).)
6)Provides that every governing body member shall have the
absolute right at any time to inspect all books, records, and
documents of the association and all real and personal
properties owned and controlled by the association. (Bus. &
Prof. Code Sec. 11273(d).)
7)Requires the association to maintain among its records a
complete list of the names and addresses of all owners of
time-share interests in a time-share plan. Existing law
provides that the association shall update this list no less
frequently than every six months, and that unless otherwise
provided in the time-share instruments, the association may
not publish this owner's list or provide a copy of it to any
time-share interest owner or to any third party or use or sell
the list for commercial purposes. (Bus. & Prof. Code Sec.
11273(e).)
This bill:
1)Provides that the association shall not publish the list of
names and mailing addresses of owners of time-share interests
in the time-share plan or provide a copy of it to any third
party, or use or sell the list for commercial purposes.
2)States that the association shall provide a copy of the list
to a member for a purpose reasonably related to membership in
the association, unless the association reasonably believes
that the recipient of the list will use the list for another
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purpose or provide a copy or disclose the contents to another
party.
3)States that if an owner of a time-share interest in the
time-share plan makes a request to the association to
communicate by mail with the membership of the association for
a purpose reasonably related to membership in the association,
and the board of administration of the association or the
managing entity determines that the mailing pertains to a
purpose reasonably related to membership in the association,
the requested mailing shall be made within 30 days after
receipt of a request and payment by the owner of actual costs.
If the board or managing entity determines that the requested
mailing does not pertain to a purpose reasonably related to
membership in the association, the board or the managing
entity shall, within 30 days after receipt of the request,
notify the requesting owner in writing and shall indicate the
reasons for the rejection.
4)Requires the association to make a good faith effort to
minimize the costs of the mailing, including the use of a less
expensive delivery method, including electronic delivery.
5)States that if the board of administration or managing entity
does not distribute the requested communication within 30 days
after receipt of a request from an owner and payment of actual
costs, the superior court in the county where the time-share
plan is located may, upon application from the requesting
owner, summarily order the distribution of the requested
communication.
6)Specifies that Section 8330 of the Corporations Code shall not
apply to time-share associations.
7)Makes related findings and declarations.
Background
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Time-shares, or vacation ownerships, are terms that generally
describe a system where owners occupy a property for short
periods of time each year while on vacation. This contrasts
with more traditional common interest developments, like
condominiums and residential subdivisions, which are usually
occupied year-round. The regulation of timeshares began in
earnest in 1981 when the industry was widely perceived as being
prone to high-pressure sales tactics and rampant consumer fraud
(an era now half-jokingly referred to as the "crime-share"
days). Stringent state regulations for time-shares were built
into the Subdivided Lands Law that regulated common interest
developments. Although time-share regulations and references
are now found throughout state law, they are principally located
in VOTA. (Bus. & Prof. Code Sec. 11210 et seq.)
Under current law, both VOTA and related provisions in the
Corporations Code governing nonprofit mutual benefit
corporations grant members of time-share plans the right to
inspect the plan's business records, including membership lists,
contact information, and allocations of voting rights, for
specified purposes. Recently, the Court of Appeal for the Third
Appellate District reviewed this grant of access to time-share
plan records in WorldMark, The Club v. Wyndham Resort
Development Corp. (Cal. App. 3d Dist. 2010) 187 Cal.App.4th
1017. In that case, the owner of an interest in a vacation
time-share requested access to time-share resort owner
WorldMark's membership records, including the e-mail addresses
of its members, so the owner could circulate a petition
proposing amendments to the corporation's bylaws. The petition
at issue "expressed a concern over the domination of WorldMark's
board of directors by current or former Wyndham executives, the
failure to conduct meetings at which member motions could be
raised and voted upon, the absence of any independent owners on
the board, and the lack of meaningful member representation in
the governance of WorldMark." (Id. at 1023.) According to the
court, the proposed amendments, if adopted would have revised
WorldMark's bylaws to address these concerns. (Id.) WorldMark
denied the owner's request, and instead offered to mail copies
of the petition at the owner's expense to all other owners at a
cost in excess of $260,000. WorldMark's correspondence to the
owner denying his request cited "privacy concerns," the
membership record's "tremendous commercial value," as well as
WorldMark's "serious concerns about the detrimental effect the
petition measures would have on the Club if implemented." (Id.
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at 1025.) Rejecting WorldMark's contention that existing law
did not require it to produce the e-mail addresses of its
members, the court held that Section 8330 of the Corporations
Code required the disclosure to allow the owner of a time-share
interest to communicate with other members about the
corporation's business.
This bill, sponsored by the American Resort Development
Association, amends VOTA to, among other things, prohibit a
time-share owner's association from providing a copy of its list
of owners to any time-share interest owner except for a purpose
reasonably related to membership in the association, as
specified, and would enact procedures to govern the processing
of requests to receive copies of the list. This bill also
expressly states that Section 8330 of the Corporations Code
shall not apply to time-share associations governed under VOTA.
Comments
The author states:
Section 11273(e) of the Business and Professions Code, which
is part of the time-share law, was written to protect the
privacy of the names and addresses of the owners of time-share
interests within time-share plans, such that the owner's
association of a time-share plan could not be required to
publish or provide a copy of the list of owners to any
time-share interest owner or third party or use or sell the
list for commercial purposes.
In 2010, the Court of Appeals of the State of California,
Third Appellate District, held that California Corporations
Code Section 8330 - not the time-share law -- applies to those
time-share associations that are organized as non-profit
corporations. Since many of the time-share associations are
organized as non-profit corporations, the court decision meant
that those time-share owners lost the privacy rights that had
been accorded them under the time-share law. Section 8330 . .
. grants members of a nonprofit mutual benefit corporation the
right to inspect and copy, or obtain for a reasonable charge,
the record of names, addresses, and voting rights of the
members of the corporation upon 10 days written notice,
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provided it is for a purpose [reasonably] related to the
person's interest as a member.
As a result of the ruling any time-share owner (belonging to
an association organized as a nonprofit mutual benefit
corporation) can easily get their association's lists and sell
those lists to any third party. The fact is, time-share
associations frequently have a membership list that can easily
be in excess of ten thousand members. Such a list on the open
market would easily be of substantial value, particularly to
unscrupulous parties who prey upon time-share owners.
Specifically, these lists end up in the hands of companies
that claim they can sell time-share units. Typically they
demand an up-front fee and then usually fail to sell the
time-share. In addition, dissemination of such a list can
expose personally identifiable information of owners to third
parties, which information might not otherwise be publically
available (keeping in mind that a timeshare is not an owner's
primary residence, and the information provided in many cases
is not public information).
Related/Prior Legislation
AB 905 (Gaines, Chapter 88, Statutes of 2015) amended the
Vacation Ownership and Time-share Act of 2004 to provide that
required copies of public reports pertaining to time-share
interests and required copies of disclosures pertaining to
exchange programs may be provided in a digital format at the
discretion of the purchaser. This bill also exempted licensed
real estate brokers or salespersons from the duty to conduct a
reasonably competent and diligent visual inspection of a
time-share property and to disclose all facts materially
affecting the value or desirability of the property to a
prospective purchaser when, as a condition of transfer, the
prospective purchaser would receive a copy of the public report,
provided the property has not been previously occupied.
AB 126 (Hall, 2013) would have required a time-share association
to obtain a time-share plan member's consent before sharing
their contact information with another owner, and would have
provided an alternate method for owners to communicate with
other members in the time-share plan. This bill died in the
Assembly Judiciary Committee.
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AB 2290 (Hill, 2012) would have prohibited a time-share
association from publishing a list of owners or providing a copy
of the list to time-share interest owners. This bill would have
established a protocol for an owner of a time-share interest to
communicate with the membership of a time-share association
about legitimate association business without providing access
to, or a copy of, the association membership list to the
requesting owner. This bill died in the Assembly Judiciary
Committee.
AB 2518 (Hall, 2012) was gutted and amended to be substantially
similar to AB 2290. This bill died in the Senate Rules
Committee.
AB 2252 (Montanez, Chapter 697, Statutes of 2004) consolidated
and revised the body of time-share vacation property law,
streamlined the regulatory approval process of time-share plans,
and added new consumer protections and disclosures to create the
Vacation Ownership and Time-share Act of 2004.
FISCAL EFFECT: Appropriation: No Fiscal
Com.:NoLocal: No
SUPPORT: (Verified8/2/16)
American Resort Development Association (source)
American Resort Development Association -- Resort Owner's
Coalition
OPPOSITION: (Verified8/2/16)
Two Individuals
ASSEMBLY FLOOR: 79-0, 5/11/15
AYES: Achadjian, Alejo, Travis Allen, Baker, Bigelow, Bloom,
Bonilla, Bonta, Brough, Brown, Burke, Calderon, Campos, Chang,
Chau, Chávez, Chiu, Chu, Cooley, Cooper, Dababneh, Dahle,
Daly, Dodd, Eggman, Frazier, Beth Gaines, Gallagher, Cristina
AB 634
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Garcia, Eduardo Garcia, Gatto, Gipson, Gomez, Gonzalez,
Gordon, Gray, Grove, Hadley, Harper, Roger Hernández, Holden,
Irwin, Jones, Jones-Sawyer, Kim, Lackey, Levine, Linder,
Lopez, Low, Maienschein, Mathis, Mayes, McCarty, Medina,
Melendez, Mullin, Nazarian, Obernolte, O'Donnell, Olsen,
Patterson, Perea, Quirk, Rendon, Ridley-Thomas, Rodriguez,
Salas, Santiago, Steinorth, Mark Stone, Thurmond, Ting,
Wagner, Waldron, Weber, Wilk, Williams, Wood
NO VOTE RECORDED: Atkins
Prepared by:Tobias Halvarson / JUD. / (916) 651-4113
8/3/16 18:06:33
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