Statutes > Illinois Statutes > CHAPTER 765 PROPERTY > 765 ILCS 101/ Real Estate Timeshare Act of 1999. > Article 10 - Business Practices

Article 10 - Business Practices


      (765 ILCS 101/Art. 10 heading)
Article 10. Business Practices

    (765 ILCS 101/10‑5)
    Sec. 10‑5. Management and operation provisions.
    (a) Before the first sale of a timeshare interest, the developer shall create or provide for a managing entity, which shall be either the developer, a separate manager or management firm, the board of directors of an owners' association, or some combination thereof.
    (b) The duties of the managing entity include, but are not limited to:
        (1) Management and maintenance of all accommodations
     constituting the timeshare plan.
        (2) Collection of all assessments as provided in
     the timeshare instrument.
        (3) Providing to all purchasers each year an
     itemized annual budget, which shall include all estimated revenues and expenses.
        (4) Maintenance of all books and records concerning
     the timeshare plan.
        (5) Scheduling occupancy of accommodations, when
     purchasers are not entitled to use specific timeshare periods, so that all purchasers will be provided the opportunity to use and possession of the accommodations of the timeshare plan which they have purchased.
        (6) Performing any other functions and duties that
     are necessary and proper to maintain the accommodations or that are required by the timeshare instrument.
    (c) If a developer, mortgagee, managing entity, or association does not pursue nonjudicial foreclosure as provided in Section 10‑50 or 10‑55 and instead forecloses against a timeshare interest pursuant to the Illinois Mortgage Foreclosure Law, the developer, mortgagee, managing entity, or association may join in the same action multiple defendant obligors and junior interest holders of separate timeshare interests, provided:
        (1) the foreclosure proceeding involves a single
     timeshare plan;
        (2) the foreclosure proceeding is filed by a single
     plaintiff;
        (3) the default and remedy provisions in the written
     instruments on which the foreclosure proceeding is based are substantially the same for each defendant; and
        (4) the nature of the defaults alleged is the same
     for each defendant.
    (d) In any foreclosure proceeding involving multiple defendants filed under subsection (c), the court shall sever for separate trial any count of the complaint in which a defense or counterclaim is timely raised by a defendant.
(Source: P.A. 96‑738, eff. 8‑25‑09.)

    (765 ILCS 101/10‑10)
    Sec. 10‑10. Cancellation of purchase contract. Any purchase contract entered into by a purchaser of a time share interest under this Act shall be voidable by the purchaser, without penalty, within 5 calendar days after the receipt of the public offering statement or the execution of the purchase contract, whichever is later. The purchase contract shall provide notice of the 5‑day cancellation period, together with the name and mailing address to which any notice of cancellation shall be delivered. Notice of cancellation shall be deemed timely if the notice is deposited with the United States Postal Service not later than midnight of the fifth calendar day.
    Upon such cancellation, the developer or resale agent shall refund to the purchaser all payments made by the purchaser, less the amount of any benefits actually received pursuant to the purchase contract. The refund shall be made within 20 calendar days after the receipt of the notice of cancellation, or receipt of funds from the purchaser's cleared check, whichever occurs later.
    If a purchaser elects to cancel a purchase contract pursuant to this Section, the purchaser may do so by hand delivering a written notice of cancellation or by mailing a notice of cancellation by certified mail, return receipt requested, to the developer or resale agent, as applicable, at an address set forth in the purchase contract.
(Source: P.A. 96‑1000, eff. 7‑2‑10.)

    (765 ILCS 101/10‑15)
    Sec. 10‑15. Interests, liens, and encumbrances; alternative assurances.
    (a) Excluding any encumbrance placed against the purchaser's timeshare interest securing the purchaser's payment of purchase‑money financing for such purchase, the developer shall not be entitled to the release of any funds escrowed under subsection (c) of Section 5‑15 with respect to each timeshare interest and any other property or rights to property appurtenant to the timeshare interest, including any amenities represented to the purchaser as being part of the timeshare plan, until the developer has provided satisfactory evidence to the Department of one of the following:
        (1) The timeshare interest together with any other
     property or rights to property appurtenant to the timeshare interest, including any amenities represented to the purchaser as being part of the timeshare plan, are free and clear of any of the claims of the developer, any owner of the underlying fee, a mortgagee, judgment creditor, or other lienor, or any other person having an interest in or lien or encumbrance against the timeshare interest or appurtenant property or property rights.
        (2) The developer, any owner of the underlying fee,
     a mortgagee, judgment creditor, or other lienor, or any other person having an interest in or lien or encumbrance against the timeshare interest or appurtenant property or property rights, including any amenities represented to the purchaser as being part of the timeshare plan, has recorded a subordination and notice to creditors document in the appropriate public records of the jurisdiction in which the timeshare interest is located. The subordination document shall expressly and effectively provide that the interest holder's right, lien, or encumbrance shall not adversely affect, and shall be subordinate to, the rights of the owners of the timeshare interests in the timeshare plan regardless of the date of purchase, from and after the effective date of the subordination document.
        (3) The developer, any owner of the underlying fee,
     a mortgagee, judgment creditor, or other lienor, or any other person having an interest in or lien or encumbrance against the timeshare interest or appurtenant property or property rights, including any amenities represented to the purchaser as being part of the timeshare plan, has transferred the subject accommodations or amenities or all use rights therein to a nonprofit organization or owners' association to be held for the use and benefit of the owners of the timeshare plan, which entity shall act as a fiduciary to the purchasers, provided that the developer has transferred control of such entity to the owners or does not exercise its voting rights in such entity with respect to the subject accommodations or amenities. Prior to the transfer, any lien or other encumbrance against the accommodation or facility shall be made subject to a subordination and notice to creditors instrument pursuant to paragraph (2).
        (4) Alternative arrangements have been made which
     are adequate to protect the rights of the purchasers of the timeshare interests and approved by the Department.
    (b) Nothing in this Section shall prevent a developer from accessing any escrow funds if the developer has complied with subsection (c) of Section 5‑15.
(Source: P.A. 96‑738, eff. 8‑25‑09.)

    (765 ILCS 101/10‑20)
    Sec. 10‑20. Licenses. Any sales or resale agent shall comply with the provisions of the Real Estate License Act of 1983, or its successor Act and the rules adopted pursuant to that Act, including licensure, unless otherwise exempt under the Real Estate License Act of 1983, or its successor Act and the rules adopted pursuant to that Act.
(Source: P.A. 91‑585, eff. 1‑1‑00.)

    (765 ILCS 101/10‑25)
    Sec. 10‑25. Liability; material misrepresentation; promotions.
    (a) A developer or other person offering a timeshare plan may not do any of the following:
        (1) Misrepresent a fact material to a purchaser's
     decision to buy a timeshare interest.
        (2) Predict specific or immediate increases in the
     value of a timeshare interest represented over a period of time, excluding bona fide pending price increases by the developer.
        (3) Materially misrepresent the qualities or
     characteristics of accommodations or the amenities available to the occupant of those accommodations.
        (4) Misrepresent the length of time accommodations
     or amenities will be available to the purchaser of a timeshare interest.
        (5) Misrepresent the conditions under which a
     purchaser of a timeshare interest may exchange the right of his or her occupancy for the right to occupy other accommodations.
    (b) A developer or other person using a promotion in connection with the offering of a timeshare interest shall clearly disclose all of the following:
        (1) That the purpose of the promotion is to sell
     timeshare interests, which shall appear in bold face or other conspicuous type.
        (2) That any person whose name or address is
     obtained during the promotion may be solicited to purchase a timeshare interest.
        (3) The name of each developer or other person
     trying to sell a timeshare interest through the promotion, and the name of each person paying for the promotion.
        (4) The complete rules of the promotion.
        (5) The method of awarding prizes, gifts,
     vacations, discount vacations, or other benefits under the promotion; a complete and fully detailed description, including approximate retail value, of all prizes, gifts, or benefits under the promotion; the quantity of each prize, gift, or benefit to be awarded or conferred; and the date by which each prize, gift, or benefit will be awarded or conferred.
        (6) Any other disclosures provided by rule.
    (c) If a person represents that a prize, gift, or benefit will be awarded in connection with a promotion, the prize, gift, or benefit must be awarded or conferred in the manner represented, and on or before the date represented.
    (d) A developer or other person using a promotion in connection with the offering of a timeshare interest shall provide the disclosures required by this Section in writing or electronically to the prospective purchaser at least once before the earlier of (1) a reasonable period before the scheduled sales presentation to ensure that the prospective purchaser receives the disclosures before leaving to attend the sales presentation or (2) the payment of any nonrefundable monies by the prospective purchaser in regard to the promotion.
    (e) A developer or other person using a promotion in connection with the offering of a timeshare interest is not required to provide the disclosures required by this Section in every advertisement or other written, oral, or electronic communication provided or made to a prospective purchaser.
(Source: P.A. 96‑738, eff. 8‑25‑09.)

    (765 ILCS 101/10‑30)
    Sec. 10‑30. Records. The managing entity shall keep detailed financial records directly related to the operation of the association. All financial and other records shall be made reasonably available for examination by any purchaser, or the authorized agent of the purchaser, and the Department. For purposes of this Section, the books and records of the timeshare plan shall be considered "reasonably available" if copies of the requested portions are delivered to the purchaser or the purchaser's agent or the Department within 7 days of the date the managing entity receives a written request for the records signed by the purchaser or the Department. The managing entity may charge the purchaser a reasonable fee for copying the requested information.
(Source: P.A. 96‑738, eff. 8‑25‑09.)

    (765 ILCS 101/10‑35)
    Sec. 10‑35. Maintenance of records. Every developer, exchange company, or resale agent shall maintain, for a period of 2 years, records of any individuals employed by the developer, exchange company, or resale agent, including the last known address of each of those individuals.
(Source: P.A. 91‑585, eff. 1‑1‑00.)

    (765 ILCS 101/10‑40)
    Sec. 10‑40. Partition. No action for partition of a timeshare interest may be initiated except as permitted by the timeshare instrument.
(Source: P.A. 91‑585, eff. 1‑1‑00.)

    (765 ILCS 101/10‑45)
    Sec. 10‑45. Managing entity lien created.
    (a) A managing entity has a lien on a timeshare interest for any of the following respectively levied or imposed against a timeshare interest:
        (1) Assessments, which for purposes of this Act
     unless the timeshare instrument provides otherwise, shall include fees, charges, late charges, fines, collection costs, and interest charged in accordance with the timeshare instrument;
        (2) Reasonable collection and attorneys fees and
     costs the managing entity incurs to collect assessments; and
        (3) Taxes, interest, penalties, late payment fees or
     fines in accordance with applicable law or the timeshare instrument.
    (b) Managing entity liens pursuant to this Section are created and attached when the charges described in Section 10‑45(a) become due. If such amounts are payable in installments, the full amount of such charges is a managing entity lien from the time that the first installment thereof becomes due.
    (c) Managing entity liens pursuant to this Section are perfected on the date that the managing entity:
        (1) In the case of a timeshare estate, records a
     notice of lien against the timeshare estate in the office of the recorder in the county where the timeshare estate is located, which notice of lien must identify each of the following:
            (A) The name of the timeshare estate owner;
            (B) The name and address of the managing entity;
            (C) The description of the timeshare estate in
         the same manner required for recording a mortgage against a timeshare estate; and
            (D) The amount of the debt secured by the
         managing entity lien.
        (2) In the case of a timeshare use, files a notice of
     lien against the timeshare use in the filing office of the Illinois Secretary of State pursuant to Article 9 of the Uniform Commercial Code, which notice of lien, in addition to any other filing requirements imposed by Article 9 of the Uniform Commercial Code, must identify each of the following:
            (A) The name of the timeshare use owner as the
         debtor;
            (B) The name of the managing entity as the
         secured party;
            (C) The address of the managing entity;
            (D) The timeshare use as the collateral; and
            (E) The amount of the debt secured by the
         managing entity lien.
    (d) The managing entity must send a copy of the recorded or filed notice of lien on the timeshare interest, as the case may be, to the last known address of the timeshare interest owner.
    (e) A managing entity lien against a timeshare estate, at the managing entity's option, may (1) be foreclosed as provided in Section 10‑50 or (2) be foreclosed in the same manner as a mortgage pursuant to the Illinois Mortgage Foreclosure Law.
    (f) A managing entity lien against a timeshare use, at the managing entity's option, may (1) be foreclosed as provided in Section 10‑55 or (2) be enforced in the same manner as a security interest pursuant to Article 9 of the Uniform Commercial Code.
(Source: P.A. 96‑738, eff. 8‑25‑09.)

    (765 ILCS 101/10‑50)
    Sec. 10‑50. Nonjudicial foreclosure against timeshare estates.
    (a) Notwithstanding anything in the Illinois Mortgage Foreclosure Law or other applicable law to the contrary:
        (1) The holder of a mortgage against a timeshare
     estate may foreclose or otherwise enforce a security interest pursuant to this Section 10‑50; and
        (2) The holder of a managing entity lien against a
     timeshare estate may foreclose such managing entity lien pursuant to this Section 10‑50.
    (b) Upon default, and after all applicable cure periods identified in the mortgage (if such default is under a mortgage) or the timeshare instrument (if default is under a managing entity lien) have expired, the holder of the mortgage or managing entity lien must:
        (1) Provide written notice of the default to the
     timeshare estate owner at the last known address of the timeshare estate owner by (A) certified mail, return receipt requested and (B) first‑class mail.
        (2) Provide the timeshare estate owner an additional
     opportunity to cure for a period of at least 30 days following the later date of the mailing of the notices pursuant to Sections 10‑50(b)(1)(A) and 10‑50(b)(1)(B).
    (c) If, the timeshare estate owner does not cure the default before the expiration of the additional cure period granted pursuant to Section 10‑50(b)(2), the holder of the mortgage or managing entity lien may foreclose the mortgage or managing entity lien by conducting a public auction that complies with the following requirements:
        (1) The holder of the mortgage or managing entity
     lien must provide notice of the public auction as follows:
            (A) By publishing notice of the public auction in
         at least each of 3 successive weeks in a newspaper, whether printed or electronic, of general circulation in the county where the timeshare estate is located. The first notice must be published no more than 30 days before the date of the public auction, which 30‑day period shall be calculated by excluding the date of publication of the first notice and the date of the public auction.
            (B) By sending written notice identifying the
         time, date, and place of the public auction to the last known address of the owner of record of the timeshare estate at least 30 days before the date of the public auction by (i) certified mail, return receipt requested and (ii) first‑class mail.
            (C) By sending notice identifying the time, date,
         and place of the public auction to all persons known to have a lien against the timeshare estate at least 30 days before the date of the public auction by certified mail, return receipt requested.
        (2) The notices given pursuant to Section 10‑50(c)(1)
     must also contain:
            (A) The name of the timeshare estate owner;
            (B) A general description of the timeshare
         estate; and
            (C) The terms of the public auction.
        (3) If more than one timeshare estate is to be
     included in the public auction, all such timeshare estates may be combined into one notice of public auction.
        (4) The public notice required by Section
     10‑50(c)(1)(A) for foreclosing a mortgage against a timeshare estate must be printed in substantially the following form:

 
NOTICE OF SALE OF TIMESHARE ESTATE OR ESTATES UNDER SECTION 10‑50 OF THE ILLINOIS REAL ESTATE TIMESHARE ACT OF 1999
 
By virtue of 765 ILCS 101/10‑50 and in execution of a certain mortgage (or mortgages, if more than one) on the timeshare estate (or estates, if more than one) given by the owner of the timeshare estate (or owners, if more than one) set forth below for breach of the conditions of said mortgage (or mortgages, if more than one) and for the purpose of foreclosing, the same will be sold at public auction starting at ........... on ............ 20.. at ........, Illinois, being all and singular the premises described in said mortgage (or mortgages, if more than one). (For each mortgage, list the name and address of the timeshare estate owner, a general description of the timeshare estate, and the book and page number of the mortgage.)
 
TERMS OF SALE: (State the deposit amount to be paid by the purchaser at the time and place of the sale and the times for payment of the balance or the whole, as the case may be. The timeshare estates, if more than one, must be sold in individual lots unless there are no individual bidders, in which case, they may be sold as a group.)
 
Other terms may be announced at the public auction.
 
Signed .................................
 
Holder of mortgage or authorized agent.
 
        (5) The public notice required by Section
     10‑50(c)(1)(A) for foreclosing a managing entity lien against a timeshare estate must be printed in substantially the following form:

 
NOTICE OF SALE OF TIMESHARE ESTATE OR ESTATES UNDER SECTION 10‑50 OF THE ILLINOIS REAL ESTATE TIMESHARE ACT OF 1999
 
By virtue of the timeshare instrument of the ................... (name and address of timeshare property) and 765 ILCS 101/10‑45 establishing a managing entity lien for failure to pay assessments and other costs on the timeshare estate (or estates, if more than one) held by the owner of the timeshare estate (or owners, if more than one) listed below, the timeshare estate (or estates, if more than one) and for the purpose of foreclosing, the same will be sold at public auction starting at ......... on ........ 20.. at ............., Illinois. (For each timeshare estate, list the name and address of the timeshare estate owner, a general description of the timeshare estate, and the book and page number of the deed.)
 
TERMS OF SALE: (State the deposit amount to be paid by the purchaser at the time and place of the sale and the times for payment of the balance or the whole, as the case may be. The timeshare estates, if more than one, must be sold in individual lots unless there are no individual bidders, in which case, they may be sold as a group.)
 
Other terms may be announced at the public auction.
 
Signed ................................
 
Managing entity lienholder or authorized agent.
 
        (6) Publishing and sending notices in compliance with
     this Section 10‑50(c) constitutes sufficient public notice of the public auction.
    (d) Public auctions pursuant to this Section 10‑50 must
     be conducted as follows:
        (1) The public auction must take place within the
     county where the timeshare estate is located.
        (2) The public auction must be open to the general
     public and conducted by an auctioneer licensed pursuant to the Auction License Act.
        (3) Notwithstanding anything in the Auction License
     Act to the contrary, the auctioneer, in his or her discretion, may waive the reading of the names of the timeshare estate owners, if more than one, the description of the timeshare estates, if more than one, and the recording information of the applicable mortgages or managing entity liens (as the case may be), if more than one.
        (4) All rights of redemption of the timeshare estate
     owner are extinguished upon sale of a timeshare estate at the public auction.
        (5) The holder of the mortgage or managing entity
     lien, the developer, the managing entity, and the timeshare estate owner are not precluded from bidding at the public auction.
        (6) The successful purchaser at the public auction is
     not required to complete the purchase of the timeshare estate if the timeshare estate, at the time the auctioneer accepts the successful bid, is subject to liens or other encumbrances, other than those identified in the notice of public auction and those identified at the auction before the auctioneer opens bidding on the applicable timeshare estate.
        (7) The purchaser at the public auction takes title
     to the timeshare estate free and clear of any outstanding assessments owed by the prior timeshare estate owner to the managing entity.
    (e) Upon the sale of a timeshare estate pursuant to this Section 10‑50, the holder of the mortgage or managing entity lien must provide the