The Florida Senate

721.53  Subordination instruments; alternate security arrangements.--

(1)  With respect to each accommodation or facility of a multisite timeshare plan, the developer shall provide the division with satisfactory evidence that one of the following has occurred with respect to each interestholder prior to offering the accommodation or facility as a part of the multisite timeshare plan:

(a)  The interestholder has executed and recorded a nondisturbance and notice to creditors instrument pursuant to s. 721.08(2)(c).

(b)  The interestholder has executed a subordination and notice to creditors instrument and recorded it among the appropriate public records in the jurisdiction in which the subject accommodation or facility is located. The subordination instrument shall expressly subordinate the interest or lien of the interestholder in the subject accommodation or facility to the rights of purchasers of the multisite timeshare plan created with respect to such accommodation or facility by the timeshare instrument, and shall provide that:

1.  If the party seeking enforcement is not in default of its obligations, the instrument may be enforced by both the seller and any purchaser of the multisite timeshare plan;

2.  The instrument shall be effective as between the timeshare purchaser and interestholder despite any rejection or cancellation of the contract between the timeshare purchaser and developer as a result of bankruptcy proceedings of the developer; and

3.  So long as a purchaser remains in good standing with respect to her or his obligations under the timeshare instrument, including making all payments to the managing entity required by the timeshare instrument with respect to the annual common expenses of the multisite timeshare plan, then the interestholder will honor all rights of such purchaser relating to the subject accommodation or facility as reflected in the timeshare instrument.

The subordination instrument shall also contain language sufficient to provide subsequent creditors of the developer and the interestholder with notice of the existence of the timeshare plan and of the rights of purchasers and shall serve to protect the interest of the timeshare purchasers from any claims of such subsequent creditors.

(c)  The interestholder has transferred the subject accommodation or facility or all use rights therein to a nonprofit organization or owners' association to be held for the use and benefit of the purchasers, which entity shall act as a fiduciary to the purchasers. Prior to such transfer, any lien or other encumbrance against such accommodation or facility shall be made subject to a subordination and notice to creditors instrument pursuant to either paragraph (a) or paragraph (b). No transfer pursuant to this paragraph shall become effective until the nonprofit organization or owners' association accepts such transfer and the responsibilities set forth in subsection (2).

(d)  The subject accommodation or facility is free and clear of the claims of any interestholder, and the purchasers' rights in and to the subject accommodation or facility as described in and limited by the timeshare instrument are protected by a recorded instrument against the claims of any subsequent creditors of any owner of the underlying fee.

(2)  The nonprofit organization or owners' association described in paragraph (1)(c) shall comply with the following provisions:

(a)  The nonprofit organization or owners' association shall not convey, hypothecate, mortgage, assign, or otherwise transfer or encumber in any fashion any portion of the timeshare property with respect to which any purchaser has a right of use or occupancy unless the timeshare plan is terminated pursuant to the timeshare instrument or the timeshare property held by the entity is deleted from a multisite timeshare plan pursuant to s. 721.552(3).

(b)  The nonprofit organization or owners' association shall notify the division and the managing entity of the multisite timeshare plan of any proposed transfer of the accommodations or facilities or use rights therein which is permitted by paragraph (a) at least 30 days prior to said transfer.

(c)  All expenses reasonably incurred by the nonprofit organization or owners' association in the performance of its duties, pursuant to paragraph (a), shall be common expenses of the timeshare plan.

(3)  In lieu of the requirements of subsection (1) or subsection (2), the director of the division may accept other assurances from the developer with respect to the subject accommodation or facility, including, but not limited to, a surety or fidelity bond or an irrevocable letter of credit, based upon the value of the subject accommodation or facility as established by independent appraisal or other evidence acceptable to the director.

History.--s. 12, ch. 93-58; s. 20, ch. 95-274; s. 907, ch. 97-102.