SB 241

Nonjudicial (or administrative) foreclosure of time shares

Under current law, a time-share estate is defined as a right to occupy a real

property unit during at least four separated periods over at least four years, together

with a property interest in the real property unit. A time-share license is defined

as a right to occupy a unit, or any of several units, under a license or lease agreement

during at least four separated periods over at least four years, without a property

interest in the real property unit. A person's interest in a time-share estate may be

foreclosed in a court proceeding (judicial foreclosure) in the same manner as an

interest in real property is foreclosed if the person defaults in payments to a creditor

that has a security interest in the time-share estate, or if the person does not pay

assessments that were imposed for time-share expenses and that have become a

lien. Current law specifies that a lien for assessments against a time-share license

may be foreclosed as provided under the Uniform Commercial Code (UCC). This bill

sets out nonjudicial (administrative) procedures for foreclosing security interests in,

and assessment liens against, time-share estates and time-share licenses. The bill

provides that a person seeking to foreclose an owner's interest in a time-share estate

or a time-share license (foreclosing entity) must use the administrative procedure,

except that the owner of a time-share estate may object to the use of the

administrative procedure, in which case the foreclosing entity must use the judicial

foreclosure procedure. In addition, the bill provides that a foreclosing entity that

uses the administrative procedure to foreclose an owner's interest in either a

time-share estate or time-share license waives the right to a deficiency if the

proceeds of the sale in the administrative procedure do not cover what is owed to the

foreclosing entity.

Procedure for time-share estates

To foreclose an owner's interest in a time-share estate, the foreclosing entity

must first send notice to the owner, informing the owner of the default, of the amount

of the default, and that he or she may, within 30 days, cure the default or object to

the use of the administrative procedure. If the owner does not timely cure the default

or object to the use of the administrative procedure, he or she has waived the right

to a judicial foreclosure, and the foreclosing entity may proceed with the

administrative foreclosure, which includes sale by public auction. The foreclosing

entity must publish notice of the foreclosure sale in a newspaper having general

circulation in the county in which the time-share estate is located. The notice must

be published once in each of three successive weeks, and the first publication must

be at least 30 days before the date of the sale. In lieu of publishing the full notice

three times in a newspaper, the foreclosing entity may post the full notice on an

Internet site for three successive weeks and publish the Internet site in a newspaper

once in each of three successive weeks. In addition to publishing notice of the sale,

the foreclosing entity must mail written notice of the date, time, and place of the sale