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New Timeshare Fraud Protection Legislation in Florida

Florida's new timeshare fraud protection legislation was fast-tracked into law this month, passing the Florida legislature and then being signed by Gov. Rick Scott on June 13. The law goes into full effect on July 1, and will dramatically change timeshare fraud protection regulation in the state.

The new escrow accounts required of timeshare transfer companies and brokers by law must now have sufficient funds or property to ensure the transfer company can follow through on its agreements – no matter what the future may hold. Escrow records must be retained for up to five years. Failure to comply with these new regulations could result in prosecution on third degree felony charges for intentionally defrauding consumers. Other penalties and fines can also be attached for failure to follow the new law.

Some exceptions do apply to the new law. Licensed attorneys, real estate brokers, agents and title insurers taking less than $600 in fees are exempt, as are developers or managing entities of the timeshare plan.

While most timeshare transactions happen smoothly, unscrupulous companies and brokers can occasionally run scams in an attempt to defraud consumers. They charge thousands in hidden fees while pretending to be legitimate agents, often targeting timeshare owners who want to sell their units. Pretending to provide a service, scam artists may bilk consumers out of thousands of dollars.

The timeshares bill says owners of timeshare condominiums cannot participate in condominium board elections. The bill also revises a formula used to calculate required reserve funds held by condominium owners for improvements. The bill addresses the Florida Vacation Plan and Timesharing Act. It sets new guidelines for foreclosure procedures and application of liens on timeshare units, including liens related to unpaid condo assessments and mortgage payments.

Considered a tool to fight fraud in the industry, the timeshare legislation specifies that timeshare brokers must provide a notice that they have paid all assessments and mortgage payments. The letter also must indicate that timeshare transfer companies or agents have taken no advance fees and must identify the escrow agent. This means timeshare transfer agents must deposit all funds paid by buyers into their escrow account rather than their own commercial accounts. Finally, the bill also amends and revises a series of timeshare regulations and changes some language in existing laws including the definition of the term "timeshare estate" and policies regarding notice addresses.

The new law was steered through the Florida legislature by Rep. Debbie Mayfield, R-Vero Beach; Rep. Dane Eagle, R-Cape Coral and Sen. Kelli Stargel, R-Lakeland. The American Resort Development Association was considered instrumental in promoting and supporting the legislation. Timeshare developers applauded the efforts they said were designed to protect timeshare consumers from unscrupulous transfer agencies.

"I commend Gov. Scott and his legislative partners for taking swift action to guard against timeshare transfer scams," Franz Hanning said. He is president and CEO of Wyndham Vacation ownership, the largest vacation ownership company in the world. "This new law will further enhance safeguards for timeshare owners and associations, and strengthens our collective efforts to protect consumers.”



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