Section 53: Exchange programs; information; promotional literature; liability
Section 53. (a) If a purchaser may participate in any exchange program, the developer, agent of a developer or person in the business of selling real estate for his own account shall, except as provided in subsection (b), deliver to the purchaser at the time of delivery of the public offering statement required by section thirty-seven, written information regarding said exchange program and the purchaser shall certify in writing to the receipt thereof. Said information shall include the following:
(1) the name and address of the exchange company;
(2) the names of all officers, directors, and shareholders owning five per cent or more of the outstanding stock of the exchange company;
(3) a statement indicating whether the exchange company or any of its officers or directors has any legal or beneficial interest in any developer or managing entity for any time-share plan participating in the exchange program and, if so, the name and location of the time-share property and the nature of the interest;
(4) unless the exchange company is also the developer or an affiliate of a developer, a statement that the purchaser's contract with the exchange company is a contract separate and distinct from the contract of sale;
(5) a statement indicating whether the purchaser's participation in the exchange program is dependent upon the continued affiliation of the time-share plan with the exchange program and the readmission fees, dues and other charges which shall be required to be paid by the purchaser if he initially becomes a member of the exchange program, allows the membership to lapse and then seeks reinstatement or readmission;
(6) a statement indicating whether the purchaser's membership or participation in the exchange program is voluntary or mandatory;
(7) a complete and accurate description of the terms and conditions of the purchaser's contractual relationship with the exchange company and the procedure by which changes thereto may be made;
(8) a complete and accurate description of the procedure to qualify for and effectuate exchanges;
(9) a complete and accurate description in boldface type of all restrictions, limitations or priorities employed in the operation of the exchange program and the manner of application thereof, including, without limitation, any restrictions, limitations or priorities based on seasonality, unit size, or levels of occupancy;
(10) a statement indicating whether exchanges are arranged on a space-available basis and whether any guarantees of specific requests for exchanges are made by the exchange program, and if so, the nature thereof;
(11) a complete and accurate description of the circumstances, if any, in which a time-share owner may lose the use and occupancy of his time-share in any properly applied for exchange without being provided with substitute accommodations by the exchange company;
(12) the fees for participation by time-share owners in the exchange program, a statement whether any such fees may be altered by the exchange company, and the circumstances under which alterations may be made;
(13) the name and location of each time-share property, accommodation or facility participating in the exchange program;
(14) the number of units in each property which qualify for participation in the exchange program and which are available for occupancy expressed within the following numerical groupings: 1–5; 6–10; 11–20; 21–50; and 51 and over;
(15) with respect to each time-share plan or other property the number of owners who are eligible to participate in the exchange program expressed within the following numerical groupings: 1–100; 101–249; 250–499; 500–999; and 1,000 and over; and the criteria used to determine current eligibility to participate in the exchange program;
(16) the disposition made by the exchange company of time-shares deposited by eligible owners with the exchange program and not used by the exchange company in effecting exchanges;
(17) a statement indicating the following information, which, except as provided in subsection (b), shall be independently audited by a certified public accountant or accounting firm and reported for each year no later than July first, of the succeeding year:
(i) the number of the time-share owners enrolled in the exchange program, the number of said owners who are fee paying and the number of said owners who are enrolled gratuitously;
(ii) the number of time-share properties, accommodations or facilities eligible to participate in the exchange program categorized by those having a contractual relationship between the developer or the association and the exchange company and those having a contractual relationship between the exchange company and time-share owners directly;
(iii) the percentage of confirmed exchanges, which shall be the number of exchanges confirmed by the exchange company divided by the number of exchanges properly applied for, together with a complete and accurate statement of the criteria used to determine whether an exchange request was properly applied for. An exchange shall be confirmed when an eligible time-share owner applies for and receives the right to occupy an exchanged time-share for a time period during the year reported;
(iv) the number of exchanges confirmed by the exchange company during the year;
(v) the number of time-shares for which the exchange company has an outstanding obligation to provide an exchange to a time-share owner who relinquished a time-share during the year in exchange for a time-share in any future year;
(18) a statement in boldface type that the percentage described in subclause (iii) of clause (17) of subsection (a) does not indicate a purchaser's or owner's probabilities of being confirmed to any specific choice, as availability at individual locations may vary.
(b) The information required by subsection (a) shall be accurate as of a date which is not more than thirty days prior to the date on which the information is delivered to the purchaser, except that the information required by clauses (2), (3), (13), (14), (15) and (17) of subsection (a) shall be accurate as of December thirty-first of the preceding year if the information is delivered between July first and December thirty-first of any year; information delivered between January first and June thirtieth of any year shall be accurate as of December thirty-first of the year prior to the preceding year. All references in this section to the word ''year'' shall mean calendar year.
(c) In the event an exchange company offers an exchange program directly to the purchaser or time-share owner, the exchange company shall deliver to each purchaser or time-share owner, prior to such offering or the execution of any contract between the purchaser or time-share owner and said company the information set forth in subsection (a). This section shall not apply to the renewal of any contract between the purchaser or time-share owner and the exchange company offering the exchange program.
(d) Each exchange company offering an exchange program to purchasers in the commonwealth shall include the statement set forth in paragraph (18) of subsection (a) on all promotional brochures, pamphlets, advertisements or other materials which contain the percentage of confirmed exchanges described in subclause (iii) of clause (17) of subsection (a) and which are disseminated by the exchange company.
(e) No developer shall have any liability arising out of the use, delivery or publication by the developer of written or printed information or audio-visual materials provided to it by the exchange company pursuant to this section. Except as otherwise provided in this subsection, no exchange company shall have any liability with respect to (i) any representation made by the developer relating to the exchange program or exchange company, or (ii) the use, delivery or publication by the developer of any information relating to the exchange program or exchange company. An exchange company shall be liable for written or printed information or audio-visual materials provided to the developer or to a purchaser or time-share owner by the exchange company. The failure of the exchange company to comply with the provisions of this section, or the use by it of any unfair or deceptive act or practice in connection with the operation of the exchange program, shall constitute a violation of this chapter.