Sen. Pamela J. Althoff

Filed: 5/21/2018

 

 


 

 


 
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1
AMENDMENT TO HOUSE BILL 2723

2    AMENDMENT NO. ______. Amend House Bill 2723, AS AMENDED, by
3replacing everything after the enacting clause with the
4following:
 
5    "Section 1. Short title. This Act may be cited as the
6Timeshare Lien and Security Interest Act.
 
7    Section 3. Definitions. As used in this Act:
8    "Accommodation" means any apartment, condominium or
9cooperative unit, cabin, lodge, hotel or motel room, or other
10private or commercial structure containing toilet facilities
11therein that is designed and available, pursuant to applicable
12law, for use and occupancy as a residence by one or more
13individuals, or any unit or berth on a commercial cruise line
14ship, which is included in the offering of a timeshare plan.
15    "Assessment" means the share of funds required for the
16payment of common expenses which is assessed from time to time

 

 

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1against each purchaser by the managing entity.
2    "Developer" means and includes any person or entity, other
3than a sales agent, acquisition agent, or resale agent, who
4creates a timeshare plan or is in the business of selling
5timeshare interests, or employs agents to do the same, or any
6person or entity who succeeds to the interest of a developer by
7sale, lease, assignment, mortgage, or other transfer, but the
8term includes only those persons who offer timeshare interests
9for disposition in the ordinary course of business.
10    "Managing entity" means the person who undertakes the
11duties, responsibilities, and obligations of the management of
12a timeshare plan.
13    "Managing entity lien" means a lien created pursuant to
14Section 5.
15    "Purchaser" means any person, other than a developer, who
16by means of a voluntary transfer acquires a legal or equitable
17interest in a timeshare plan other than as security for an
18obligation.
19    "Timeshare instrument" means one or more documents, by
20whatever name denominated, creating or governing the operation
21of a timeshare plan.
22    "Timeshare interest" means and includes either:
23        (1) a "timeshare estate", which is the right to occupy
24    a timeshare property, coupled with a freehold estate or an
25    estate for years with a future interest in a timeshare
26    property or a specified portion thereof; or

 

 

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1        (2) a "timeshare use", which is the right to occupy a
2    timeshare property, which right is neither coupled with a
3    freehold interest, nor coupled with an estate for years
4    with a future interest, in a timeshare property.
5    "Timeshare plan" means any arrangement, plan, scheme, or
6similar device, other than an exchange program, whether by
7membership agreement, sale, lease, deed, license, or
8right-to-use agreement or by any other means, whereby a
9purchaser, in exchange for consideration, receives ownership
10rights in or the right to use accommodations for a period of
11time less than a full year during any given year, but not
12necessarily for consecutive years. A timeshare plan may be:
13        (1) a "single-site timeshare plan", which is the right
14    to use accommodations at a single timeshare property; or
15        (2) a "multi-site timeshare plan", which includes:
16            (A) a "specific timeshare interest", which is the
17        right to use accommodations at a specific timeshare
18        property, together with use rights in accommodations
19        at one or more other component sites created by or
20        acquired through the timeshare plan's reservation
21        system; or
22            (B) a "non-specific timeshare interest", which is
23        the right to use accommodations at more than one
24        component site created by or acquired through the
25        timeshare plan's reservation system, but including no
26        specific right to use any particular accommodations.

 

 

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1    "Timeshare property" means one or more accommodations
2subject to the same timeshare instrument, together with any
3other property or rights to property appurtenant to those
4accommodations.
 
5    Section 5. Managing entity lien created.
6    (a) A managing entity has a lien on a timeshare interest
7for any of the following respectively levied or imposed against
8a timeshare interest:
9        (1) assessments, which, unless the timeshare
10    instrument provides otherwise, include fees, charges, late
11    charges, fines, collection costs, and interest charged in
12    accordance with the timeshare instrument;
13        (2) reasonable collection and attorney's fees and
14    costs the managing entity incurs to collect assessments;
15    and
16        (3) taxes, interest, penalties, late payment fees, or
17    fines in accordance with applicable law or the timeshare
18    instrument.
19    (b) Managing entity liens pursuant to this Section are
20created and attached when the charges described in subsection
21(a) become due. If such amounts are payable in installments,
22the full amount of such charges is a managing entity lien from
23the time that the first installment thereof becomes due.
24    (c) Managing entity liens pursuant to this Section are
25perfected on the date that the managing entity:

 

 

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1        (1) In the case of a timeshare estate, records a notice
2    of lien against the timeshare estate in the office of the
3    recorder in the county where the timeshare estate is
4    located, which notice of lien must identify each of the
5    following:
6            (A) the name of the timeshare estate owner;
7            (B) the name and address of the managing entity;
8            (C) the description of the timeshare estate in the
9        same manner required for recording a mortgage against a
10        timeshare estate; and
11            (D) the amount of the debt secured by the managing
12        entity lien.
13        (2) In the case of a timeshare use, files a notice of
14    lien against the timeshare use in the filing office of the
15    Illinois Secretary of State pursuant to Article 9 of the
16    Uniform Commercial Code, which notice of lien, in addition
17    to any other filing requirements imposed by Article 9 of
18    the Uniform Commercial Code, must identify each of the
19    following:
20            (A) the name of the timeshare use owner as the
21        debtor;
22            (B) the name of the managing entity as the secured
23        party;
24            (C) the address of the managing entity;
25            (D) the timeshare use as the collateral; and
26            (E) the amount of the debt secured by the managing

 

 

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1        entity lien.
2    (d) The managing entity must send a copy of the recorded or
3filed notice of lien on the timeshare interest, as the case may
4be, to the last known address of the timeshare interest owner.
5    (e) A managing entity lien against a timeshare estate, at
6the managing entity's option, may be foreclosed:
7        (1) as provided in Section 10; or
8        (2) in the same manner as a mortgage under the Illinois
9    Mortgage Foreclosure Law.
10    (f) A managing entity lien against a timeshare use, at the
11managing entity's option, may:
12        (1) be foreclosed as provided in Section 15; or
13        (2) be enforced in the same manner as a security
14    interest pursuant to Article 9 of the Uniform Commercial
15    Code.
 
16    Section 10. Nonjudicial foreclosure against timeshare
17estates.
18    (a) Notwithstanding anything in the Illinois Mortgage
19Foreclosure Law or other applicable law to the contrary:
20        (1) the holder of a mortgage against a timeshare estate
21    may foreclose or otherwise enforce a security interest
22    pursuant to this Section; and
23        (2) the holder of a managing entity lien against a
24    timeshare estate may foreclose the managing entity lien
25    pursuant to this Section.

 

 

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1    (b) Upon default, and after all applicable cure periods
2identified in the mortgage (if the default is under a mortgage)
3or the timeshare instrument (if the default is under a managing
4entity lien) have expired, the holder of the mortgage or
5managing entity lien must:
6        (1) Provide written notice of the default to the
7    timeshare estate owner at the last known address of the
8    timeshare estate owner by:
9            (A) certified mail, return receipt requested; or
10            (B) first class mail.
11        (2) Provide the timeshare estate owner an additional
12    opportunity to cure for a period of 30 days following the
13    later date of the mailing of the notices sent pursuant to
14    paragraph (1) of this subsection.
15    (c) If the timeshare estate owner does not cure the default
16before the expiration of the additional cure period granted
17pursuant to paragraph (2) of subsection (b), the holder of the
18mortgage or managing entity lien may foreclose the mortgage or
19managing entity lien by conducting a public auction that
20complies with the following requirements:
21        (1) The holder of the mortgage or managing entity lien
22    must provide notice of the public auction as follows:
23            (A) By publishing notice of the public auction in
24        at least each of 3 successive weeks in a newspaper,
25        whether printed or electronic, of general circulation
26        in the county where the timeshare estate is located.

 

 

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1        The first notice must be published no more than 30 days
2        before the date of the public auction, which 30-day
3        period shall be calculated by excluding the date of
4        publication of the first notice and the date of the
5        public auction.
6            (B) By sending written notice identifying the
7        time, date, and place of the public auction to the last
8        known address of the owner of record of the timeshare
9        estate at least 30 days before the date of the public
10        auction by: (i) certified mail, return receipt
11        requested; or (ii) first class mail.
12            (C) By sending notice by certified mail, return
13        receipt requested, or first class mail, at least 30
14        days before the date of the public auction, identifying
15        the time, date, and place of the public auction to all
16        persons known to have a lien against the timeshare
17        estate.
18        (2) The notices given pursuant to paragraph (1) of this
19    subsection must also contain:
20            (A) the name of the timeshare estate owner;
21            (B) a general description of the timeshare estate;
22        and
23            (C) the terms of the public auction.
24        (3) If more than one timeshare estate is to be included
25    in the public auction, all such timeshare estates may be
26    combined into one notice of public auction.

 

 

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1        (4) The public notice required by subparagraph (A) of
2    paragraph (1) of this subsection for foreclosing a mortgage
3    against a timeshare estate must be printed in the following
4    or a substantially similar form:
 
5"NOTICE OF SALE OF TIMESHARE ESTATE OR ESTATES UNDER SECTION 10
6OF THE TIMESHARE LIEN AND SECURITY INTEREST ACT
 
7By virtue of Section 10 of the Timeshare Lien and Security
8Interest Act and in execution of a certain mortgage (or
9mortgages, if more than one) on the timeshare estate (or
10estates, if more than one) given by the owner of the timeshare
11estate (or owners, if more than one) set forth below for breach
12of the conditions of said mortgage (or mortgages, if more than
13one) and for the purpose of foreclosing, the same will be sold
14at public auction starting at ........... on ............ 20..
15at ........, Illinois, being all and singular the premises
16described in said mortgage (or mortgages, if more than one).
17(For each mortgage, list the name and address of the timeshare
18estate owner, a general description of the timeshare estate,
19and the book and page number of the mortgage.)
 
20TERMS OF SALE: (State the deposit amount to be paid by the
21purchaser at the time and place of the sale and the times for
22payment of the balance or the whole, as the case may be. The
23timeshare estates, if more than one, must be sold in individual

 

 

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1lots unless there are no individual bidders, in which case,
2they may be sold as a group.)
 
3Other terms may be announced at the public auction.
 
4Signed .................................
 
5Holder of mortgage or authorized agent.".
 
6        (5) The public notice required by subparagraph (A) of
7    paragraph (1) of this subsection for foreclosing a managing
8    entity lien against a timeshare estate must be printed in
9    the following or a substantially similar form:
 
10"NOTICE OF SALE OF TIMESHARE ESTATE OR ESTATES UNDER SECTION 10
11OF THE TIMESHARE LIEN AND SECURITY INTEREST ACT
 
12By virtue of the timeshare instrument of the
13................... (name and address of timeshare property)
14and Section 5 of the Timeshare Lien and Security Interest Act
15establishing a managing entity lien for failure to pay
16assessments and other costs on the timeshare estate (or
17estates, if more than one) held by the owner of the timeshare
18estate (or owners, if more than one) listed below, the
19timeshare estate (or estates, if more than one) and for the
20purpose of foreclosing, the same will be sold at public auction

 

 

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1starting at ......... on ........ 20.. at .............,
2Illinois. (For each timeshare estate, list the name and address
3of the timeshare estate owner, a general description of the
4timeshare estate, and the book and page number of the deed.)
 
5TERMS OF SALE: (State the deposit amount to be paid by the
6purchaser at the time and place of the sale and the times for
7payment of the balance or the whole, as the case may be. The
8timeshare estates, if more than one, must be sold in individual
9lots unless there are no individual bidders, in which case,
10they may be sold as a group.)
 
11Other terms may be announced at the public auction.
 
12Signed ................................
 
13Managing entity lienholder or authorized agent.".
 
14        (6) Publishing and sending notices in compliance with
15    this subsection constitutes sufficient public notice of
16    the public auction.
17    (d) Public auctions pursuant to this Section must be
18conducted as follows:
19        (1) The public auction must take place within the
20    county where the timeshare estate is located.
21        (2) The public auction must be open to the general

 

 

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1    public and conducted by an auctioneer licensed pursuant to
2    the Auction License Act.
3        (3) The auctioneer, in his or her discretion, may waive
4    the reading of the names of the timeshare estate owners, if
5    more than one, the description of the timeshare estates, if
6    more than one, and the recording information of the
7    applicable mortgages or managing entity liens (as the case
8    may be), if more than one.
9        (4) All rights of redemption of the timeshare estate
10    owner are extinguished upon sale of a timeshare estate at
11    the public auction.
12        (5) The holder of the mortgage or managing entity lien,
13    the developer, the managing entity, and the timeshare
14    estate owner are not precluded from bidding at the public
15    auction.
16        (6) The successful purchaser at the public auction is
17    not required to complete the purchase of the timeshare
18    estate if the timeshare estate, at the time the auctioneer
19    accepts the successful bid, is subject to liens or other
20    encumbrances, other than those identified in the notice of
21    public auction and those identified at the auction before
22    the auctioneer opens bidding on the applicable timeshare
23    estate.
24        (7) The purchaser at the public auction takes title to
25    the timeshare estate free and clear of any outstanding
26    assessments owed by the prior timeshare estate owner to the

 

 

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1    managing entity.
2    (e) Upon the sale of a timeshare estate pursuant to this
3Section, the holder of the mortgage or managing entity lien
4must provide the purchaser with:
5        (1) a foreclosure deed or other appropriate instrument
6    transferring the mortgage holder's or managing entity's
7    interest in the timeshare estate; and
8        (2) an affidavit affirming that all requirements of the
9    foreclosure pursuant to this Section have been satisfied.
10    (f) The timeshare estate is considered sold and the deed or
11other instrument transferring the timeshare estate must
12transfer the timeshare estate, subject to municipal or other
13taxes and any liens or encumbrances recorded before the
14recording of the mortgage or the managing entity lien
15foreclosed pursuant to this Section (as the case may be), but
16not including such managing entity lien.
17    (g) The purchaser of a timeshare estate at a public auction
18pursuant to this Section must record the foreclosure deed or
19other instrument with the appropriate recorder of deeds within
2030 days after the date the foreclosing mortgage holder or
21managing entity (as the case may be) delivers the foreclosure
22deed or other instrument to the purchaser.
23    (h) If the holder of a mortgage or managing entity lien
24conducts a nonjudicial foreclosure pursuant to this Section,
25the holder of the mortgage or managing entity lien forfeits its
26right to pursue a claim for any deficiency in the payment of

 

 

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1the obligations of the timeshare estate owner resulting from
2the application of the proceeds of the sale to such
3obligations.
4    (i) For purposes of this Section, obligations to pay
5assessments secured by a lien established pursuant to a
6timeshare instrument before the effective date of this Act are
7considered managing entity liens.
8    (j) This Section applies to the foreclosure of mortgages
9and liens considered to be managing entity liens that arose
10before or after the effective date of this Act.
 
11    Section 15. Foreclosure of lien or security interest on a
12timeshare use.
13    (a) Notwithstanding anything in the Illinois Mortgage
14Foreclosure Law or the Uniform Commercial Code to the contrary,
15the holder of a managing entity lien created by Section 5 on a
16timeshare use, in the case of the failure to pay assessments
17when due, or a security interest against a timeshare use, in
18the case of a breach of the security agreement, may do either
19of the following:
20        (1) enforce the security interest pursuant to Part 6 of
21    Article 9 of the Uniform Commercial Code, including
22    (without limitation) accepting the timeshare use in full or
23    partial satisfaction of the timeshare use owner's
24    obligation pursuant to Section 9-620 of the Uniform
25    Commercial Code; or

 

 

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1        (2) nonjudicially foreclose in the same manner as
2    authorized by Section 10 for holders of a mortgage or
3    managing entity lien against a timeshare estate.
4    (b) All rights of redemption of a timeshare use owner are
5extinguished upon sale of a timeshare use as authorized by
6subsection (a) of Section 10.
7    (c) The holder of the security interest or managing entity
8lien, the developer, the managing entity, and the timeshare use
9owner are not precluded from bidding at the sale of the
10timeshare use pursuant to this Section and may enter into
11agreements for the purchase of one or more timeshare uses
12following the completion of the sale proceedings.
13    (d) The purchaser at the public auction takes title to the
14timeshare use free and clear of any outstanding assessments
15owed by the prior timeshare use owner to the managing entity.".