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Public Act 100-1038


 

Public Act 1038 100TH GENERAL ASSEMBLY

  
  
  

 


 
Public Act 100-1038
 
HB2723 EnrolledLRB100 08926 HEP 19069 b

    AN ACT concerning civil law.
 
    Be it enacted by the People of the State of Illinois,
represented in the General Assembly:
 
    Section 1. Short title. This Act may be cited as the
Timeshare Lien and Security Interest Act.
 
    Section 3. Definitions. As used in this Act:
    "Accommodation" means any apartment, condominium or
cooperative unit, cabin, lodge, hotel or motel room, or other
private or commercial structure containing toilet facilities
therein that is designed and available, pursuant to applicable
law, for use and occupancy as a residence by one or more
individuals, or any unit or berth on a commercial cruise line
ship, which is included in the offering of a timeshare plan.
    "Assessment" means the share of funds required for the
payment of common expenses which is assessed from time to time
against each purchaser by the managing entity.
    "Developer" means and includes any person or entity, other
than a sales agent, acquisition agent, or resale agent, who
creates a timeshare plan or is in the business of selling
timeshare interests, or employs agents to do the same, or any
person or entity who succeeds to the interest of a developer by
sale, lease, assignment, mortgage, or other transfer, but the
term includes only those persons who offer timeshare interests
for disposition in the ordinary course of business.
    "Managing entity" means the person who undertakes the
duties, responsibilities, and obligations of the management of
a timeshare plan.
    "Managing entity lien" means a lien created pursuant to
Section 5.
    "Purchaser" means any person, other than a developer, who
by means of a voluntary transfer acquires a legal or equitable
interest in a timeshare plan other than as security for an
obligation.
    "Timeshare instrument" means one or more documents, by
whatever name denominated, creating or governing the operation
of a timeshare plan.
    "Timeshare interest" means and includes either:
        (1) a "timeshare estate", which is the right to occupy
    a timeshare property, coupled with a freehold estate or an
    estate for years with a future interest in a timeshare
    property or a specified portion thereof; or
        (2) a "timeshare use", which is the right to occupy a
    timeshare property, which right is neither coupled with a
    freehold interest, nor coupled with an estate for years
    with a future interest, in a timeshare property.
    "Timeshare plan" means any arrangement, plan, scheme, or
similar device, other than an exchange program, whether by
membership agreement, sale, lease, deed, license, or
right-to-use agreement or by any other means, whereby a
purchaser, in exchange for consideration, receives ownership
rights in or the right to use accommodations for a period of
time less than a full year during any given year, but not
necessarily for consecutive years. A timeshare plan may be:
        (1) a "single-site timeshare plan", which is the right
    to use accommodations at a single timeshare property; or
        (2) a "multi-site timeshare plan", which includes:
            (A) a "specific timeshare interest", which is the
        right to use accommodations at a specific timeshare
        property, together with use rights in accommodations
        at one or more other component sites created by or
        acquired through the timeshare plan's reservation
        system; or
            (B) a "non-specific timeshare interest", which is
        the right to use accommodations at more than one
        component site created by or acquired through the
        timeshare plan's reservation system, but including no
        specific right to use any particular accommodations.
    "Timeshare property" means one or more accommodations
subject to the same timeshare instrument, together with any
other property or rights to property appurtenant to those
accommodations.
 
    Section 5. Managing entity lien created.
    (a) A managing entity has a lien on a timeshare interest
for any of the following respectively levied or imposed against
a timeshare interest:
        (1) assessments, which, unless the timeshare
    instrument provides otherwise, include fees, charges, late
    charges, fines, collection costs, and interest charged in
    accordance with the timeshare instrument;
        (2) reasonable collection and attorney's fees and
    costs the managing entity incurs to collect assessments;
    and
        (3) taxes, interest, penalties, late payment fees, or
    fines in accordance with applicable law or the timeshare
    instrument.
    (b) Managing entity liens pursuant to this Section are
created and attached when the charges described in subsection
(a) become due. If such amounts are payable in installments,
the full amount of such charges is a managing entity lien from
the time that the first installment thereof becomes due.
    (c) Managing entity liens pursuant to this Section are
perfected on the date that the managing entity:
        (1) In the case of a timeshare estate, records a notice
    of lien against the timeshare estate in the office of the
    recorder in the county where the timeshare estate is
    located, which notice of lien must identify each of the
    following:
            (A) the name of the timeshare estate owner;
            (B) the name and address of the managing entity;
            (C) the description of the timeshare estate in the
        same manner required for recording a mortgage against a
        timeshare estate; and
            (D) the amount of the debt secured by the managing
        entity lien.
        (2) In the case of a timeshare use, files a notice of
    lien against the timeshare use in the filing office of the
    Illinois Secretary of State pursuant to Article 9 of the
    Uniform Commercial Code, which notice of lien, in addition
    to any other filing requirements imposed by Article 9 of
    the Uniform Commercial Code, must identify each of the
    following:
            (A) the name of the timeshare use owner as the
        debtor;
            (B) the name of the managing entity as the secured
        party;
            (C) the address of the managing entity;
            (D) the timeshare use as the collateral; and
            (E) the amount of the debt secured by the managing
        entity lien.
    (d) The managing entity must send a copy of the recorded or
filed notice of lien on the timeshare interest, as the case may
be, to the last known address of the timeshare interest owner.
    (e) A managing entity lien against a timeshare estate, at
the managing entity's option, may be foreclosed:
        (1) as provided in Section 10; or
        (2) in the same manner as a mortgage under the Illinois
    Mortgage Foreclosure Law.
    (f) A managing entity lien against a timeshare use, at the
managing entity's option, may:
        (1) be foreclosed as provided in Section 15; or
        (2) be enforced in the same manner as a security
    interest pursuant to Article 9 of the Uniform Commercial
    Code.
 
    Section 10. Nonjudicial foreclosure against timeshare
estates.
    (a) Notwithstanding anything in the Illinois Mortgage
Foreclosure Law or other applicable law to the contrary:
        (1) the holder of a mortgage against a timeshare estate
    may foreclose or otherwise enforce a security interest
    pursuant to this Section; and
        (2) the holder of a managing entity lien against a
    timeshare estate may foreclose the managing entity lien
    pursuant to this Section.
    (b) Upon default, and after all applicable cure periods
identified in the mortgage (if the default is under a mortgage)
or the timeshare instrument (if the default is under a managing
entity lien) have expired, the holder of the mortgage or
managing entity lien must:
        (1) Provide written notice of the default to the
    timeshare estate owner at the last known address of the
    timeshare estate owner by:
            (A) certified mail, return receipt requested; or
            (B) first class mail.
        (2) Provide the timeshare estate owner an additional
    opportunity to cure for a period of 30 days following the
    later date of the mailing of the notices sent pursuant to
    paragraph (1) of this subsection.
    (c) If the timeshare estate owner does not cure the default
before the expiration of the additional cure period granted
pursuant to paragraph (2) of subsection (b), the holder of the
mortgage or managing entity lien may foreclose the mortgage or
managing entity lien by conducting a public auction that
complies with the following requirements:
        (1) The holder of the mortgage or managing entity lien
    must provide notice of the public auction as follows:
            (A) By publishing notice of the public auction in
        at least each of 3 successive weeks in a newspaper,
        whether printed or electronic, of general circulation
        in the county where the timeshare estate is located.
        The first notice must be published no more than 30 days
        before the date of the public auction, which 30-day
        period shall be calculated by excluding the date of
        publication of the first notice and the date of the
        public auction.
            (B) By sending written notice identifying the
        time, date, and place of the public auction to the last
        known address of the owner of record of the timeshare
        estate at least 30 days before the date of the public
        auction by: (i) certified mail, return receipt
        requested; or (ii) first class mail.
            (C) By sending notice by certified mail, return
        receipt requested, or first class mail, at least 30
        days before the date of the public auction, identifying
        the time, date, and place of the public auction to all
        persons known to have a lien against the timeshare
        estate.
        (2) The notices given pursuant to paragraph (1) of this
    subsection must also contain:
            (A) the name of the timeshare estate owner;
            (B) a general description of the timeshare estate;
        and
            (C) the terms of the public auction.
        (3) If more than one timeshare estate is to be included
    in the public auction, all such timeshare estates may be
    combined into one notice of public auction.
        (4) The public notice required by subparagraph (A) of
    paragraph (1) of this subsection for foreclosing a mortgage
    against a timeshare estate must be printed in the following
    or a substantially similar form:
 
"NOTICE OF SALE OF TIMESHARE ESTATE OR ESTATES UNDER SECTION 10
OF THE TIMESHARE LIEN AND SECURITY INTEREST ACT
 
By virtue of Section 10 of the Timeshare Lien and Security
Interest Act and in execution of a certain mortgage (or
mortgages, if more than one) on the timeshare estate (or
estates, if more than one) given by the owner of the timeshare
estate (or owners, if more than one) set forth below for breach
of the conditions of said mortgage (or mortgages, if more than
one) and for the purpose of foreclosing, the same will be sold
at public auction starting at ........... on ............ 20..
at ........, Illinois, being all and singular the premises
described in said mortgage (or mortgages, if more than one).
(For each mortgage, list the name and address of the timeshare
estate owner, a general description of the timeshare estate,
and the book and page number of the mortgage.)
 
TERMS OF SALE: (State the deposit amount to be paid by the
purchaser at the time and place of the sale and the times for
payment of the balance or the whole, as the case may be. The
timeshare estates, if more than one, must be sold in individual
lots unless there are no individual bidders, in which case,
they may be sold as a group.)
 
Other terms may be announced at the public auction.
 
Signed .................................
 
Holder of mortgage or authorized agent.".
 
        (5) The public notice required by subparagraph (A) of
    paragraph (1) of this subsection for foreclosing a managing
    entity lien against a timeshare estate must be printed in
    the following or a substantially similar form:
 
"NOTICE OF SALE OF TIMESHARE ESTATE OR ESTATES UNDER SECTION 10
OF THE TIMESHARE LIEN AND SECURITY INTEREST ACT
 
By virtue of the timeshare instrument of the
................... (name and address of timeshare property)
and Section 5 of the Timeshare Lien and Security Interest Act
establishing a managing entity lien for failure to pay
assessments and other costs on the timeshare estate (or
estates, if more than one) held by the owner of the timeshare
estate (or owners, if more than one) listed below, the
timeshare estate (or estates, if more than one) and for the
purpose of foreclosing, the same will be sold at public auction
starting at ......... on ........ 20.. at .............,
Illinois. (For each timeshare estate, list the name and address
of the timeshare estate owner, a general description of the
timeshare estate, and the book and page number of the deed.)
 
TERMS OF SALE: (State the deposit amount to be paid by the
purchaser at the time and place of the sale and the times for
payment of the balance or the whole, as the case may be. The
timeshare estates, if more than one, must be sold in individual
lots unless there are no individual bidders, in which case,
they may be sold as a group.)
 
Other terms may be announced at the public auction.
 
Signed ................................
 
Managing entity lienholder or authorized agent.".
 
        (6) Publishing and sending notices in compliance with
    this subsection constitutes sufficient public notice of
    the public auction.
    (d) Public auctions pursuant to this Section must be
conducted as follows:
        (1) The public auction must take place within the
    county where the timeshare estate is located.
        (2) The public auction must be open to the general
    public and conducted by an auctioneer licensed pursuant to
    the Auction License Act.
        (3) The auctioneer, in his or her discretion, may waive
    the reading of the names of the timeshare estate owners, if
    more than one, the description of the timeshare estates, if
    more than one, and the recording information of the
    applicable mortgages or managing entity liens (as the case
    may be), if more than one.
        (4) All rights of redemption of the timeshare estate
    owner are extinguished upon sale of a timeshare estate at
    the public auction.
        (5) The holder of the mortgage or managing entity lien,
    the developer, the managing entity, and the timeshare
    estate owner are not precluded from bidding at the public
    auction.
        (6) The successful purchaser at the public auction is
    not required to complete the purchase of the timeshare
    estate if the timeshare estate, at the time the auctioneer
    accepts the successful bid, is subject to liens or other
    encumbrances, other than those identified in the notice of
    public auction and those identified at the auction before
    the auctioneer opens bidding on the applicable timeshare
    estate.
        (7) The purchaser at the public auction takes title to
    the timeshare estate free and clear of any outstanding
    assessments owed by the prior timeshare estate owner to the
    managing entity.
    (e) Upon the sale of a timeshare estate pursuant to this
Section, the holder of the mortgage or managing entity lien
must provide the purchaser with:
        (1) a foreclosure deed or other appropriate instrument
    transferring the mortgage holder's or managing entity's
    interest in the timeshare estate; and
        (2) an affidavit affirming that all requirements of the
    foreclosure pursuant to this Section have been satisfied.
    (f) The timeshare estate is considered sold and the deed or
other instrument transferring the timeshare estate must
transfer the timeshare estate, subject to municipal or other
taxes and any liens or encumbrances recorded before the
recording of the mortgage or the managing entity lien
foreclosed pursuant to this Section (as the case may be), but
not including such managing entity lien.
    (g) The purchaser of a timeshare estate at a public auction
pursuant to this Section must record the foreclosure deed or
other instrument with the appropriate recorder of deeds within
30 days after the date the foreclosing mortgage holder or
managing entity (as the case may be) delivers the foreclosure
deed or other instrument to the purchaser.
    (h) If the holder of a mortgage or managing entity lien
conducts a nonjudicial foreclosure pursuant to this Section,
the holder of the mortgage or managing entity lien forfeits its
right to pursue a claim for any deficiency in the payment of
the obligations of the timeshare estate owner resulting from
the application of the proceeds of the sale to such
obligations.
    (i) For purposes of this Section, obligations to pay
assessments secured by a lien established pursuant to a
timeshare instrument before the effective date of this Act are
considered managing entity liens.
    (j) This Section applies to the foreclosure of mortgages
and liens considered to be managing entity liens that arose
before or after the effective date of this Act.
 
    Section 15. Foreclosure of lien or security interest on a
timeshare use.
    (a) Notwithstanding anything in the Illinois Mortgage
Foreclosure Law or the Uniform Commercial Code to the contrary,
the holder of a managing entity lien created by Section 5 on a
timeshare use, in the case of the failure to pay assessments
when due, or a security interest against a timeshare use, in
the case of a breach of the security agreement, may do either
of the following:
        (1) enforce the security interest pursuant to Part 6 of
    Article 9 of the Uniform Commercial Code, including
    (without limitation) accepting the timeshare use in full or
    partial satisfaction of the timeshare use owner's
    obligation pursuant to Section 9-620 of the Uniform
    Commercial Code; or
        (2) nonjudicially foreclose in the same manner as
    authorized by Section 10 for holders of a mortgage or
    managing entity lien against a timeshare estate.
    (b) All rights of redemption of a timeshare use owner are
extinguished upon sale of a timeshare use as authorized by
subsection (a) of Section 10.
    (c) The holder of the security interest or managing entity
lien, the developer, the managing entity, and the timeshare use
owner are not precluded from bidding at the sale of the
timeshare use pursuant to this Section and may enter into
agreements for the purchase of one or more timeshare uses
following the completion of the sale proceedings.
    (d) The purchaser at the public auction takes title to the
timeshare use free and clear of any outstanding assessments
owed by the prior timeshare use owner to the managing entity.

Effective Date: 1/1/2019