AZ LAW BOOK

developer as well as by the sales agent or managing entity who actually committed the violation. The developer is responsible for the actions of the association and managing entity only while they are subject to the developer’s control, as provided in the timeshare instruments or by law. 32-2197.12. Blanket encumbrance; lien; alternative assurance Excluding any encumbrance placed against the purchaser’s timeshare interest securing the purchaser’s payment of purchase money financing for the purchase, the developer is not entitled to the release of any monies placed in escrow under section 32-2197.05 with respect to each timeshare interest and any other property or rights to property appurtenant to the timeshare interest, including any amenities represented to the purchaser as being part of the timeshare plan, until the developer has provided satisfactory evidence to the commissioner of one of the following: 1. The timeshare interest together with any other property or rights to property appurtenant to the timeshare interest, including any amenities represented to the purchaser as being part of the timeshare plan, are free and clear of any of the claims of the developer, any owner of the underlying fee, a mortgagee, judgment creditor or other lienor or any other person having a blanket encumbrance against the timeshare interest or appurtenant property or property rights. 2. The developer, any owner of the underlying fee, a mortgagee, judgment creditor or other lienor or any other person having a blanket encumbrance against the timeshare interest or appurtenant property or property rights, including any amenities represented to the purchaser as being part of the timeshare plan, has recorded a subordination and notice to creditors document in the appropriate public records of the jurisdiction in which the timeshare interest is located. The subordination document shall expressly and effectively provide that the interest holder’s right or blanket encumbrance does not adversely affect and is subordinate to the rights of the owners of the timeshare interests in the timeshare plan regardless of the date of purchase, from and after the effective date of the subordination document. 3. The developer, any owner of the underlying fee, a mortgagee, judgment creditor or other lienor or any other person having a blanket encumbrance against the timeshare interest or appurtenant property or property rights, including any amenities represented to the purchaser as being part of the timeshare plan, has transferred the subject accommodations or amenities or all use rights to the accommodations or amenities to a nonprofit organization or owners’ association to be held for the use and benefit of the owners of the timeshare plan. The organization or association shall act as a fiduciary to the purchasers, if the developer has transferred control of the organization or association to the owners or does not exercise voting rights in the organization or association with respect to the subject accommodations or amenities. Before the transfer, any blanket encumbrance against the accommodation or facility shall be made subject to a subordination and notice to creditors instrument pursuant to paragraph 2. 4. Alternative arrangements have been made that are adequate to protect the rights of the purchasers of the timeshare interests and approved by the commissioner. 32-2197.13. Hearing on denial of public report Any applicant objecting to the denial of a public report may, within thirty days after receipt of the order of denial, file a written request for a hearing. The commissioner shall hold the hearing within twenty days thereafter unless the party requesting the hearing requests a postponement. If the hearing is not held within twenty days after a request for a hearing is received, plus the period of any such postponement, or if a proposed decision is not rendered within forty-five days after submission, the order of denial shall be rescinded and a public report issued. 32-2197.14. Investigations; orders; hearings A. The commissioner, on the commissioner's own motion, or if the commissioner has received a complaint and has satisfactory evidence that the owner, agent or developer is violating any provision of this article or rules of the commissioner or has engaged in any unlawful practice as defined in section 44- 1522 concerning the sale of timeshare interests or deviated from the provisions of the public report, may investigate the timeshare property and examine the books and records of the owner, agent or developer. For the purpose of examination, the owner, agent or developer shall keep and maintain records of all sales transactions and monies received pursuant to such sales transactions and make them accessible to the commissioner upon reasonable notice and demand.

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Law Book Revised 11.02.2017