Understanding Timeshare Fraud – Part Two – Disclosures Required by the Tennessee Timeshare Act

Chances are, you would not spontaneously decide to buy a house while walking down the street on the way to lunch.  If you were going to buy a house or piece of property, think of all the steps you might go through.  You might search the internet or hire a real estate agent.  You might drive through your favorite neighborhoods, get approved for a mortgage, or get advice from a lawyer or financial planner.  You might go over the contract with your real estate agent, whether at your kitchen table or at her office, well before you submitted your offer to the seller.  And once the contract was signed, there could be days, weeks, or months of inspections, due diligence, and preparations for closing.

Now imagine how timeshare sales sometimes take place.  A family is walking to lunch.  They are offered free tickets to a show, event, or attraction if they attend a short presentation.  Maybe they are promised other gifts, or a meal.  They say yes, without having a real interest in making a purchase.  Several hours later, perhaps they find themselves signing a thick set of closing documents – very similar in number and kind to the documents they might sign to purchase a house, but without an agent, or a lawyer, or very much time to consider what they are even doing.

Put simply, it’s a dynamic that can, in some circumstances, be subject to abuse.

That’s why the legislature and the courts, in their wisdom, have ensured that customers have protections in these types of transactions.  As I discussed in my last blog entry, the most powerful of these protections is the Tennessee Timeshare Act, Tenn. Code Ann. §66-32-101, et seq.  Over the next several blogs I will talk about some of the provisions of the Tennessee Timeshare Act in detail.

In today’s blog I want to discuss one type of protection that is found within the Tennessee Timeshare Act – the requirement that sellers of timeshares provide purchasers of timeshares with certain disclosures.

In particular, I want to focus on two types of disclosures that purchasers of timeshares are entitled to receive.  The first is the Public Offering Statement.  Tenn. Code Ann. §66-32-112, requires that “A public offering statement must be provided to each purchaser of a time-share interval and must contain or fully and accurately disclose” and then goes on to list fifteen different topics of disclosure covering various issues that a prospective purchaser might want to know about.  Think about those words – “must be provided”….”must contain”….”fully and accurately disclose”…This is a very specific, toothy requirement.  This toothiness is further reinforced by Tenn. Code Ann. §66-32-116, which requires that the timeshare developer “amend or supplement” the Public Offering Statement to reflect any material changes.  In other words, when a consumer goes to make a timeshare purchase, she should receive a Public Offering Statement that sets forth the up-to-date basics about what she is actually buying.

So, every consumer should get an up-to-date Public Offering Statement when they purchase a timeshare.

But that’s not the only type of disclosure that a timeshare purchaser should receive.

The Rules of the Tennessee Real Estate Commission regulate whether real estate agents can offer gifts to purchasers to induce them to enter transactions.  The Tennessee Timeshare Act is similarly concerned with gifts or things of value that are somehow linked to the sale of a timeshare.  Specifically, Tenn. Code Ann. §66-32-133 regulates “any prize or gift promotional offer” in regard to a timeshare project whether made “by mail, by telephone, by advertisement or in person.”  (Note that Tenn. Code Ann. §66-32-102(2) defines “advertisement” broadly, as “any written, printed, verbal or visual offer by an individual or general solicitation.”)  Tenn. Code Ann. §66-32-133 requires, among other things (it’s a long list), that the aforementioned “any person:” (1) must “clearly and conspicuously state the name and street address of the person making the offer;” (5) must “clearly and conspicuously disclose next to each prize, gift, or thing of value offered or any product offered for sale through the promotional plan the item’s approximate verifiable retail value;” (6) must not represent that the “prize, gift, or thing of value offered or any product offered for sale through the promotional plan possesses particular features or benefits, if it does not, or is of a particular standard, quality, grade, or model, if it is of another;” and (10) must “clearly and conspicuously disclose” the restrictions and conditions that must be satisfied “to receive or use the prize, gift, or thing of value or product or service offered,” all costs that must be paid or satisfied “to receive or use the prize, gift, or thing of value or product or service offered,” and the details of all restrictions associated with the offer.

The Tennessee Court of Appeals, in the case of Overton v. Westgate Resorts, Ltd., L.P. (2015 WL 399218) (Tenn. Ct. App. 2015) held that this provision applied to a promise to give timeshare purchasers “unlimited Owner’s Nights” and a “foosball table.”

Accordingly, not only should every purchaser receive an up-to-date Public Offering Statement, but for any “prize, gift, or thing of value or product or service offered” along with the timeshare that fits the definition of Tenn. Code Ann. §66-32-133 and the holding of the Overton case, the purchaser should also receive the sorts of disclosures described above.

John O. Belcher is a founding member of Belcher Sykes Harrington, PLLC and routinely represents consumers in timeshare fraud cases.  The information above is just a general summary and does not constitute legal advice.  If you would like to discuss your particular timeshare transaction, don’t hesitate to contact Belcher Sykes Harrington, PLLC.

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